Academic journal article Journal of Applied Management and Entrepreneurship

Family Success in the Air Conditioning Business: The Case of Mike Miller of Star Service, Inc

Academic journal article Journal of Applied Management and Entrepreneurship

Family Success in the Air Conditioning Business: The Case of Mike Miller of Star Service, Inc

Article excerpt

Executive Summary

In 1952, William J. (Bill) Miller and Joe Yoder, as equal working partners, started Residential Heating and Air Conditioning, Inc. in Baton Rouge, LA. The company focused on supplying the needs of homeowners in southern Louisiana as consumers first began to experience the comfort of air conditioning. In 1956. Miller and Yoder changed the name of the company to Star Engineering. Inc. and ventured into commercial air conditioning installation. Working under an agreement to keep family members out of the business, the two partners operated Star Engineering. Then, in 1967, Joe Yoder decided to retire. Bill Miller bought his partner out and continued to manage the company. The story of the family business begins with Bill Miller's acquisition of Yoder s stock in the company.

Bill Miller had six children, three sons and three daughters. Of the children, only two expressed an interest in joining the business. Mike Miller. Bill's oldest son, joined the firm in 1972 after earning a degree in construction technology from LSU. In 1973. the Millers changed the business name from Star Engineering to Star. Inc. Mike learned the business rapidly and impressed his father to the point that in 1976. Bill Miller decided to appoint Mike as president. While Mike managed the construction sales side of the business. Bill Miller decided to head up the service side of the business, maintaining and repairing existing air conditioning units for customers.

The original goal of the service business, which was to cover Bill Miller's salary, was achieved within the first few years of service operation. Managing both construction sales and service, the Millers built Star to annual revenues of $7 million by 1979, but then the oil crisis hit Louisiana and construction activity "dried up." During this time of crisis, the Millers made two important decisions. First, they decided not to pursue unprofitable jobs. Because of the dire economy, many competitors would make very low bids on projects to the point where there was no profit for the contractor. second, the Millers decided to focus on the air conditioning service business. Rather than sell air conditioners to its customers. Star would take the opposite approach and market itself as a maintenance and repair operation. Star would take the side of the customer and help them keep their air conditioning units running as long as possible. Star would benefit by keeping the air conditioning units in operation and would bear the cost of replacement units. As a maintenance company, Star sought long-term, fixed-price contracts with commercial and industrial companies. Benefits to the customers included a guaranteed cap on heating and cooling expenses, quick and efficient service, and a "no-hassle" approach in which customers were no longer subjected to unanticipated or questionable costs for air conditioning.

In 1983, Star Service, Inc. was formed and spun off from Star, Inc. Also in 1983, Robert Miller, Bill's youngest son, graduated from LSU and joined the family firm. The Millers were ready to move forward with their business when they encountered an opportunity to acquire a franchise from the Line Corporation of Pittsburgh, Pa. Line was looking for prospective air conditioning companies as franchise targets and their representative called the Millers. Line offered a new thought process in the air conditioning service industry. They provided extensive training, process engineering, and pricing information for franchisees. In 1984, the Millers acquired the Line franchise for Baton Rouge. After Bill and Mike Miller decided to buy the Line franchise, their service manager disagreed with the idea so strongly that he quit. Fortunately, Robert Miller had come into the business full-time the year before and had been training. In April 1985, Robert took over the management of the service operations. Within a few years (1991), Star moved out of the construction side of the business and became 100 percent service. …

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