Profiles in Prosperity

Episode 79 - Tom Peregrino

Title: Contractor of the Year

Daffan Mechanical, Granby, Texas.

Intro: Welcome to Profiles In Prosperity, the leading podcast for residential service contractors sponsored by Service Roundtable and hosted by David Heimer.

David Heimer: Hi, this is David Heimer. Welcome to Profiles In Prosperity. Last week, we all gathered at the Barefoot Roundtable in Clearwater Beach, Florida, and it was just fabulous. We got to see people we haven’t seen in more than a year. We heard some amazing presentations, got some great ideas, and we got to see the award given to the contractor of the year, Tom Peregrino of Daffan Mechanical in Granbury, Texas. Guess what? Tom is here with us today. You get to hear from the contractor of the year. So Tom Peregrino, welcome to Profiles In Prosperity. Congratulations on the big honor, what a fabulous thing and it was so well-deserved so that’s awesome.

Tom Peregrino: Well, thank you, David. I appreciate the award and I appreciate all the hard work that my team members put in to help earn that award. And we definitely enjoy hanging out with everyone at the Barefoot Roundtable, you guys put on a great event. It was a great experience last week. It’s good to be here, hanging out with you this period of time with you, David.

David Heimer: Well, thank you. It’s great to have you, and it was great to see you at the event. So, how did you end up in our industry?

Tom Peregrino: It all went back to my wife and I decided to have another child. And I was working in the banking industry. I was a branch manager for a bank back in the mid-1990s. And when our second daughter came along and we looked at how expensive she was and I looked at my checkbook, I told my wife, I said, I think I needed to do something different where I can make some more money. And so, I just happened to open up the newspaper in the help bonded section. And back in those days, they had a bunch of ads for different types of places you can go to work. And there was an ad there that was for a sales position, a comfort consultant position for a local HVAC company. And so, it sounded good, sounded like you could make some good money and they would take care of all the training and it had some benefits. And so I just took a risk, applied for the position, and went through the interview process. And the next thing you know, after about 30 days’ worth of training, they kicked me out in the field and I started selling HVAC equipment. Didn’t have a clue what I was doing, but a year later I doubled my income. And of course, that was back in 1995/96 and I never looked back.

David Heimer: You doubled your income from what you had been making as a branch manager in banking?

Tom Peregrino: I did. And you know, that really helped calm my wife down who was scared to death when I made that jump, because she was saying, “you’re leaving a secure bank job with a salary and all these benefits, and you’re getting a hundred percent commission and you don’t even know anything about air conditioning.” And I said, “yes, I can do it, believe in me.” And 12 months later, she’s like, “okay, I think this will work.”

David Heimer: I got to say that is really a gutsy and unusual move. What was it that made you think, yeah, this is something I should do and I can do?

Tom Peregrino: Some of it had to do with the way they crafted the ad. And you know, the strategy is still the same for those in our industry. If you’re looking for somebody to bring on as a comfort consultant, they basically said, hey, do you have these attributes? And if you have these attributes and you’re a hard worker and you’ve got some good people skills, we will train you, we will pay you while you’re being trained, and you will have an opportunity to make a really good living. And I felt I had those attributes and sure enough, the training was pretty good. So to me, the way I viewed that ad is, it was relatively low risk. In the worst case, they would say, no, you’re not hired, but at best we can make a big difference in terms of our personal income. So, yeah, it was a big jump. Though some people would say it was a big jump for me. I thought, nah, I think this is low risk. Let’s give it a shot.

David Heimer: Good for you. That’s awesome. So was that Daffan Mechanical that you were working with them or was that a different company?

Tom Peregrino: It was a different company. I was a comfort consultant for that company for about five years. And that’s pretty much what I did until I joined my original partner who started Daffan Mechanical back in November of 1999.

David Heimer: So you were partners with him in Daffan Mechanical in 1999?

Tom Peregrino: Well, no, that was kind of slow progress. So when he decided to start up his own company, he was my original service tech partner. And what I mean by partner is not necessarily a business partner. So when he would turn leads over and need someone to come out and sell a new piece of equipment, I was kind of his buddy in terms of taking care of the customers in that respect. So, we were a really, really effective team. If he couldn’t fix it, he would call me and I would come and sell a new system to a customer and we worked really well together. So when he called me and said, hey, I’m getting ready to start my new company, do you want to continue to do what we’ve done before at this previous company and we’ll just do it for my own company? I said, yeah, I’ll take the risk again, let’s see what happens. And it worked out really well.

David Heimer: So how did you end up becoming a partner then at Daffan Mechanical?

Tom Peregrino: It took several years. So now we’re at 2000 and we’re growing, growing rapidly. We had a tremendous start, and so every year we just continued to grow. And I went from being the comfort consultant for him, shortly thereafter within a year, I was the install manager. Then I became the office manager. Then I became the general manager, was the service manager, so within a few years I was wearing a lot of hats. And to his credit, you know, he was very, very generous. And he said, “Tom, I’m going to give you a percent of the company.” And so, I think it was about maybe four or five years into building the company, I was able to be a small part-owner of the company, and that’s kind of how that portion started.

David Heimer: Tell us about the company now; how big are you? How many people have you got? What services do you offer?

Tom Peregrino: Over the last 21 years? We’ve stayed specialized in terms of HVAC, we don’t have any plumbing or electrical divisions, so we are highly focused on HVAC and currently have 33 team members. And we finished out the year, last year around 7.6 million in HVAC revenue. We have grown quite a bit over the last 21 years and we have learned quite a bit. It has been quite the roller coaster ride.

David Heimer: You joined Service Nation in 2016, and when I look at your numbers over the years, you’ve had good, strong growth in sales and profits. What have you done to achieve that?

Tom Peregrino: That’s an excellent question. So, when I have the opportunity, we’ll move back a little bit. Before I joined Service Nation Alliance, I purchased the company from my original partner in 2010, and we basically had to rebuild it almost from scratch again. And so from 2010, up until the point I joined Service Nation Alliance, we were just doing everything we could to rebuild the organization, become hyper-focused on residential work replacement and repair. But after so many years, you know, going into 2015 and 16, I had realized that I had kind of reached the limit of what I could do, what I could bring to the table, my skill set. And I started looking at what other best practices organizations are out there that could help me, you know, who had mentors and who had processes, who had systems that I could plug and play and take my company to the next level. And fortunately, I attended one of your Success Days back then, and was really, really impressed at your guys’ program and decided, you know what, I’m going to bring them on as my consultant, my team, and David, I’m so glad I did that. I mean, I look back at our growth and especially our profitability and we just took off. It was a great experience.

David Heimer: I’m glad it worked well for you. You’re an impressive guy and that’s why you’re now an advisory board mentor. And I was wondering if you could talk just a little bit about the advisory board and how that has helped you and how you see it helping other people.

Tom Peregrino: Yeah, so the advisory board benefit, you guys did the onboarding for me and helped me begin integrating Service Nation Alliance into my organization. You know, you guys said, hey, we’re going to plug you into this AB thing. And of course, you know, six years ago, I was like, well, I don’t know what it is. It sounds like I’m going to join a group of other contractors, and we’re just kind of hanging out and grinding each other’s shoulders. So, I started plugging into the AB calls on a weekly basis, and I’m telling you, it was and is fantastic. And I was kind of one of the unicorns regarding being an AB member before I became a mentor for you guys. But back in the day when I was a member, here I am sitting on the phone and on the video conference calls with these contractors, and man, they’re high performers, and they are doing things that I’m not doing that I should be doing.

I began talking to them offline and I began asking tons of questions. And the first thing that came to my mind is, man, I got to go see these guys. I want to do onsite visits and just check out their facilities and their people because I’m a huge proponent of Robin Duplicate. And if somebody is doing it better than I’m doing it, I’m just going to do it their way. If it’s working good for them, I’m just going to copy and duplicate. So within the first year of being an AB member, I went to North Carolina, the John Ian’s Organization, and hung out with him for two, three days. Got to visit with all of his leadership team, how they got all their installers out in the morning and meet with his HR manager and meet with his CSR manager and look at how the dispatch calls and just visited with him personally and visited with just lots and lots and lots of people.

And I came back to my organization and I said, guys, check out what this company is doing. Let’s just do what they do. And we took those golden nuggets that I don’t think you can duplicate less you go visit another company. I mean, we implemented those. And then I flew to Chicago to hang out with Kevin Frunp and Lliana Air Conditioning and Heating Organization, and I did the same thing. Now, this was all on my own dime, but I thought I never had access to contractors before, fellow contractors that didn’t want to kill me, that weren’t competing against me. I’ve never had access to this before and now I do. And they want me to come, and they’re willing to spend time with me, and they open up everything and I can access everything. It was just a tremendous wealth of information.

And so I hung out with Kevin’s Frump, visited with all his people, and learned how he ran his organization. I came back to my company and I said, guys, get a load of this, look at what he’s doing here. You know, let’s say specifically, you know, look at how he’s dispatching his calls and he’s managing his overtime, look at how he’s doing this. And we implemented a lot of his golden nuggets that he gave me. And then I flew to California and I visited Justin’s organization, Justin Home Quiz, and it was awesome. Spent several days there, he took us to a vineyard and we had a nice dinner. I mean, great relationships as well as information that you gather when they do those.

So I went to visit Chris Hunter’s organization over in Oklahoma, and was able to spend a whole day with Chris. How do you do what you do? What’s the magic, what’s your secret sauce? And, you know, we all know Chris Hunter, he’s just very, very generous in terms of sharing and teaching. And I came back to my organization with more and more information and that was so beneficial. That was so beneficial in helping us rapidly integrate the best practices that have been out there. It was a huge win for us. So as the months and years have progressed to Service Nation Alliance, I just continued to love being on the AB calls. And now, you know, my buddies in AB 14 are great friends. We were so glad to be together again in Florida at the Service Nation Alliance conference and be able to reconnect after COVID, that was so refreshing. And because the AB program that you guys have for all these contractors, because it’s so awesome and I’ve benefited so much from it, when I had an opportunity to mentor another group, oh, it was a no brainer. I just jumped all over it. Now I feel like I’m just contributing back and returning all the benefits that I derived. Now, I try to help another group of contractors that are trying to grow like I’m trying to grow.

David Heimer: It’s a really great thing, isn’t it? So gratifying when you get with high performers, they’re so eager and so happy to share what they know. It’s a wonderful thing. It benefits so many people, but it’s enormously gratifying to realize how generous people are with their time and their information.

David Heimer: Absolutely. You know, there’s so much good information on how to run an HVAC business, not only within the Service Nation Alliance, but you can also get good information outside Service Nation Alliance, whether you read Ron Smith’s book or you read Ken Goodrich’s book, there’s lots of resources. But what I love about Service Nation Alliance is because we can visit with fellow contractors on a weekly basis. And of course, visit them if we’d like to. They can say this is how you can implement it and integrate it into your organization rapidly. It’s a practical, pragmatic implementation of best practices. And all too often I see a lot of contractors, you know, outside and within even the Alliance where that’s sometimes where they stumble a little bit. They stumble on, okay, I get the KPI I should be working towards, but how do I do it? What are pragmatic ways? What’s the step-by-step? How do I get from point a to point B? How do I need to make the fundamental changes in the processes and the people in the communication? How do I do it from where I’m at right now? And it’s there, you guys definitely have the secret sauce in terms of helping people implement those processes.

David Heimer: You are a big part of it. And I sure appreciate what you’re doing with the other members, so thank you for that. I heard that you do some very unique things to give back to the community, that that’s an important part of what you do and you’ve got some unique programs. Could you tell us a little bit about that?

Tom Peregrino: Sure. On the smaller things that we do for our community in no particular order, one of the things we do is we do a huge 4th of July float and we’ve done it almost since day one. We have a very large package unit that is all colored in patriotic colors, red, white, and blue. And we have this big package unit that goes down the road where we’ve got, I think maybe in our town here on the 4th of July you may have like a hundred thousand that lineup throughout the whole parade. On 4th of July, we call the whole crowd down with a big old package in it, which is very, very welcomed and appreciated because it gets pretty warm here.

David Heimer: You actually have it running and it’s blowing cold air on the people?

Tom Peregrino: Oh, absolutely. And years ago when we first started David, it was a little five ton packaging unit. And we said, hey, you know, it was kind of gimmicky and to get some top of mind awareness, let’s put it in the float and cool the crowd down. Well, it was such a big hit, we came back the next year and we had a 10 ton package unit and they loved it even more. And then as the years progressed, this year as we’ve had for the last few years, we’ll have a 40-ton package unit on a big trailer with a big generator and that puts out a lot of cold air. You just can’t imagine how big a big package unit like it is on one of those big 18 wheeler trailers, it’s pretty odd and shocking when you see that coming down the parade line.

So we really enjoyed doing that, and all of our team members, you know, will participate and carry the duct work down the parade line, and so we really enjoyed that. So that’s one of the things that we do for the community. Another thing we’ve enjoyed doing is we give away a scholarship every year to a high school student that’s graduating and wants to get into the trades. And that was started – we lost one of our lead installers in a motorcycle accident a long time ago, and so we created the Michael Newman scholarship in his honor. And so every year it’s pretty cool to see an interview, different students that are interested in getting into the trades and it doesn’t have to be HVAC. We just awarded the current recipient with the scholarship and he’s going into a welding program. And so, that was so neat to make his path a little bit easier to get into the trades. And yeah, that’s really fulfilling for us.

Besides the normal community sponsorships and attending various events, we have really been insistent on helping out our schools, our local schools. We focus on loving our teachers, and so we do quite a bit of lunches for our teachers and know if there’s anything they need in terms of school supplies, we donate lots of school supplies that just happened to have our logo on it. We’ve got a really, really good relationship with our local school district and all those teachers. Now behind the scenes strategically, you know, the majority of those teachers are females. And as you and I both know, females are instrumental in making decisions in the home when it comes to HVAC purchases.

David Heimer: Yes they are.

Tom Peregrino: So it’s definitely win-win. And then David I’d say finally, our biggest and most important contribution back to our community is really the one that we rarely talk about. It’s our widow’s maintenance program. And the Genesis of that goes back to 10 years ago when we bought out our partner and we made the huge leap to go into debt and rebuild the company. And we were starting from scratch all over again 10 years ago and we decided, hey, we want God to be part of this. We want God’s blessing. And we went to God and did a lot of praying. And we said, Lord, you know, we really want you to bless us. We’re taking a risk. We have lots of team members that depend upon us. And, you know, he came back with one simple sentence, which he said to me, well, what’s in it for me? Which was kind of irritating, but I got the point. He was basically saying, well, what’s in it for me if I help you build your organization.

And at that time, we made a commitment that if we come across any widow and that is a customer of ours, that we would do their maintenance for free. And that started out relatively small because we don’t advertise that, we don’t promote it, we don’t market it, it’s a very quiet ministry that we do behind the scenes. And so our service techs, when they’re on a service call and they happen to have a conversation with the customer that happens to be a widow, then we sign them up for our widow’s maintenance program. We do their maintenance for free. We come out there twice a year. And along the lines besides just checking their HVAC is, you know, your typical widow needs help with other things besides air conditioning. You know, they have home repair issues that they have a hard time finding people to do, or maybe they can’t do it themselves.

They have car issues so that my service techs can help them with, whether it be changing a tire or changing a headlight. And so, there’s a lot of really, really neat things that happen as we’ve continued to grow our widows maintenance program. And so fast forward 10 years later, when we have our Thanksgiving luncheon that used to be just for our team members. We now invite all of our widows to our Thanksgiving luncheon, and last year, about 150 were able to attend. And we’ll play bingo and we’ll do all kinds of games with them. Last year, we had a comedian do a little stand-up act for them. One year we had a magician and we always gave away a free system. We raffle away a free system to one of the widows that are in attendance. I wish they could all attend. I think we have close to 400 widows now that we take care of in our community. That is such a huge highlight; not only for them, but for us too. It is really a cool event.

David Heimer: I got to believe your team members really love this.

Tom Peregrino: They do, but it was a process. What’s really cool is when a service technician begins going into widows’ homes on a consistent basis that you see a softening of their hearts. Being a service technician is tough, you know, you’ve got to deal with angry customers. You’ve got to deal with tough environments, super hot attics and super cold outdoor temperatures. But it’s really, really hard to be tough and grumpy when you knock on the door and the widow answers the door. And I think I’ve seen consistently when we have a new technician come in and we do their onboarding and then they start visiting all these widows, it’s a good thing. I think it keeps everything in perspective in terms of what’s most important, taking care of people.

David Heimer: What a great program you’ve got there, that’s truly unique, 400 widows. How big is your market that you’re in?

Tom Peregrino: Original location is in Granbury, Texas, just right outside of Fort Worth. And our market share got to a point where we needed to expand in order to continue to grow our revenue. So Hood county, which is pretty much our original branch’s location, serves about 80,000 people. And then we opened up another branch in another county about 30 minutes away that has about 40,000. And then a couple of years ago, we opened up our third branch in another community that has a higher density population. It has about a quarter of a million. And so, between those three branches, that met our long-term strategic goals to just continue to grow our revenue.

David Heimer: I didn’t realize you had done that geographical expansion like that, do you see more of that in the future?

Tom Peregrino: Probably, it’s nothing new. I can thank Chris Hunter and John Ames for their hub and spoke model, their satellite model. Again, you know, they were just so generous in sharing their experiences on how to open up remote branches successfully. And I was able to visit with them and spend lots of time learning from what they did right and even some of the mistakes that they made along the way. And so, just the strategic expansion through satellites has been successful for us over the last five years. And if we continue to grow our market share and need to grow even more, then that’s exactly what we’ll do. We’ll open up another branch in another location,

David Heimer: What an impressive list of stuff you do. And the widow’s program is truly unique. I mean, I’ve been in this industry a long time and I have never heard of a program like that. So my guess is that we’ll hear some more of these after other people hear what you’ve done. And I’m guessing that some other companies will copy that program, and the world will be a better place with more programs like that. That’s fantastic.

Tom Peregrino: I agree.

David Heimer: Well, Tom, thank you so much for doing this with us. This is fabulous. I love hearing about your success and everything that you’ve done. The geographical expansion, the support that you’ve had through the advisory board and how you’ve propagated that yourself by becoming an advisory board mentor, the way you give back to the community is fabulous stuff, man. So, thank you so much for spending this time with me. Congratulations on the big award. I mean, after I’ve talked to you, of course, I knew you deserved it anyway, but it certainly reinforces it when I hear all the wonderful things that you’ve done and the success that you’ve had.

Tom Peregrino: Well, thank you, David. I enjoyed visiting with you and I was honored to receive that award. And I was so happy to come back to my team and show it to them and thank them for all their hard work, because if it wasn’t for my leadership team and my team members working hard and serving every single day it wouldn’t have happened. So, it’s been a big blessing. So yeah, I appreciate that award.

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