Mar 02, 2017

Next in Line

Passing down the water treatment torch from generation to generation

Water treatment dealerships have an almost inherent family structure. Many started with a married couple working out of a small office. Just as those businesses have grown, so too have their children, and many of them have followed in their parents footsteps. In the following pages, WQP features three dealerships—Futuramic’s Clean Water Center of Omaha, Neb.; Peacock Water Conditioning of Lima, Ohio; and McGowan Water Conditioning of Mankato, Minn.—in which the business has been handed down from generation to generation.

Where Water Meets the Rhodes

By Bob Crossen

Phil Rhodes Sr. did not dream of becoming a water treatment dealer. In the 1960s, he was happy selling high-end garbage disposals and “sink centers,” push-button faucets with ultraviolet lights to sterilize the sink. At the time, these products were high-tech, so much so that the sink center was featured on the Mary Tyler Moore Show. In 1969, when moving back to Nebraska after taking a respite from the sales industry, he sought to purchase the local franchise selling the same products he had sold before, but there was a catch: The owner selling the business would not sell unless Phil Sr. took over its water softener service too.

“Probably within six months to a year, that was the part of the business where the potential was, so that’s where he focused,” said Phil Rhodes Jr., son of Phil Sr. and owner of Futuramic’s Clean Water Center in Omaha, Neb. “He kind of got into it on a side note, but it very quickly became the main focus.”

The business was built on the backs of Phil Sr. and his one employee in the early years, but before long, the company employed a secretary, service personnel and salt truck drivers. Phil Jr. and his brothers, John and Jim, delivered salt in their teens, and their children have done the same in their youth.

“I actually came on full time in 1988,” said Phil Jr., who had been managing a restaurant before that. After completing his college course work, John also came to work for the family business, and Jim did sales and answered the phone. Both are still involved in the business today, albeit to a lesser extent. Phil Sr. even drops by for part-time work these days too.

Deeper Than Blood

Employees of Futuramic’s historically have been dedicated, including workers not related to Phil Sr. by blood. Phil Sr. said many of his employees came to be like family to him because they had worked with him and his children for so long. One such employee, he noted, worked for his company for 35 years before retiring.

“We just have always had really good employees, so that makes it a whole lot easier,” Phil Sr. said. “You’ll find with our business, most of our employees are like family. I count them as a son or grandson anytime or as a daughter or granddaughter.”

Nowadays, more than half of Futuramic’s employees are related to each other, and Phil Jr. said that dynamic works well because everyone gets along. Each employee has a role and plays his or her part for the team.

The key, he noted, is everyone’s dedication to one another. In early January, for instance, Omaha was hit with an ice storm. Despite the awful road conditions, several employees still came to work that day. It is that voluntary level of commitment to the business that Phil Jr. said he does not take for granted, and it has not gone unnoticed by clients.

“From the customer’s perspective, everybody is so intimately entwined in the business that … there’s the understanding that they’re the most important thing,” Phil Jr. said. “You get just a stronger commitment with good family members in the business.”

That outcome is the manifestation of Phil Sr.’s business philosophy: The customer is always No. 1. The phone will not ring more than once before Phil Sr.—who still performs odds jobs for the dealership in his retirement—picks up the handset to respond. Phil Jr. said that adds to the business’s integrity.

Occasionally, however, that integrity gets challenged. It does not happen often, but there are times when Phil Jr. has to have difficult conversations, just like any manager—except his are with family members. Management of the dealership requires more diplomacy than the average company, he said, because the employees are still family at the end of the day.

“Everything that happens in the business affects everybody,” Phil Jr. said, “so it does tie us to how well the business is doing. It can have a huge impact on the whole family.”

Pride in the Family

When Phil Jr. indicated he wanted to be part of the family business, Phil Sr. was “tickled to death.” Phil Jr. has since become the face of the business.

“He’s done a majority of running it for many years now, and is responsible mostly for the huge growth,” Phil Sr. said. “We’re fortunate that my grandkids and kids all do an exceptional job at what they do. You don’t find that very often. They do as good as anybody in the industry.”

There is another generation on the rise, as Phil Jr.’s son, Phil Rhodes III, and nephew, TJ Rhodes, both work at Futuramic’s. TJ, 24, has found a role with the family business as a jack-of-all-trades. He has learned how to install residential systems, service products and manage office work. He has even used the knowledge he gained from classes at a nearby technical school for marketing and business.

Water, he said, has always been something he loved. He grew up fishing and boating, which has given him the drive to take the lead on commercial water projects ranging from ultrapure water filtration to light industrial applications. The work is satisfying because that aspect of the water industry has kept his work dynamic and engaging.

“It’s not as monotonous. Everyone is different,” TJ said. “A lot of times when you go into residential jobs, you see a lot of the same thing. [With] the commercial stuff, you almost never see anything [that’s the same]. You never have the same job twice. You get to see a whole lot more, and there’s a whole lot more opportunities for trying new things and seeing different things.”

Evolution of a Business

When Phil Sr. first bought the service files for the water softening business, the industry was on the cusp of developing new technologies. At the time he took over the records, many of the units required that only hot water pass through them or they could only be serviced manually. Through the years, Futuramic’s has stayed at the forefront of new technology.

“When reverse osmosis first started getting popular, I remember introducing that and trying to market that before it was well-known,” Phil Jr. said. The number of salt deliveries has increased with the business’s growth, which has encouraged logistic efficiencies, and product ranges are wider, so employees need to understand a customer’s issue on a case-by-case basis to determine the best solution.

“When we first started, there was a whole different sales process. It was more like the used car or the siding salesman out there. Now there’s just a ton of knowledge and education that goes along with it,” Phil Jr. said.

Futuramic’s still uses some relics from its past—employees write cards to clients with a typewriter, for instance—but advancements in phones and computers have drastically changed the industry. In the 1970s, technicians sought out pay phones to check in with the office or find the next service location. These days, GPS units in service vehicles direct employees to new locations. Technicians can contact the office while on the go with cellphones, and they can print invoices from the truck or email them to the customer.

Phil Jr. said one of the most important technological changes has been social media. The internet has made business visibility simpler, because a message can easily be sent to numerous people.

“Marketing-wise, we’re doing a huge amount on social media and through the website. It’s all changed. We have invested a lot into social media marketing just recently, and we’re making big strides in that,” Phil Jr. said.

Futuramic’s also keeps in contact with its customers after installation and salt deliveries. Whether it is through text message, email, phone calls, open house events or social media, he said following up with customers makes them the priority.

Between that philosophy and family dedication, Phil Sr. looks forward to seeing the business flourish for future generations. “I would love to see the business stay in the family,” he said.

Painting the Town Blue

By Lauren Baltas

Four generations ago, Peacock Water Conditioning began leaving its mark on Ohio under the name Peacock Brothers Plumbing. When brothers Albert and Jim Peacock cofounded the company in 1906, little did they know they were creating a legacy.

Now, Andy and Tim Peacock, Albert’s and Jim’s great-grandsons and current partners in the company, attribute much of the business’s success to the values and dedication of the founding brothers.

“They had a strong entrepreneurial streak,” Tim said.

“They came from very humble beginnings,” Andy said. “They saw an opportunity and moved forward with it.”

In 1953, Albert and Jim decided to transition the company to the water conditioning industry, opening Servisoft in addition to Peacock Brothers Plumbing. Eventually, Albert’s son Neldon and his wife Alice took over Servisoft, renaming it Neldon Peacock and Sons Inc. and making it the sole business under the Peacock name. In 1971, Tim and Andy’s late father, Tim Peacock Sr., began helping his parents run the business and eventually renamed it Peacock Water Conditioning.

Certain qualities of the original plumbing business have outlived it. For example, as Albert and Jim completed successful plumbing jobs in the area, they left a trademark: blue pipes. The brothers painted their handiwork blue as the Peacock signature. Today, the color blue is a mainstay in the Peacock Water Conditioning logo.

But perhaps the feature with the most longevity is the Peacock family’s emphasis on relationships. Throughout each generation’s ownership, there was always a helping hand—whether for a customer or an employee.

For instance, as Albert and Jim passed the torch, they played an active role in the transition, offering advice and help even after retirement, “which is maybe kind of a theme that continued through what we’re doing here today, because that’s how it always was—people were transitioning out, and they were still providing advice for those running the business, the family,” Andy said.

On the Job

Gradual transition and mentorship were part of Andy’s and Tim’s upbringing. As kids, the inner workings of the family business were woven into the fabric of their lives. From dinner table conversations to last-minute service calls, learning the fundamentals of business was inescapable.

“It was not uncommon at all for my dad to get some kind of emergency service call in the evening, grab one of us up and take us on a service call,” Andy said. “It was a very normal part of our childhood, for sure: watching him take care of customers over the phone and even in person. So a lot of that sort of knowledge—how you run a business and how you treat customers—seemed very natural to pick up. You’re around it on a daily basis.”

As adults, Andy and Tim did not immediately join the family business. Similar to their father, who served in the Vietnam War and started a career in banking prior to joining the family business, Tim and Andy took intermittent reprieves, attending college and starting careers in customer service before returning to run Peacock Water Conditioning. “And I know Dad appreciated that, because it provided new ideas,” Tim said.

Today, due in large part to the business savvy of Tim Sr., Peacock Water Conditioning has assisted approximately 36,000 customers—a leap from the mere hundreds of customers Neldon and Alice served—with an approximate 70% residential and 30% commercial ratio. The company serves an area that stretches approximately 100 miles east to west and offers six offices, in Kenton, Upper Sandusky, Bucyrus, Lima and Norwalk, Ohio, with 59 total employees.

Family Values

At Peacock Water Conditioning, “family” carries more than one definition. While not all employees carry the Peacock name, certain individuals have worked side by side with the family for several generations. Four employees have been with the company for more than 30 years, meaning they have worked under Tim and Andy, Tim Sr., and Neldon and Alice. One employee even worked for the Peacocks until he was 87 years old.

“We’ve had some longevity, and we’ve been blessed with that. That has to do with—again, back to my dad—the people he was hiring and creating relationships with; a lot of them stuck around for a long time,” Tim said. “It’s a nice thing to brag about.”

When forming relationships becomes an integral aspect to a business—especially a family business—family takes new forms.

“[My kids] have a very close relationship to Lew, who has been with our company for 35 years,” Tim said. “It’s like Uncle Lew.”

According to Tim and Andy, establishing relationships beyond the traditional workplace relationships helps maintain a successful business, as it creates an open and welcoming environment. Not only does it ease training when transitioning new staff, but it also maintains an understanding of the company’s values; values they wish to sustain with “philosophical continuity.”

“We like having a core group of people here that fully understand what we’re after,” Andy said.

As more people joined the Peacock family over the generations, the line between work and home became blurred. “You call work ‘home,’” Tim said. “Everybody makes that mistake every once in a while. In a lot of ways, we see this as a part of our home, as a part of our lives.”

Integrity, Honesty & Respect

After their father’s death, Tim and Andy worked diligently to retain Tim Sr.’s lessons and goals in the company’s values. For a time, the brothers had the opportunity to work side by side with their father, learning the ropes of water conditioning and forming a unique bond.

“I think overall we would both probably say that [the business] is an important part of how we remember our dad,” Andy said. “Outside of him being our dad, he’s our boss.”

Having seen the business in both their father’s and grandfather’s hands, the brothers recognized the core values of the Peacock name. Three of those values—integrity, honesty and respect—have become a company mantra. Prior to meetings, Tim or Andy reads a statement reminding their employees of the importance of maintaining these values in interactions with others to encourage personal growth in the workplace. To do that, communication is key.

Every business faces its challenges with customers or staff, and Peacock Water Conditioning is not immune. However, by trying to remain positive and open to differences of opinion along the route to agreement, the process can be healing, rather than damaging. In Tim’s and Andy’s view, their business achieves the best ideas from discussing conflicts and finding a middle ground.

The Next Generation

Considering the future of Peacock Water Conditioning, Tim and Andy treat their kids with the same integrity, honesty and respect as their employees. Neither brother has expectations for his children to assume leadership roles at the company; rather, they hope their kids seek the path that is most fulfilling to them, but if that path is water conditioning, all the better.

Like their father, Tim’s sons have worked at the company during summers, and “they’re subjected to the same sort of dinner table conversations that we got to hear when we were kids,” Andy said. “A lot of that really does happen in a natural, organic way.”

“If they’re interested, if the business is still thriving, we’d certainly welcome them to come back and consider taking on a stronger role,” Tim said. “And if they choose to do something different with their lives, then we’ll support them on that front too.”

The multi-generational aspect of Peacock Water Conditioning is by no means compulsory. Each generation’s leader came to fruition in his own time. This belief reinforces the philosophical continuity that Tim and Andy pride the Peacock name on. In many ways, it is just as characteristic of the name as the color blue.

Taking on the Family Tradition

By Kate Ferguson

“What the heck am I doing here?” It’s a question just about everyone has probably asked him or herself during a difficult workday. It is on those days that Mike McGowan, owner of McGowan Water Conditioning in Mankato, Minn., glances at a date written down on his desk: May 1, 1955.

It is the date Mike’s grandfather, Lyle “Mac” McGowan, founded the dealership. It also serves as a reminder to Mike of why he is putting in the hard work each day. “You’re working for your family legacy, in a way,” he said. “Part of me feels a real responsibility. It’s kind of a tradition for me.”

Taking the Lead

The tradition began when Lyle left his job at a Culligan dealership and decided to launch his own business, then known as McGowan & Sons National Soft Water Service. The dealership offered an exchange tank service to provide water softening to local residences.

Lyle passed away in 1963, leaving the business to his wife, Betty. The couple’s eldest son, Jack, ran the dealership until 1968, when Betty decided to sell the business. Jack moved his family to Montana and opened a dealership there. The family’s foray into Big Sky country did not last long though—just more than a year later, Jack moved back to Minnesota, where McGowan Water was floundering. The businessmen who bought the dealership had no experience in water treatment, so they sold it back to Jack.

Jack went to work to get the dealership back to its former success—and beyond. He “really built the company to what we are today,” Mike said, adding that the rental business he nurtured has been a key factor for the dealership. “The rental base is what floated our company through the lean years,” he said. “When the economy slowed down, it was ‘thank God for those rentals.’”

When Mike joined the family business in the late 1990s, he did not have any designs on running the company—in fact, he described himself as “just another guy. I delivered salt, I rode with the installers, I did service work,” he said. “My dad was running the company, and I was just one of the guys. Life was pretty good.”

The dynamics changed when Jack decided to hire a general manager, who began implementing lots of changes within the dealership—including conducting performance reviews. Because Mike was just one of the guys, he sat down with Jack and the general manager for his review, just like the other employees. The final question on the review form asked employees what they would change about the dealership. Mike came prepared.

“I had a whole list ready,” he said. “I took a deep breath, and I said we need new computer software.” The list went on and on: Mike thought the dealership needed a new routing system. There were a few clients they should fire. They needed a new phone system. They needed uniforms. All of the trucks should match. And last but not least, he was fed up with the garbage cans, which were actually old brine tanks Jack had repurposed by cutting off the tops. “My dad basically pushed back from the table and said something to the effect of, ‘Well, put your money where your mouth is,’ and he left,” Mike said.

And just like that, Mike was running the show.

Making It Official

The youngest of eight siblings, Mike said he never felt pressure from his parents to join the family business. “They definitely encouraged us to explore,” he said. Mike worked a few other jobs and gave college a chance (“twice, but I quit twice,” he said) before starting at McGowan Water full time.

At the time, two of his brothers also worked there, but ultimately, the water business was not the right fit for their personalities. Dan, who Mike describes as technical and analytical, went on to become an accountant for an insurance company. Pat, who Mike describes as “rough around the edges,” now works at a sand mine.

Today, Mike is the only sibling involved in the business. He credits his “gift of gab” as a key trait that makes him right for the job. But transitioning the leadership role from Jack to Mike was not always an easy task.

According to Mike, Jack quickly reduced his involvement at the dealership after the performance review, eventually coming in only to use the fax machine—at least until Mike bought him a home fax machine. “He basically never came back,” Mike said.

A few incidents led Mike to realize he needed to make his leadership role at the dealership official. First, a truck broke down while Jack was on vacation. When Mike went to the bank to get a loan for a new truck, he learned he was not able to sign for the company.

Then, about 10 years ago, Jack had a heart attack. That was the final sign for Mike—shortly after, he began the process of buying his parents out. “We needed to make it official, on paper, because we had eight employees,” Mike said. “If he dropped dead, there would be a major scramble.”

Exit Strategy

Seeing his parents’ experience led Mike to one of his key business tenets: have an exit strategy.

“My mom and dad stuck all of their money into the company. Their retirement is this business,” Mike said. “They put their whole life into this company, so they really needed somebody to buy it.”

For that reason, all aspects of Mike’s purchase of the business were made official, including putting all agreements in writing. “They sold it to me as if I was any other geek on the street,” Mike said.

Mike realized that even though he has a few decades to go before retirement, he needs to have a plan for the dealership—and himself—in mind. And, like his parents, he is not just assuming that his daughter, who is now three years old, will take over the family business someday.

“I’ve always just run by the seat of my pants,” he said. “But you do have to look forward and say, ‘Where am I going?’ I think a lot of my focus over the next 10 or 15 or 20 years is to make my company a sellable product, because I do need to exit at some point.”

Change for the Better

Making the dealership a sellable product means making changes today that keep the business relevant and up to date. Mike is not afraid to make changes to the business when needed—an attribute he has carried over from Jack’s leadership.

In switching from exchange tanks to automatic softeners in the ‘60s, Jack took “a major risk,” Mike said. “It was a major investment, because he was taking exchange tanks that were essentially paid for … and throwing them away and then putting in hundreds of dollars worth of investment into the company into people’s homes [in the form of] an automatic softener.” The risk has paid off and its effects are still being felt decades later, as the rental base formed then has helped carry the dealership through hard times.

Many of the changes Mike has brought to the dealership are on the accounting side of the business. He implemented departmentalization, dividing the company into five departments—rentals, sales, service, salt delivery and plumbing—to see which were making money and which were losing money.

“We’re running each [department] almost as a separate company now, and we have been for a number of years,” Mike said. “What that did is it showed us that we didn’t make any money in service.”

To resolve that, Mike took a hard look at his pricing strategy and labor costs, and opted to implement flat rate pricing. “We make a lot more money off our service now,” he said. The new strategy makes it easier for customers to understand the pricing and makes purchasing decisions easier. “You present them one price,” Mike said. “They don’t have to sit and do math in their head.”

Changes like these have helped the dealership to nearly double its profits since Mike took leadership of the company. But he is not done yet—more changes are on the horizon for McGowan Water Conditioning, including upgrading the phone system, software, servers and internet.

And even though change is not easy (it “makes everybody nervous when they know that software’s about to change”), Mike knows that the risk is worth the reward of keeping the family tradition alive and healthy. “You have to do right for your company so that your employees have employment tomorrow,” he said. “You need to make a profit so that when you sell [your customers] a water softener today, in five years when they need service, when they call you’re still there.” 

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