The continuous makeover of Golden Rule Plumbing & Heating Inc.

Key members of the Golden Rule Team (back row left to right): Jeff Backous, Eric Michelberger, Mark Paup, Mark Leonard; (seated) Nicole Blair, Miranda Paup.


It was a lazy afternoon in 1999. Mark Paup and his wife Miranda were reading their local Sunday paper when an advertisement soon caught their eye in the Des Moines Register:
    Business For Sale
Paup was just 25 years old - and had only “fallen into” plumbing six years prior - but the possibilities and excitement of owning their own business was too great. One thing lead to another and the couple ended up buying City Rule Plumbing, a mostly new construction business with four trucks and five employees.

Like any new business, the first few months were rough on the new owners. At the time, City Rule’s location was more than a half-hour away from the Paups’ home in Grimes, Iowa.

“It was a mess,” Paup says. “If we had a service call, we had to run there and back again. We ended up working 12-hour days, being away from home and family.” Soon the Paups made the first of many major makeover decisions, which have been an ongoing part of the company ever since: The shop would have to be relocated.

A two-year stint at renting a closer location did make things easier, but not less expensive. Now City Rule had 10 employees, and was looking to build its own shop.

“We built the shop in back and lived out of the front,” Paup tells me. “We figured, as we grew, we could move the office into the home.” Which is exactly what they did. The company continued to grow: more employees, more trucks, more customers. City Rule even took over a local heating and cooling company and basically doubled its size overnight - taking on 25 new employees in one week.

“At that point it was, ‘I’m either going to grow or get out of this,’ because it wasn’t worth it,” Paup admits. So that’s when Mark and Miranda began working on their business instead of in it. They moved their family to Des Moines, and their former master bedroom and living rooms became office space for City Rule.

Put that one down as Makeover Decision No. 2.

Time For A Change

Up until this point, City Rule was still heavily focused on new construction. And why not? The year was 2004 and the Des Moines metro area was a hotbed of new homes and businesses. However, Paup had never wanted to be stuck in a niche. If anything, he had a vision of widespread service. His goal was creating a franchise and multiple locations, either through acquisitions or however that path lead him to his ultimate dream.

“I’ve stayed on the straight path of ‘This is where I’m going,’” Paup insists. “And most of the guys that are with us now are on board. But we went through a lot of guys who were with us for a long time and just couldn’t grasp why we were doing all this.”

Paup tells me about all the questions these techs had: “Why are we doing all this training?” “Why are we wasting all this money on marketing?” “I’m a plumber. Why do I have to do heating and cooling?”

It was the ongoing overhaul of City Rule that had these techs griping. But Mark and Miranda wouldn’t have had it any other way. They read the signs and knew that service was where they had to be. “We weren’t trying to pull out of new construction completely, but we were trying to be more specialized so that we could charge the margins we wanted and still be profitable,” Paup says. “Because otherwise it was getting pretty tough.”

However, even though the Paups had the vision, execution was a little shaky.

It was around this time in 2004 that Mark met with industry consultant and PM columnist Al Levi of Appleseed Business Inc. His first order of business was to work on the basic operating manuals and shop priorities.

“When I first arrived in 2004, Mark and Miranda were overwhelmed with the rapid expansion and the demands of clients and staff alike,” Levi tells me. “There were no systems in place for pretty much anything, and it was through shear determination that the couple made it work. They realized it had to change if they were going to get their lives back.”

The addition of service training stations (above) along with a radiant-heated classroom (below) have made the biggest impact on the Golden Rule team. Techs are "hungry" for training, says owner Mark Paup.

Makeover Decision No. 3

It was during one of these early consulting sessions that Mark brought a specific concern to Levi.

“I think it was the second question I asked him: ‘What do you think of the name?’” Paup recalls. The name “City Rule” had come with the company. And though the team had its “Rules to Live By” tagline, the name of the company had always confused its customers.

While Levi didn’t have too many negative things to say about the name at the time, he admitted that maybe it was time for a change.

Building on its base of “rules,” the company decided to go with the name “Golden Rule.”

“The name should convey what a company stands for and build momentum by tying nicely to an integrated tagline, which is, in essence, a company’s real mission statement,” Levi says. “‘City Rule’ didn’t accomplish this, but ‘Golden Rule’ locked into ‘Rules to Live By’ perfectly.”

Because the Golden Rule is the ultimate rule to live by, I tell Paup.

“Right. Exactly,” he agrees, smiling.

Now, after the name change - which actually took three years to make official - all other changes fell into place, not the least of which were newly wrapped Sprinter vans for Golden Rule’s blossoming service business.

“With the new trucks - the rolling billboards - the name change created a logo that we could then brand into everything we do: our shirts all the way down to our magnets,” Paup says.

A new name wasn’t the only thing that changed at the company.

In the beginning, it was mainly Mark, Miranda and close friend and field supervisor Tom Blair running the show. With nearly 50 employees, Golden Rule would have to delegate and train more people to get the job done.

New-hire Nicole McNamee-Blair was welcomed to the office manager position. With her on the team, Miranda finally had a break (she had been the sole office person for the first five years).

A few more customer service representatives were hired to field calls and follow up with customers. Two system engineers (the “salesmen”) soon followed, along with an install manager and a full-time dispatcher.

Then, with Levi’s help, Paup created weekly meeting dates for technician training.

Tuesday morning is sales training. Techs review their scorecards - which are tallied daily - and role-play customer interaction.

These meetings have gotten a great response from the guys. “When they started, these were techs who said, ‘I want to go in, fix this toilet, and leave.’ Now we do everything COD. They have to go in and talk to customers,” Paup explains.

As with any company that likes to know where it stands, Golden Rule hands out surveys to its customers. Paup tells me the response rates have been steadily growing and have garnered favorable reviews. “Our guys are putting on their booties. They’re creating the conversation, and making an impression.”

Paup tells me that one sticking point has always been customer price objections. “We started with good techs who weren’t salesmen. Now you have to be both tech and sales.” While Golden Rule techs were good at offering the service, they were falling down with any price objection from the customer. “That’s where the training and role-playing has come in. And nobody’s going to be harder on them then their own peers,” he adds.

Mark and his team came up with GOLDEN - a sales acronym to help technicians in the field easily remember their training:
    Get pumped.

    Open the call.

    Look and listen.

    Diagnose the problem.

    Energize your presentation.

    Need to ask for the sale.
However, even with Levi’s guidance, Mark and Miranda still found they had things to learn. Especially about getting to a known financial position (KFP). And who better to show them the way than PM’s own Ellen Rohr of Bare Bones Biz.

“Before working with Al and Ellen, we tried to get a compensation program in place. But we kept failing and bombing because it was getting so complex,” Paup recalls. By getting Rohr on board, Golden Rule got to KFP PDQ.

Rohr put the company’s financial metrics in place, and tied it into a bonus and compensation program called “Reward the Right Stuff.” It gave the staff the “WIIFM” they needed to go beyond what they had achieved before.

“Before, we’d look at the statement on the tenth of the month - or another date, or quarterly; nothing was consistent - and we’d lose $20,000-30,000 dollars,” Paup says. “We’d be like, ‘Oh, shoot!’

“Now we have a financial quick-check every week. We’ve only lost money two months in the last two years, and they’ve been under $5,000.”

Paup boasts that every Tuesday morning - no matter what - he gets his financials. On his phone, if he has to.

“It’s nice to be out of town on a business trip, and you’re sitting around with everyone else at breakfast when you get this e-mail on your phone, and it’s your financials. I always say, ‘Hey, did you guys get your financial report today?’ That’s been great.”

After the name change, all other changes fell into place -- not the least of which were newly wrapped Sprinter vans for Golden Rule’s blossoming service business.

Up-To-Speed

This brings us up to 2008, and the newly named Golden Rule is humming along. Employees are being cross-trained in heating, cooling and plumbing. The sales breakdown is getting better: 40 percent service, 25 percent replacement, and 35 percent new construction.

But, not one to rest on his laurels, Paup had another makeover in mind.

Earlier this year, the company had the front interior walls ripped down and reconfigured. No longer looking like a Frankenstein office/home, it now has an open floor plan with partitions separating CSRs from dispatch and sales, and completely walling off technicians from the office.

Paup is very satisfied with the building’s transformation. “The biggest thing is how easy it is to communicate with everybody now.”

For instance, dispatch used to be in the center of the office. Techs would trek through all the time, stopping here and there to talk. With its new location just off the 7,000-square-foot warehouse and training center, a barrier is in place, but it is still kept personal.

Another barrier can be found in Golden Rule’s 2,000-square-foot tools and equipment cage. No one but the warehouse manager is allowed in. “We’re finally up on our bar coding, scanning and inventory,” Paup says. All the techs have to do is call the manager with what they need, and he puts the materials in the specified staging area for them to pick up that night. They can then go directly to the job in the morning.

Another great addition to the building makeover was the installation of radiant in-floor heating. It runs throughout the training center, office space and warehouse, keeping employees toasty warm for those early-morning meetings.

Ongoing Makeovers

“Training has been a huge transformation,” Paup tells me. “The guys are hungry for it; they want to be trained and get everybody up-to-speed on plumbing, heating and cooling.” He then divulges one of his dreams. “It’s always been a passion of mine to let these guys create their own company.”

From Tuesday-morning sales meetings to Thursday-morning service training to the company’s evening apprentice-to-junior-tech training, Golden Rule is offering every opportunity for its employees to advance in the industry. Consultants Levi and Rohr are pleasantly surprised at the progress the company is making in this area, along with the buy-in at all levels of the company.

“Mark is competitive in the best sense of the word - he wants to win and he wants others on his team to win as well,” Levi tells me when I ask him about Paup’s “right-stuff” qualities as a business owner. “He’s determined, so he makes things happen. And Mark is the right mix of hands-on when needed and hands-off when delegation is called for.”

While Golden Rule seems to be in ongoing transformation mode, it will continue to adapt and change as long as its owners push toward their goals.

The company already is soliciting via direct mailers to try to acquire other businesses - the next step toward opening that second location.

“It’s all about persistence. You’ve really got to have your mind set in the direction you want to go as an owner and as an individual. The hardest part is sticking to your guns when everyone is telling you otherwise,” Paup says. “And it can’t be somebody else’s goal or the consultant’s dream; it’s got to be your own personal goal.”