How An HVAC Online Distributor Achieved Double-Digit Growth

Mike Luongo

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Published: January 16th, 2023

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Mike Luongo

Founder, Total Home Supply

$375K

revenue/mo

Founders

Employees

Total Home Supply

totalhomesupply.com

from Ohio, USA

started January 2010

$375,000

revenue/mo

Founders

Employees

Discover what tools recommends to grow your business!

Discover what books Mike recommends to grow your business!

Want more updates on Total Home Supply? Check out these stories:

1. How 5 Founders Left Their Jobs To Start A $4.5M Heating & Cooling Business (2019) ➜

2. How We Expanded Our Team & Grew To $500K/month (2020) ➜

3. How A Permanent WFH Model Allowed Us To Grow Our Team And Increase Our Employees Pay (2022) ➜

This is a follow up story for Total Home Supply. If you're interested in reading how they got started, published about 5 years ago, check it out here.

Hello again! Remind us who you are and what business you started.

I am Mike Luongo, the managing member of Total Home Supply, which was founded in 2010.

The founding members were unhappy with the way other online companies were being run and decided to form a company that would treat our customers the way we like to be treated.

This led to having customer-friendly policies, answering the phone with a human, not voicemail, and always trying to put the customer first.

Over the years, we have refined our product mix and have discontinued many categories which did not perform well. This has been the catalyst for our growth. Once we defined the company as an online distributor of HVAC specialty products, we catapulted in the right direction with double-digit growth year after year.

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Tell us about what you’ve been up to. Has the business been growing?

The supply chain problems occasioned by COVID caused us to change our selling model a bit. Where we used to do mostly drop ship, we are now stocking inventory. We had to move to a much larger warehouse to accommodate our new requirements.

We also decided to have most of our employees work from home permanently. This allowed us to rent more warehouse space and less office space. Our employees enjoy more time at home since there is no commute. We have seen a drastic productivity improvement.

We have added additional employees to help with the additional workload. We also spent the last six months looking at new software to streamline all the processes. After much back and forth, we moved to NetSuite and started the implementation process. We hope we can complete the switch sometime at the beginning of 2023.

Since moving into our new location in October of 2022, we have been juggling different racking systems and storage options to maximize the space. Our newest move was to add a 400-square-foot mezzanine to handle the storage of parts.

When you have suppliers who see you as a valued partner and not just their next big order, work with them to grow your common goals.

We entered the parts business a few years ago with one product line, Williams Furnace Company. This was a very successful move. With the success of selling furnace parts for Williams, we decided to become a Friedrich Parts Depot.

We also added Reznor parts for unit heaters. We are working through the storage challenges of thousands of small parts.

What have been your biggest challenges in the last year?

Supply chain issues are going to continue for the foreseeable future. That said, bringing in as much inventory as possible makes sense. The problem with all the inventory and unreliable lead times is space, which I mentioned above.

With many manufacturers, we are still determining when and what they will ship. We would love to take everything we can get, but space becomes a problem. The thought of temporary extra space is always a consideration, but the problems and logistics of such a task can make it not worth the effort.

One of the other big concerns is tax compliance. Since the laws have changed with the sales tax collection nationwide, the cost to calculate, collect and remit the tax is costing us tens of thousands of dollars. It has added a big expense. I already see some states taking advantage and implementing new taxes which we must collect and remit. It has become quite a burden.

Listen to your customers’ needs and try to meet them where they are.

What have been your biggest lessons learned in the last year?

We have learned the importance of solid relationships with our vendors. We have watched a relationship fall apart and seen others grow into awesome partnerships.

It is important to work together with your suppliers. When you have suppliers who see you as a valued partner and not just their next big order, work with them to grow your common goals.

It also pays to discuss with your suppliers what their needs are. It leads to great success if you can figure out how to help your supplier while growing your business.

This is why we have been working with our suppliers to help promote the categories they need help with and those that drive our business. Altogether, it has helped us maintain our double-digit growth.

What’s in the plans for the upcoming year, and the next 5 years?

Total Home Supply will continue to add more product lines to our mix, but we will not just add anything that comes along. We will be looking for partnerships where we both benefit.

I see us getting more involved with parts distribution as the need for parts will continue to grow. We will also be branching out into hydronic heat, as that is our next logical category.

We are also planning on doing more instructional videos. We find most customers like them, and they help explain the features and uses of the products. We would like to touch on installation, basic troubleshooting, and how to use the product. I feel this is great advertising as well as informative.

Advice for other entrepreneurs who might be struggling to grow their business?

Listen to your customers’ needs and try to meet them where they are. We heard complaints about lead times, stock, and product availability and made a major effort to make available what our customers need on the timeline they need. This directly resulted from listening to people’s requests and seeing how we could solve them.

One of the keys to our success that we worry about as we grow is staying connected to the customer. Interacting directly with customers is incredibly powerful and leads to many ideas for growth.

As we have scaled, much customer interaction is happening with newer employees. It’s key to staying connected to the customers’ needs and adapting to them as they change.

Another thing we have struggled with is knowing when it is worth it to spend money on something. When you are a scrappy startup, spending thousands on software seems crazy. As you grow, it can be hard to lose that mentality and adapt to the changing needs of a larger business. Sometimes an expense that seems crazy can be worth it because of the ROI it delivers.