Small Business Interview with David Oliva of RD Appliance Service – Small Business Show 104

The Small Business show episode number 104 for Wednesday, February 1, 2017. Greetings folks and welcome to the Small Business show here at BusinessShow Co the show by, for and about small business owners here in Durham, New Hampshire.

I'm Dave Hamilton and in Concord, California, I'm Shannon Jean. How are you, sir?

I'm doing well, how about you?

I'm doing good. Good. We had a few days of sun out here. Now we're back into the barrage of anti drought weather, which is great. Oh, that's good to. Yeah, yeah. So that's good. Yeah. Hey, you know, we talked a few weeks ago about a post that I submitted up on Reddit in the small business subreddit, as they're called. And you know, we got a bunch responses and you know, one of the responses was from David Oliva from RD Appliance Service. And I have to say the response I got was so well written and so detailed that I know this guy, you know, if he isn't already, he's going to be a massive success. And I thanks, David for joining us today on the Small Business Show.

Oh, you're welcome. Thank you for having me.

Yeah, I read through your stuff and I was like, oh man, this is just perfect. The kind of person that we want to talk to on the show and share your story. So give us a little history about your business and your involvement. I know it's a multi generational business which we've just started to explore recently and give us the spiel.

Okay. So my father's uncle, my great uncle, started the business in 1963. Officially he was working doing appliance repairs in Queens before that, but he officially started the business in 1963 and he was solo until about the late 70s when my father started working with him. And it was the two of them until about 2002 my uncle retired and I came on just as a technician training with my father. And from there I learned the business, I became a better technician. And over the past few years I've been taking care of more of the business end and my father's been stepping back because he's about ready to retire.

Sure, sure, that makes sense. So as a multi generational business owner, how was that transition from coming on board and talk, if you can, for a little bit about what you had to take on? Because it's not just, I would imagine, about becoming the technician, it's also learning all the other aspects of running the business.

Yeah, I mean there wasn't really all that to transition because initially Like I said, it was just a very small company. It was just me and my father. So it's not like I had to convince a board to take.

Yeah.

To take orders from me or anything like that. It was more about learning the accounting and just money coming in, money going out, paying for parts. So there wasn't all that much to it. It was run very much as a very casual, old fashioned type of business. So the transition was more about me learning about business than taking over what was already being done.

Ah, yeah, that makes sense. And you talked in the email that you sent me, you know, about how you had a different vision for the business going forward and talk about that a little bit without that vision.

Yeah, my father and his uncle never really had any ambition to make it a larger company. They're happy with just being a one man operation, which is great. It keeps everybody fed and it's easier to do.

There's some beauty in that simplicity for sure.

Yeah, absolutely.

Yeah.

I mean, you're only responsible for yourself. You don't have to worry about employees or anything. It's a lot easier. But you know, my wife and I discussed some things and we decided that we'd like to, you know, to have a larger business long term. Thinking of retirement. You know, it's hard to retire from a single person operation.

Well, the plan just thus far has been to create your successor.

Right? Well, right, exactly. So, you know, I don't know what my children are going to want to do, so I would like to have, have a functioning business that can run without me that I can retire from and still, you know, have some sort of an income.

Yeah, yeah, that makes sense. And, and you work with your wife, is, is that right?

I do. My wife is the office manager. She handles the phones and the scheduling, parts ordering, dealing with any customer issues.

Yeah, we're gonna have to have you back on sometime. We'll do a show about working with spouses because I work with my spouse too. I just, just, just came to me, it's like, oh yeah, there's a lot of, a lot of nuances there to make.

Yeah, there's a lot to it.

Yeah.

But I do enjoy it. It's a nice thing.

Yeah, it's nice to be able to spend more than just the evening together and to have some common ground. I work with my spouse too and it's the same kind of thing.

It's great.

We had a guy on the show last month and one of the terms he used that I really have been thinking a lot about, he Used the term thought partner to talk about his spouse. And I was like, man, that really encompasses so much.

That's a great term.

Yeah. Because, you know, you, you're like, like you said, you're working with your spouse, talking about expanding the business, making sure she's on board and is going to be, you know, part of that whole process. So. Yeah, that's.

Yeah, she's a very valuable partner. Absolutely.

Yeah. That's good. That's great. She's gonna be listening, of course, too. Oh, yes, that's right. So go ahead.

No, I was going to say you've talked about expanding the business. Where, how, how far have you gone with that? Have you put any plans into action or anything that would, would set this up? Or is, is this still just in the planning phases?

No, no. Yeah. So we recently hired a third technician. Well, aside from my father and I, so.

Sure, sure.

A new, A new person in the business. So that's, that's our initial expansion. We've contracted with, with the manufacturer to do Warra, and as a side to that, they send us a lot of other referral work. We are in the process of contracting with another manufacturer to do warranty work for them. And so the business is coming in and it's really more than we can handle at the moment. So we are probably going to be hiring another technician within the next year or so. It's difficult to find someone always that's reliable and responsible.

Yeah, sure.

Well, yeah, for the first time ever, this is a business now that has non family employees.

Exactly.

Yeah. Yeah. It's a whole nother. I mean, it's a whole nother opportunity, but another set of issues that you've got to tackle.

Well, it's a nice challenge. That was another reason why I was interested in expanding the business because I've been a technician for 15 years and I'm fairly good at it. So not that I've lost interest, but in general, I think once you really kind of master something, it loses its appeal a little bit. So that it would be a nice challenge to now try to run a business as opposed to just being a technician.

Yep.

Oh, yeah, I love that. That's great.

I will say this as someone who has. Has been through various changes that I've imposed on myself. And then of course, the changes that just get imposed upon you, you know, at some point you, you know, the business works for you and then, and then you work for the business, you know, as it, as it grows and you work for your employees. Right. And that's A good thing. But I'll just say this. Be aware of that itch at some point that might make you want to get back into being a technician. It sounds like you still are at this point.

I am, yeah.

Yeah. So you haven't really separated from it. You just. You're just adding things to keep the challenge level high. That's probably one of the. One of the smartest ways to do it, because you wouldn't have done it for 15 years if at some level you didn't enjoy it. And don't lose sight of that is.

No, I mean that I would have. I very much enjoy being a technician. And I don't think I will ever completely cut that out because I do like it. I can't see myself just being in an office all day. It's not something I can do.

Right. Yeah, exactly. Well, it's an easy thing to have happen as you grow.

I could. I get that.

Yeah, you become. Because basically what happens is as you add people, because I have a service business as well. And you know, we try to calculate out on a spreadsheet. Okay. If that opportunity is there, like you said, if you have more business than you can handle, if you plugged another technician in, you know, what's the revenue they can then generate? And, you know, in a perfect world, it should just be okay, one tech does this, two does this, three does this. But the more you add, to Dave's point, you become more of a manager. Right. And working on that. So, yeah, keeping your finger in things is a great way to, you know, keep that spark going and the things that you're really interested in.

Absolutely.

Yeah. I think that's cool. So is that part of the, you know, you mentioned that you made some drastic changes a few, you know, a couple years ago that increased, you know, business and volume and profits and that kind of thing. Is that part of those changes?

Well, no, that's actually a more recent change which as a result of the other changes, you know, became necessary because the other changes.

So talk about that. Yeah.

One of the things about this industry in general, and specifically appliance repair, is that we have a lot of really good technicians and very few people who know anything about running a business, which is a big point of failure for a lot of small companies. And so one of the organizations where a member of United Services association, they put on annual and annual conventions where they do training programs on technical and on business. So I attended some of the business courses and got a lot of really good information from that. And we put that information to use. So the first thing we did was we, for the first time ever, figured out how much it actually costs us to operate the business. And from there we had a baseline, said, okay, well, we're way undercharging. We need to raise our prices just, I mean, like triple. We had a way up in price. And one of the, one of the concerns was that we were going to lose a lot of customers because of that. And we did, we lost some. But the increase in prices which allowed us to run the business properly, made the business that much better. And so then from there, because we were operating so much more efficiently and so much better and so much more professionally, the business just came. It just came almost. It's unbelievable. It was almost like magic. It's just one day we were so busy, we couldn't even do all the work, you know, so some of the changes were going from people leaving messages on an answering machine like it used to be in the 60s and 70s, which were fine, to having someone actually answer the phones live. That right there probably doubled our business just immediately because how often are you going to leave a message for service business? Just never, nobody.

Yeah, you need it. You need it now. Right, exactly. At least talk to somebody now.

So that between answering the phones live, pricing appropriately, those were the two biggest changes that really made everything better from there.

Yeah, and it sounds so simple, but if you're in a, you know, you've been doing things a certain way for so long, you know, pulling yourself out, your comfort level and changing it up can be, you know, challenging.

Yeah, it made us, it made us pretty nervous talking about the prices. And we did lose customers, but we gained customers who were willing to pay what we need to charge.

So how, how did your dad feel about this kind of stuff, these changes when you were making them?

Well, you know, he was very nervous, a very conservative person. He was, he was apprehensive. But when we looked at the numbers, you know, we both said, well, this, we have to do this or we're going to go out of business.

Sure. Okay. So that really was easier.

Yeah, Right, right.

It's. It's this or nothing, so. Right.

Yeah, it's a challenge. I would say, you know, many people, maybe most people, since, you know, our whole society is, you know, based on consumerism, are expect prices to go down. And what I found, and you can probably back me up on this, is as a service business, your expenses are continually going up. And then to have to go back and keep raising those prices, like you said, it can be challenging. But if you kept enough that you're making the same with less customers and then you brought in all new customers, that's fantastic, man.

So we haven't had to raise prices over the last couple years. Once we stabilize it, what we actually need to operate the business properly. That's been great. We haven't had to raise prices recently.

That's cool.

Yeah, right. Better to take the hit once and go through that pain than to plan to raise prices every six months or every year or something crazy like that.

Exactly.

Yeah. Pull it through that. So one of the other things you mentioned that really caught my eye because I have a service business and I know how this is. We used to have highly trained and well compensated technicians and an average repair cost might have been 500 to $700. When they're working on expensive laptops and now they're working on iPhones and iPads, that the average repair is 100 bucks. You mentioned that you had made a move towards upscale appliances. Talk about this and if you will, and how you made that transition and has it been difficult and how it's worked out for you.

Sure. It's an interesting thing. Everybody talks about middle class disappearing and that really applies to appliances as well. Because the larger manufacturers, somebody like Whirlpool or ge, their trend is to lower prices on their machines. A Whirlpool washing machine costs about the same today as it did 30 years ago. When you got a repair on a machine that costs $500 to buy new, Very few people are going to invest 3 or $400 to repair it. It just doesn't make sense. So when you transition to the higher end appliances that might cost $10,000 to replace, you can see how much easier it is to make a decision on whether or not to repair that appliance. So you can. Number one, the labor rates are higher on high end machines because you need more skill, you need more information, you need more training. So you can charge a higher rate on the higher end appliances. And the other thing is that willing to pay it because they have the money and they're paying for the convenience. They're willing to pay, you know, whatever you're charging. That's not to say you're going to charge unfairly, but they're willing to pay for the repair just to get it done because they don't want to be bothered to go out and go shopping. They have other things to do. The people that purchase these type of appliances, they're busy people, they have a lot going on. They Have a lot of money, they have a lot of stuff to do and they're not interested in haggling. They just say, yes, fix it, just do it. Yeah, it's just, it makes sense. It makes the business a little bit easier. And the nice thing is those appliances, they're more challenging, they're more technically complex. And for me personally, it makes it a more enjoyable job and generally working in a nicer environment because it's, you know, generally a nicer home. Yeah. The one thing about it is the customers can be a little bit more difficult to deal with than your average customer. But we've worked that out and well.

Yeah, you have to, you have to be good with customer service, Right? Yep. This reminds me of I had a computer repair business for a long time and it was absolutely exactly the same thing was true. You know, I could go and fix somebody's, you know, computer that was this low end thing. And it was always that we were haggling over the price from day one and it was never, never a pleasant experience. But you go the other end of the spectrum and they're a little more demanding. But as long as you're good at what you do and not overly egotistical about it. Yeah, you know, you have to understand what I found going into those sorts of scenarios. It doesn't matter how great I am, the person that I'm going to see has a bigger ego than me and I need to cater to that. Like that's just part of the deal. And if you accept that going in, then it's easy. It's no problem. Yeah. Yep.

Yeah. We're fortunate in our, in that our service area here on Long island is, you know, pretty, pretty well stocked with, with wealthy people. So that keeps the high end business a little bit more easier to do. I know, I know technicians and business, business owners in other parts of the country and they, they can't get that high end work because it doesn't exist. It's not there in such density as it's here.

Yeah.

I grew up, I grew up across the sound from where you are, so I know the area. I was in Norwalk, so I know the area.

Okay, yeah, sure, well.

And I think that, you know, and I don't think you can put too fine of a point on this. That is a critical thing to identify instead of chasing these, you know, sub $500 appliances where people are just like, hey, I don't want to spend any money, you know, going after that higher end. In addition, it really helps distinguish you from the other people that other repair places that can't work on that product. Exactly. You know, and you have to be.

The best at what you do.

Yeah, yeah, that's true. It seems to me in, you know, the way the kind of the whole world is going is the people in the top 10% of whatever field you're in will do phenomenally well. And then the other 90% are like fighting over the scraps of this, you know, lower end disposable type of product, especially for the service industry. You know, if you really know what you're doing, you're certified, you're highly trained, you can, you know, get that premium price for your, for your service. I commend you for recognizing that, man. I really think that's the future, you know, for, for all of us.

Well, I mean, it is. Yeah. And I know, I know a lot of, like I said, I know a lot of local technicians. We get together monthly for sort of a, you know, brainstorming session. And they don't like to work on those appliances because they don't want to put in the effort to, to learn how they work. They're, they're more complex. They don't want to deal with those people. And as a result, they often refer a lot work to my company, which is great. But for them it's not really working out because I see their businesses declining and they're constantly talking about how they're not busy enough.

Yeah.

And, and you know. Well, Right. Because they don't, they go, for whatever reason, they're not interested in doing it.

Yeah, yeah, that's right. And you know, it's, it's like it's more difficult. You got to challenge yourself. You, you're going to have to get, you know, your new employee and future employees, they're going to have to get trained. They're going to have to do those things. And it is, that's the hard part. Yeah, yeah, yeah, it's.

I just spent last week four days in New Jersey at Mila headquarters. Mila's a German appliance manufacturer. They, they make just the top of the line stuff. So I spent four days there at one of their training programs on all their new, you know, their new products. So that's, that's a lot of time to invest in, in training on just one brand of product. Yeah, but it's necessary.

Yeah. Well, I think all the low hanging fruit is gone. You know, as far as all for all of our service businesses, you know, people are really focused on price. Those are the folks I mean, I tell our people here, if the first question out of a potential customer's mouth is how much is it? That it probably is not our customer. You know, you want the customer that can you. What's the experience going to be like? Are you really highly trained? Have you been around a long time? So if there's a problem, you're going to take care of me? That's the customer you really want?

Yes, absolutely.

Yeah. Yeah.

We know when people call up to just to question how much the diagnostic fee is, you can tell almost right away whether or not they're going to be willing to pay for a repair. And so we try to weed that out before we even go there because we don't want to have to send a technician out and then have to argue about the price or something like that. That's not something doing.

Yeah, and that is the beauty of. I mean, I come from an industry that always did free diagnostics. Right. And, you know, probably about five years ago, I was like, look, we just cannot do this because everybody's using our service and then doing something else with it. I'll fix myself. Now that you told me what's wrong with it, I'll fix it myself. So charging that a good amount, that gets them. There's some skin in the game. You weed those people out. They just, oh, I don't want to pay that. Okay, no problem. Sure.

It's nothing personal.

This is the way we have to run our business. I always ask them, so what do you do for a living and what do you guys charge quickly? People like, oh, yeah, I'm an attorney and I charge this. And they're haggling over paying $125 diagnosis fee. That's great. So on the show, we're big fans of mistakes in the sense that they teach you such valuable lessons. And one of the questions we always ask our guests that come on, is what's the best mistake you've ever made in the sense of what did you learn from the most in your business?

Yeah, I had to think about that question. I've made a ton of technical mistakes over the past 15 years, but I don't really think that's what you're asking. As far as was business mistake, the biggest one was not knowing how workers comp insurance works. So, yeah, so, you know, we got very busy. We were making more money. And then at the end of that first year, we got a giant bill from the insurance company. And what is this? They said, oh, well, you know, workers comp as a percentage of the payroll and all that. And this is what you owe. And so we, you know, we didn't know that going in and we had relied on someone we were working with, you know, an accountant. And she said, no, you know, everything is fine. You don't need to change anything. Which is obviously not true.

Yes.

So that was our biggest financial mistake. And what I learned from that was I simply cannot trust, just blindly what, you know, what advisors, accountants or lawyers or anybody are telling me without actually verifying it for myself.

Yeah, that's true. And I would argue that one of the best decisions to ever make is once you start getting employees is to get a good payroll company that can really keep you educated and pull out that workers comp over time. And so, yeah, that's a huge thing.

Not a nice thing to happen.

Yeah, no, that's great. It reminds me similar. We had a guest on, I think last year and they were talking about the inventory. If you're in the inventory or business where you're stocking lots of inventory, well, at the end of the year, you know, there's going to be some, some taxes due on that stuff. And you're often, you get, you're like, wait, where, where's the cash for that? But it's sitting out in your warehouse because you bought all this inventory, you know, so it's. Yeah.

Fortunately, we don't stock too much inventory on hand. Just we keep what we need on the trucks and that's enough.

So if you go out and do this diagnosis on like a high end mealy, you know, dishwasher or something like, and you know, you need the parts, so you'll have to order those parts and then make a second trip. Is that how it works?

Sometimes it works that way. What we try to do is to get the model number and a good description of the problem ahead of time.

And.

Because we're so busy, we're generally scheduling calls out about two or three days. So we can then order the parts we think we need so we can bring them with us and try to get them one shot.

Yeah, Common things that typically fail.

Right. And of course we stock common parts on the truck anyway. But we can do what they call pre diagnosis, which is, you know, just getting a description of the problem, reading through the service manual or reading the fault codes and saying, well, it could be one of these four things. So we're just going to bring all of these things and then our part supplier will take them back if we don't need them.

Oh, that's pretty good.

Okay. Yeah, that makes, that's great. And you know, I don't want to dig too deep in the specifics, but I'm curious, do you do any business with like the home, the big home warranty providers out there covering appliances?

We don't. That's something I have zero interest in doing.

Tell me why. I'm sure. I think I have an idea.

Yeah, I think you know why. They, number one, they don't pay well at all.

Yeah.

They're notoriously difficult to deal with. And if you do get involved with them, from what I've heard from people who work with them, is if you get paid at all, it could take a month or two or three to actually get that check. They're constantly trying to drive down the price that they're going to pay you for a repair. It's just, you know, it's one thing if you're getting started and you need work or your business is not really doing well, I could see it has value for something like that. But with, with as much business as we have, I don't want to deal with that headache. I mean, they're paying, they pay per job about half of what we charge for a diagnosis. So it doesn't, it's just not.

Yeah, well, again, you know, one of the most critical things for a small business owner is to identify where you really are making your profit. Not, not just revenue, but, you know, what are your, you know, or who are your best customers, what are your best markets, all that kind of stuff. So recognizing that and like you have is fantastic. You know, many of us go through, you know, well, maybe previous generations, through decades, not really having even the time, especially if you're self employed. Yeah. You know, you're just hustling all day long to pay the bills and trying to do bookkeeping, I imagine at night and that kind of thing. So being able to step back and think about those things is really what will make the next generation of your business successful, I think.

Yeah, well, that was one of the things we had to account for in time. I do most of the calls currently because the new technician we hired is still in training. So he does a little bit. My father's stepping back a little bit because he's older, so I do a lot of them. But we had to decide that I have to. I can only schedule so many calls per day because I need at least this much time per week to do business related things.

Sure.

You know, I can't schedule 12 hours of service calls and then come home and take care of the business. It's just not going to happen.

Yeah, you really need to be able to work on the business, not in it all the whole time. And the E Myth thing. So we talk about small business owners measuring success and what's successful and cash is king and profits, that kind of stuff. But I think all of us have different ways that we measure success. What's your real measure of success for your company now or maybe going forward?

Well, I would. I would like to be considered the best at what we do. That's. I know that's sort of an ambitious goal.

That's perfect.

But that's what drives me. I'm somewhat of a perfectionist. I like to refine everything I do as far as myself or my hobbies or whatever I'm interested in. I like to try to get it, just get it done the best that I can. So perfecting the business, perfecting the technical aspect and perfecting the business side, that's. That's what I'm interested in doing. So that's. I suppose I could tangibly measure that with reviews from customers or how much money is coming in. But ultimately, you know, aside from the financial aspect, I just, I want to be the best at what we do. That means we just don't have any time to not, you know, to not practice, to not train, to not keep up to date. It's just.

Yeah, you can't be complacent. And you got to develop these systems that are going to continually, you know, push you towards being the best, whether it's at training or, you know, that kind of stuff. I think critically important, and I think you're on that. I mean, you found me or I found you up in the Reddit small business area. So I imagine you may be like me, where you're up there at night kind of poking around, reading things, looking for tips and tricks and trying to just absorb yourself on.

I'm very much interested in other people's experiences with their business because even if it's an unrelated field, you can learn a lot from things that other people have done. Yeah, I mean, the small business forum on Reddit is great.

Yeah, yeah, I agree. And I would encourage anyone that's listening now to jump up there and you can ask questions. I mean, it's just a great place and you meet some great people that just happen to own small businesses, and who knows, you may be helping them out as well, answering questions. So one of the last things I want to ask is hindsight is awesome. And we constantly look back on things if you could give yourself, now that you've been around doing the business for so long, give yourself one bit of advice that you would have liked to have told yourself when you were just getting started. What would that be?

I think it would be to not underestimate the value of your skill. Whatever skill it is that you have, it may not seem as valuable to you as it is to other people. Because something that seems simple to you because you've been doing for so long, I would say that you might tend to underestimate saying, you know, well, this is, this is such a simple repair for me. I can do it with my eyes closed, so why should I be charging X amount of dollars for? I think that's something else. And I'm sure it applies to other small businesses as well. But I know in this industry, again with single owner operators, that tends to be what happened. And people talk, all of them.

I mean, I would say that that's the whole crux of not charging enough is you feel like, well, this is something easy. I want. I'm a good guy, you know.

Exactly.

Yeah. And you will. Oh, I feel bad charging this kind of thing. And that's, you know, I really would argue that most small business owners have that good thing inside of them that actually hurts them, you know.

Well, what I found is that though, so charging appropriately and properly valuing your skills actually allows you to serve your customers better because now you have money to invest in training and correct tools and whatever it is that you need to run the business better.

Yeah.

You're not just having that scrappy, skilled guy that can get it done now. You can do it really the right way.

Correct. Absolutely.

Oh, yeah, man, these are, these are such great tips of, you know, recognizing your, your skill and all that stuff is fantastic. And you know, I really appreciate you coming on today and talking about things with us because all these things are, to your point, across the spectrum of business owners, no matter what you're in, these things are all applicable. And you know, my, my dream is for, you know, some. Somebody's gonna be listening to this show whenever tonight or a year from, from now and, you know, feel inspired.

And the small business show is the number one show to listen to in your truck on the way to and from calls.

I hear it. There you go. It should be required listening.

I was listening to it this morning.

There you go. That's awesome. Yeah, that's perfect. You know, so. And again, I, I really appreciate you coming on. You know, what's the best way for for folks to learn more about your business and the services that you offer.

You can just go to our website, which is rdapplianceservice.com and from there you have links to our blog, our phone number, our FAQ page, the history of the business, all sorts of information.

Nice. That's great. Well, we've really enjoyed having you on, Dave. You have any more questions for David?

No. This has been fantastic. It's just been a blast listening. Actually, it's been a blast listening to both of you talk. You know, there's just. I mean, having been in the service business and now kind of doing some different stuff, you know, it's. There's a million things that we can all learn from each other, and I love it. Thank you so much, David. This has been great.

Oh, you're welcome. Thank you.

Yeah, yeah. And we wish you the best of luck on your journey, man. You're.

You're.

You're definitely doing the right things.

All right, thanks. I appreciate it. Happy to be here, folks.

Awesome.

You can. You can find david@rdapplianceservice.com you can find us at BusinessShow Co and then of course, our Facebook small business support group at businessshow Co. Facebook. We look forward to hearing all of your stories over there. It's a fun place to be. Thanks for hanging out with us. Make sure you keep doing whatever you can do to keep living that charmed life. Thank you, David, for being on the show. We'll see you next week.

Take care, everybody.