Many of the heating and air conditioning industry’s greatest contractors will tell you they had aspirations of success very early in life, and it was no different for Leland Smith, chairman of the board of Service Champions Group. He started hustling early, with a paper route at 13 that he later gave up at 16 to make after-school deliveries for his father’s small chain of Smith’s Dollar Discount stores.
“I knew I wanted to be a millionaire, but I didn't know how it would happen,” Smith recalled, in an interview for the Contracting Business 2024 series on “The Greats of HVAC,” part of our year-long celebration of more than 80 years as a leading HVACR publication.
Smith earned a degree in accounting from the University of Kentucky, worked as an accountant for the American Standard Westinghouse Air Brake Company, and about three years later joined his brother Craig to build a plumbing business in Orange County, California. Four uncles on their mother’s side owned plumbing companies, and Craig thought he’d give it a shot.
After a few years of learning on the job, Smith started his own shop, Allied Plumbing, Heating & Air. He sold that business to ARS in 1997, and in 2000 founded Service Champions Plumbing, Heating & AC. By that time, he was firmly on the path to success he dreamed of as a young boy. The company is now part of Champions Group Holdings, at present a family of 21 leading HVAC, plumbing and electrical businesses. Service Champions is a portfolio company of Odyssey Investment Partners.
Frank DiMarco, himself a recognized figure in the world of home service, joined the team as chief operations officer in 2018, and was named CEO in June, 2022.
Leland Smith originally chose the name Service Champions because that’s what he has always wanted to provide: service that is above and beyond all others.
In addition to their ambition, the “greats” of HVAC will also tell you they discovered very early on the value of a peer group for ironing out the wrinkles in the fabric of a business; the masters who came before and made the mistakes, learned the lessons, and reaped the profits. Leland Smith learned much of what he knows as a member of Contractor Success Group, founded by Jim Abrams, himself a legend responsible for many HVAC industry “firsts”. CSG would later become AirTime 500, and is now CertainPath.
“There were three key things I learned from Jim Abrams,” Smith said: “Take care of your employees, treat them better than anybody else and they’ll stay with you; be the highest priced company in the market; and deliver quality work without cutting corners to make it easier and cheaper. The cheapest guys are never the largest. We always have been and today we still are the most expensive heating and air conditioning company in Orange County,” he said, and added that there’s not much price push-back from customers.
“Out of 100 customers, one or two might complain, but if you hire the right people, treat them well, and do quality work, 98 percent of your customers will not complain about the price. They’ll only complain when you don’t do something right.”
“When I started in March 2000, I had one sales guy who is still with me today, a cousin, two others to install and two techs. We grew so much over those 19 years, from zero to $50 million, and a 25 percent profit margin. I just stuck with what Jim Abrams taught me. I’m not that smart, but I listen really well,” Smith joked.
Leland Smith is successful because he combines business acumen and market sense with an understanding of the importance of having great people by your side to help design and follow best practices that keep customers and employees happy.
“I’ve always had a group of people from five or six companies that I would meet at the Airtime 500 meetings, and whoever they said was doing the best, I’d find them at coffee breaks and at lunch, and then I’d try to take them out to dinner, and I’d pay for everything. I couldn’t afford it, but I would pay for it to get them to come to dinner. And then, in a couple weeks, I’d ask to visit their business and stay a day or two, just to learn. Then I’d go back home and put to work what I learned there.”
Among Smith’s best friends was Kevin Comerford, still a successful HVAC businessman and also a consultant with Wrench Group. “Kevin would always have a group of six people to stay in touch with, and if we were at $5 million or $10 million, we wanted to hang around with owners of the $20, $40 and $50 million businesses,” Smith shared.
“When we sold our businesses in 2019, he and I both were at about $45 or $50 million, but our “family” as we called them, were at $80, $90, $100 or $120 million, and we always wanted people who were bigger and better to tell us the mistakes they went through to get to $50 and $100 million. It works constantly for us. The key is that you surround yourself with people that are better than you. We all shared our financials as well. If anyone didn’t want to share financials, we didn’t want them in the group.”
Value for the Price
Service Champions doesn’t just slap a random high price on an HVAC installation; there’s definitely value there. For one thing, they replace all linesets for each new installation, and there is not an inch of corner cutting.
“We replace everything 100 percent every time and do it right the first time. We also had a “Happy Money” promise, which said if you’re not happy, you don’t have to pay for it. Most of the time I would tell the unhappy customer to ‘pay me what you think is fair.’” Only one paid nothing, and Smith honored the pledge. He then went back to the customer to learn why he wasn’t happy.
“We’re totally into making the customer 100 percent happy. If you do great work and you treat customers right, you’ll make a lot of money. One of our sayings is, ‘what we do is easy, it’s just easier not to. Our tuneups take a good hour-and-a-half to do them the right way.”
Smith has always believed in the importance of in-house training of new technicians – the training lasts 14 weeks -- and that those techs have genuinely pleasant personalities.
“I would be the last one to interview new candidates, with our general manager and service manager, and I was looking for eye contact, how he came across, and would my wife buy from him. You can teach anybody the technical, but you can’t teach personality,” Smith insisted.
“Some people think the higher priced guys are ripping off the customers. We’re doing just the opposite. We make sure quality is there all the time. We have clean-cut guys who we’ve trained ourselves, and if you’re not happy I’m going to give you your money back. It’s that simple. And our reputation is phenomenal, I believe.”
Smith’s door and phone line are always open to those who want to observe the company in action and seek advice.
"I could help anybody run a better company if they just ask. I tell people all the time, 'just call me, I'll talk to you,'" he said.
In the meantime, Smith urges contracting business owners to focus on creating a family atmosphere, getting involved in a contractor support group, and finding people to talk to who are bigger and better than you.
"Bring out a bottle of wine, ask a question, and shut up and listen to what they're telling you. Take notes, and then go back to your shop and do it."