Advisor boosts business’ failing expansion to doubled revenue

TUKWILA, Wash. – If your furnace is working overtime and you still have a cold, drafty house, the usual suspects are old windows and poor insulation. Or maybe a worn out furnace.

But what if you round up the usual suspects and you still have a cold, drafty house?

After energy audits, homeowners would take care of the usual suspects, sometimes at great expense, only to discover that they still had problems with inadequate air flow or imbalances that made some rooms hot and other rooms cold.

Derrick (far right) and Millicent Rhoades, with crew of The Ductologist

Derrick (far right) and Millicent Rhoades, with crew of The Ductologist

However, finding someone to fix ductwork was a challenge.

“We didn’t have contractors we could direct people to who could solve problems or understand ducts the way I did,” said Rhoades, aka The Ductologist. “I looked and looked and looked and couldn’t find anyone, so finally I decided I was going to have to be that guy.”

He and his wife, Millicent – who worked in energy conservation with major West Coast utility companies – decided to open their own business focusing on ductwork in 2009.

Growing pains prompt search for assistance

Initially, their business hummed along, mostly because they had a strong network of industry colleagues who referred work to them, they knew their vendors and they were experts in energy conservation and ductwork.

But problems arose when they tried to expand. Once he had two employees, Derrick Rhoades said, he spent much of his time and $10,000 in advertising trying to find customers to fill their schedules.

“We tried it for one and a half, maybe two years,” he said, but ended up with little to show for it. “We were making bad decisions and I didn’t know who to turn to.”

They went online and eventually found a website for the Washington Small Business Development Center (SBDC). They met with Steve Burke, the certified business advisor at the Washington SBDC in Tukwila, Wash.

The Washington SBDC is a network of more than two dozen certified business advisors working in communities across the state to help business owners and entrepreneurs start, grow or transition their businesses. The Washington SBDC is supported by Washington State University, the U.S. Small Business Administration and other institutions of economic development and higher education. SBDC advising is confidential and provided at no cost to the client.

Stepping back to reassess

Rhoades’ first question to Burke was how to market his services. But, after listening, Burke’s response was, “You’re asking the wrong question.”

Instead, Burke said, the Rhoades needed to back up and look at the fundamentals of how they were doing business. Along with business systems and accounting procedures, Burke wanted to talk about strategic planning. What was their particular expertise and value to the client? Which types of jobs were profitable and which were not?

Work that Rhoades considered his bread and butter, work that he had actively solicited, turned out to be costing him money.

“I’m going to give Steve a lot of credit on this,” Rhoades said. “He said, ‘You have to start acting like a business.’”

Revenues double, satisfaction ‘off the chart’

The Rhoades began meeting with Burke in late 2011; from the first quarter to fourth quarter of 2012, revenue doubled. According to Millicent Rhoades, it doubled again in 2013 and 2014.

Remarkably, that growth came without a huge advertising budget. The majority of their clients continue to come from industry referrals, the logos on their three company vans and word of mouth, Derrick Rhoades said.

They have seven employees and are pushing $500,000 in revenue for 2015 with increased profitability: “I can see this becoming a million dollar business,” he said.

Which is exciting, but almost beside the point for the owners. With business systems in place and their SBDC advisor just a phone call away, the work itself is a success and reward.

“My job satisfaction is off the chart,” Rhoades said. “I love what I do. I love going into homes and solving problems for people.”

By Hope Belli Tinney, Washington SBDC

Derrick Rhoades, The Ductologist, 206-355-2478,
Steve Burke, Washington SBDC, 206-246-4445,