By Ellen Jensen

Entrepreneur: William Iler and Mike Chieppo
Company Name:
Design Mechanical
1140-A Booth Street
Kansas City, KS 66103
(913) 281-7200
Type of Business: Mechanical construction and service
Year Founded: 2003
Number of Employees: 65
Keys to Success: "Care about your customers."-Mike Chieppo, "Happy employees."- Bill Iler

Design Mechanical came to be a few years ago when a couple of engineers grew tired of the corporate world and decided to start a business. Although the company's background is not overly remarkable, its quick growth and success certainly is.

In just three years, company founders William Iler and Mike Chieppo have brought Design Mechanical from three to 65 employees. The company has won the Kansas City Kansas Area Chamber of Commerce New Small Business of the Year award, and has achieved STAR qualification through the Mechanical Service Contractors of America (MSCA). Iler and Chieppo say the key to their success is relationships-solid partnerships with vendors, suppliers and subcontractors that lead to referrals and new business opportunities.

Iler earned a bachelor's degree in electrical engineering at the University of Missouri at Rolla. He then took a service position at Carrier, where he stayed for six years before joining The Fagan Company.

Chieppo joined Trane as a sales engineer after graduating from Oklahoma State University with a mechanical engineering degree.
 
Business on the Fly
After 23 years with Fagan, Iler saw an opportunity to take his experience, knowledge and drive and put them to use in his own company. Chieppo knew Iler from his manufacturer's rep days and learned about his plans. Their respective backgrounds made a good fit, and the timing was right.

Once they decided to start their own company, things happened quickly. Six weeks after Iler left Fagan, he and Chieppo had incorporated Design Mechanical, said Valerie Mussett, sales, marketing manager and one of the original employees.

During that time, Iler and Chieppo developed a business plan, including how much they planned to save, the business breakdown of construction versus service, how many people they were going to hire per year and estimated expenses. They found their first customer before they even had an office.

The company's first job was to install a chiller in a local fiberglass company, but they had to make up purchase order numbers on the fly because they hadn't set up processes yet. Mussett worked from home, two employees worked in the field, and Chieppo and Iler worked out of their cars. If Mussett needed them to sign paperwork, she arranged to meet them at a Quick Trip or other local establishment.

"When we moved into offices, I threatened to pull the seat out of my Pontiac Bonneville and put rollers on it so I would be more at home," Iler said.

Faith and Hard Work
When you start a business, there's no looking back. Iler said you cross a line, and you do what it takes to make it work.

"It's like jumping off a cliff—you either fly or freefall until you hit bottom," Chieppo said. "We have faith and trust combined with hard work. We felt like it would go, or we never would have started."

Design Mechanical is a mechanical contractor, providing HVAC equipment, service, piping and sheet metal. Iler and Chieppo decided to form a service-oriented company and use those service relationships to build the general construction part of the business. Service is the more consistent side of the business, while construction is subject to outside market influences and tends to ebb and flow, Chieppo said. Their goal is to have about 60 to 65 percent of business come from service and 35 to 40 percent come from construction.

Minimal Managers
Iler handles the service side of the business, and Chieppo the construction side. They estimate they spend at least 70 percent of their time out in the field selling and working with customers, while 30 percent is spent as managers. They both consider themselves "seller-doers" and spend as little time as possible running the office. Iler and Chieppo give a lot of credit to their employees for allowing them that luxury.

"We manage our own jobs and our own responsibilities," Mussett said. "They allow us to do our jobs without interruption, and they give us the ability to make decisions-we are expected to make decisions, and we are rewarded."

All for One
Each year Design Mechanical employees set up company, department and individual goals, and they hold each other accountable. If the company goal is 15 percent growth, the company as a whole has to figure out ways to grow that 15 percent, Iler said. The individual parts make that happen.

"We have defined goals," Mussett said. "We write our responsibilities down and commit to them, and we present our goals to each other at goal-setting time."

Everybody also has a responsibility to stick to the budget, and they all report on their parts. The staff meets regularly and communicates often to stay on track.

Chieppo said the reason employees communicate as much as they do is to have a clear vision of where they are going. He said the company tries to stay on the forefront of the construction industry, which means the team has to be up to date on new technology in the industry. They know where they want to go, and they're not afraid to take risks to get there.

"We want to be the best," Chieppo said. "The whole company is always working together on ways we can improve-how can we reach or surpass our goals."

Design Mechanical has reached or exceeded the goals set up in its business plan. One such goal was to become STAR qualified through MSCA. Iler said Design Mechanical was the first contractor in the Kansas City area to become STAR qualified. To achieve that designation, companies must meet 10 requirements, one of which is that at least 25 percent of the service technicians must hold UA STAR certification.

"Our technicians decided they wanted to do this, so they got organized, studied and passed the test," Mussett said.

Companies also must provide ongoing educational training to employees, and employees must attend at least one national or local program each year sponsored by the Mechanical Contractors Association of America or MCAA.

All-Important Relationships
Design Mechanical holds customer appreciation events, including monthly in-house gatherings and a party around Thanksgiving. These events give customers an opportunity to get to know everybody in the organization, Iler said. Iler and Chieppo also organize fishing, ski and golf trips for customers, and employees are welcome to attend those, as well.

"We have built up a customer base of more than 325, and most of that has come from referrals, from building those relationships," Chieppo said. "Most of those are repeat customers."

Ralph Dyro, vice president of real estate for Black & Veatch, has been working with Iler for 25 years. Now, Design Mechanical handles all of the heating and air conditioning in Black & Veatch's buildings. Dyro said that close to 3,000 people work in one of their buildings, and the heating and air conditioning has to work.

"Bill pays attention to details, and he gets the job done," Dyro said. He hasn't failed me."

Because most of their new business comes from referrals, the outside sales reps do little cold calling. They also let their customers know when they provide new services, such as air quality tests and vibration analysis, which predicts equipment failure before it occurs. Not a lot of companies provide the service, Chieppo said, so it's just one more service that distinguishes Design Mechanical in the marketplace.

Slow and Steady Growth
"The challenge is to keep finding ways to grow, stay fresh and ahead of the technology curve," Iler said. "The company is growing fast, so processes and systems need to change to make us more efficient and effective."

It's important to manage growth, Chieppo said. The company has to be able to pay for what they produce, so they try not to take giant steps. At one point, Design Mechanical won a big job and added about 20 employees at one time, but generally they try to grow more gradually. Right now, the company has approximately 37 people in the field on the service side.

On the construction side, Iler and Chieppo set job goals and manage the job around the quantity of work. Ideally, Chieppo would like to grow slowly and win enough construction work to keep a core team busy. However, sometimes they win a big job and need to hire union labor to pick up the slack.

When bidding projects, Design Mechanical doesn't don't always have all the information they need because the projects are in such early stages, but they manage to get it done because of their expertise, said George Loelkes, director of facilities and engineering for Townsend Capital. Design Mechanical can find things in the bidding process that will help cut costs and decrease the schedule.

"I've done over $6 million worth of work with them and haven't had a change order, which means there were no unanticipated costs that caused us to change the original contracts," Loelkes said.

It's a humbling experience that customers have faith enough to ask you to work on their businesses and employees put their livelihood in your hands, Iler said.

Ellen Jensen is the managing editor of Kansas City Small Business Monthly magazine.