How We Started A $1M/Month Business Selling HVAC And Energy Auditing Tools
Hello! Who are you and what business did you start?
Hi, I’m Bill Spohn, President, CEO, and majority owner of TruTech Tools, LTD. Eric Preston is my trusted business partner. Our business continues to grow as we complement each other's personalities so well. TruTech is one of the largest online stores in the niche market of tools and test instruments for Heating, Ventilation, Air Conditioning, and Refrigeration (HVAC/R) Technicians. We are also the major supplier to a smaller market of technicians that do energy audits and assess building performance, including indoor air quality. We serve customers in the US and Canada.
While we sell a wide range of products (6,000 SKUs), we are best known for stocking and selling the latest and most advanced products in our categories; things like blower doors, Duct Blasters(R), thermal imagers, and AC/R smart probes. While these products may sound obscure to the average consumer, they help techs perform at a higher level in creating comfortable, healthy, and energy-efficient indoor environments. We set ourselves apart but understanding how and where these products are used.
In 2007, our first year in business, we sold about $70K. This year (2020) we plan to reach $16 Million with 63,000 customers served over that time. We have made the Inc 5000 list 3 times; 2016 (#3962), 2018 (#4509), 2019 (#4643)
I founded the company with Jim Bergmann, Jr, and his dad, Jim Sr. (who passed in 2016). The business was intended as a retirement “hobby” for Jim Sr. as both his son and I had full-time jobs. After I bought them out (with Eric noted above) in 2014, we have continued to have a great relationship with Jim Jr. and have continued to build each others’ businesses. The interesting thing is, I have always worked remotely (100 miles away) from the majority of the staff at the offices/warehouse.
What's your backstory and how did you come up with the idea?
I’m a first-generation college graduate of immigrant grandparents. Growing up we learned about family, treating people right, hard work, and being “economical”- which has grown into respect for spending and waste of any sort and the environmental impact of choices I make. I also worked as a clerk in our small town (Rome, NY) public library as a teenager. During breaks at work, I would voraciously read Popular Science magazine and long to be a writer for them. Additionally, from my late teens forward, I had it in the back of my mind that I would own a business someday.
We have learned the importance of listening closely to customers, as they have the answers for success in our business. They don't; always know exactly what they want, it is up to us to synthesize what we hear into a business proposition that works for all involved.
I worked for three manufacturers in this market for over 20 years in a variety of roles (engineering, marketing, business management). Through this experience, I was able to identify the points of customer pain that we now address in the marketplace: Customers have a hard time learning about these products, getting a selection of choices in one place, finding them in stock and available at a good price for fast (and usually free) delivery.
I sometimes say this business was built out of frustration. Frustration with the fact the products (of the manufacturers) I worked for were not being fully appreciated in the marketplace in the both mentally and physically crowded space of the bricks and mortar wholesalers. Along with my business partners, we envisioned a one-stop-shop for tools and test instruments for HVAC Contractors.
After helping found the business, I continued to advise and work outside of it for 21 months, as a rep for the main brand being. From this vantage point, I was able to watch and gauge market acceptance by both vendors and customers which has proven critical going forward. The business grew from $70K in sales in the first year to $750K in the second year to $2.5 million in the third year. At this point, Jim Sr. was looking to sell the business as it had grown into much more than a retirement hobby.
During this 21 month period where the business grew and I worked outside of it, I saved enough money to take the risk of jumping to own and run the business full time which I did when Jim Sr. was looking for a buyer in late 2008.
Take us through the process of designing, prototyping, and manufacturing your first product.
When people ask me “What do you make at TruTech?” I smile and say, “We make people happy!”.
It’s our goal to promptly provide customers with products they need. It sounds simple, but it can be challenging. As an eCommerce company, we need to be sure the products we are selling work as intended for long service life. That comes through vetting the vendors and the products and not just loading up on trying to sell everything possible.
We are constantly working to improve the customer experience through systems and training. We invest in systems to deliver clear and accurate information to our three target groups: customers, employees, and vendors.
As part of my “economical” nature, we usually get to the point of “overload” and hover there for a bit before we make an investment in new staff, physical space, or systems.
Describe the process of launching the business.
We started getting customers immediately, as we were networked in the local market with contractors and with national contractors on a couple of key BBSs (Bulletin Board Systems - the precursor to Facebook groups) and via our connections with people, we had previously trained an/or met at conferences and trade shows.
Our website was designed by a recent graduate of a vocational program in digital media on the ZenCart (shareware) platform. We added unique content, namely our sincere perspectives, to the manufacturers’ product descriptions. The screenshot below shows the core data and minimal menu from the Waybackmachine.org website.
Our start-up costs were just short of $20K to host the website and buy initial inventory. We have been able to build the business via refinement of sales, while still meeting every expense including payroll for owners without the need for inside or outside investment or anything beyond a revolving line of credit.
In a way, I have achieved both goals. The company I have built, TruTechTools, LTD provides products but more importantly provides support in the form of educational resources (in all types of media) so technicians can easily work at a higher level and give them confidence in the work they do. (<- Those are our brand promises, by the way.)
Since launch, what has worked to attract and retain customers?
We are very focused on three groups of people: customers, employees, and vendors. It is only in serving these three groups that we will succeed. We strive to have the best customer experience and in providing clear communication at every step of the process.
I often take the customer journey, through our website, our phone system, our emails, our social media, everything; to see how it feels to be a customer of ours. We believe that for every 1, 2, or 3-star review or one complaint that is voiced there may be as many as ten other unhappy customers behind it - yet those others have not spoken up. We rapidly focus our attention on these unhappy customers and in stout of having 5,000 customers a month (lately) that customer is treated like they are our only customer.
We treat employees fairly and with respect. We teach our employees how we run our business. We show them the challenges we face and celebrate the victories we achieve. We share our Profit and Loss statements with staff and issue profit sharing to all employees three times a year.
We have very close relationships with our vendors. We keep an eye out for any bad vibes they get on social media and inform them when this happens. We regularly meet with our key vendors and work on unique marketing programs together with them. We also aggregate data across our brands (but keep private data private) and share some key analytics to help both our businesses succeed. For vendors new to our market, we provide guidance and advice on what we think will help them thrive.
If you are just getting started, please be sure you understand the market you are getting into or you have a business partner that understands the market.
Our core values really summarize what keeps our business thriving:
Be prompt, honest, clear and helpful in communications with customers, employees, and vendors
Fairly treat customers, employees, and vendors, especially with prompt delivery of products
Use a balance of data and experience to make decisions. Document our key processes and use systems wherever possible to automate tedious work. Foster an environment where we learn, understand, teach, and refine these processes.
Impart confidence in the products we sell to customers by learning, teaching, and promoting proper processes.
Manage business and financial aspects wisely to grow our business to the benefit of our customers, employees, and vendors, hence to society. To conduct our mission, we must stay in business.
Be a good steward of the industry and community by networking, supporting and promoting these values in others and giving back to our national and local communities.
Brand promises
Making it fast and easy for technicians to work at a higher level.
Helping to impart confidence in your work.
How are you doing today and what does the future look like?
We have been profitable since we first started using our initial investment of less than $20K. We are currently running at about 6% Net Profit before taxes. Our Gross Margin is roughly 19% and it includes the cost of goods, credit card fees, and inbound and outbound shipping. Basically the variable costs associated with our business.
Ad costs make up the bulk of our customer acquisition costs of 5%. Our ROAS is currently running above $10. Our customer LTV is about $1510. Our monthly session traffic is about 170,000 and our conversion rate is lately over 1.7%. We have 25K email subscribers and almost 10,000 followers on Facebook and 8,000 on LinkedIn. Our YOY growth has been over 20% for the last 3 years and looks like we will do it again in 2020.
In early 2019 we moved from a 4,000 sf facility (where we were since 2012) to 15,000 sq due to our growth in inventory (we are NOT a drop shipper) and staff. We do 99.9% eCommerce. We do no 3rd party sites, no Amazon, Walmart, Sears, etc. We pride ourselves on knowing our products’ values and conveying them to the customers. We don't sell on price, we sell on the quality of the relationship. However, we often sell at the best price anyway!
We plan to continue to grow judiciously adding products and product lines to serve our customer’s needs.
Through starting the business, have you learned anything particularly helpful or advantageous?
We have been duped by a few customers over the years who were granted credit, got their products, and never paid us. Although our overall fraud loss is WAAAY below industry standards due to the systems we use (eg. Kount, Appruve) and training we give our staff.
We have been generous with customers and non-customers in providing information and advice, not just chasing the money/order.
We have been very blessed in two ways during this Pandemic time in 2020. First, the main trade we service, HVACR, was considered an essential trade and continued to work. Second, due to closures and restrictions at our bricks and mortar competitors, many new customers have found us due to our pervasive online presence that has grown over the last 13 years.
We have learned the importance of listening closely to customers, as they have the answers for success in our business. They don't; always know exactly what they want, it is up to us to synthesize what we hear into a business proposition that works for all involved.
I am a technical person that can communicate - or as I like to say: I love people, science and business, in that order. I am very detail-oriented and not afraid to speak up, politely, when I see something amiss - no matter the situation
I am a chronic committee and board volunteer and technical presenter and the host of 2 podcasts: RESTtalk and Building HVAC Science.
I also recognize the qualities I lack and have brought together a team that helps me balance out.
What platform/tools do you use for your business?
We have used 3D Cart as our website platform for over a decade. 3D is not huge, but they are constantly evolving and we have a great experience getting to know key people there as we have “grown-up” together!
Our shipping tools are integrated into our Enterprise Resource Planning system, Bizowie, which also controls our inventory and accounting. Bizowie allows us to continue to scale our business as it keeps track of inventory and provides critical business management reports.
We use MailChimp for email marketing because it's so easy to use, has many relevant features. We use Sprout Social to manage social media content, again easy and effective. We also use LiveChat for our site as customers expect us to communicate in that way.
What have been the most influential books, podcasts, or other resources?
I really enjoy SharkTank and The Profit (Markus Lemonis) TV shows. I have also learned from the following podcasts: Gary Vee, The Edifice Complex, Growth Think Tank, Hidden Brain, HVAC School, Social Capital, The Power of Thought
Inspirational books include: The E-Myth Revisited, Traction, The Great Game of Business, Profit First, The Synergy Trap, Don’t Make me Think, Grow to Greatness, Built to Sell, First Things First.
Advice for other entrepreneurs who want to get started or are just starting out?
If you are just getting started, please be sure you understand the market you are getting into or you have a business partner that understands the market. If not, you run the risk of not knowing if you are truly making progress or just spinning your wheel and wasting time and money. It is possible to prepare by self-educating and researching the market, but better is being active in the market, either working for a company already established there or taking your “prototype” and trying to sell it while taking copious notes.
Do not question what your limits might be, keep forging ahead, but do not go to the point of physical, mental, or relationship exhausting. To enjoy the fruits of your labor, you need to be healthy and sane.
Don’t stop trying up: Failure - it's just an extreme learning experience.
When your back is against the wall, everything is now in front of you, except the wall.
Continue to explore what makes sense for customers of your business - scratch the itch, but not to the point of drawing blood.
Don’t succumb to fearlure, a fear of failure, as it can lure you, in a negative way.
Feelure: pausing to feel the failure, assess it, roll it around in your mind. Learn from it.
The approach that sets me APART:
seek Advice
Plan the steps
take Action
Review the actions
Teach what you’ve learned.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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