Get
in the game: Commercial business can offer many unique possibilities. Pictured
here is a luxury suite in Atlanta's Phillips Arena. The broadloom carpet is a
custom version of Bentley Prince Street's Mill City.
No matter how well-known you are as a retailer, no matter how successful your operation, the commercial sector is a whole new ball game. Even those retailers who are pursuing a modest agenda of Main Street commercial work have to re-establish themselves and build a reputation. Word-of-mouth is the key to your success, so if you are now expanding your efforts into commercial flooring remember that the first steps are crucial. Here are a few things to keep in mind.Spending Other People’s Money:When you are handling residential work, your clients are usually spending their own hard-earned after tax dollars. As such, they are inclined to be very particular, demanding, and sometimes downright unreasonable. A slight variation in a carpet’s dye or the surface texture, or in the shade of luxury vinyl tile can bring severe repercussions. The selection of flooring for the home is all about the feeling one has toward the product. They are focused on what it will provide or convey and much less about the technical attributes or performance. The savvy retailer charges for this accordingly. He understands that products and installation are held to a higher standard when they go into the home. On a commercial sale, though, floor replacement is another budget item. It is bankrolled with before tax dollars, on the expense side of the ledger. The client is unlikely to make a fuss over some variations in appearance, especially is it involves minor visual blemishes that will not affect long-term performance. (We’ve all heard the expression “Close enough for government work.”) The difference in attitude means fewer customer gripes-but it is also why your gross profit margin or markup will be more modest in the commercial side of the business. Just the Facts:Whereas your residential customers will dwell on color, texture, hand, and harmony with other furnishings in the home, commercial clients have a different agenda. Their focus is on the basics, notably price and long-term performance in high traffic areas. In competing with retailers over the years, I won many a job by sticking to the basics. I’d look at what was needed rather than nuance. Some retailers simply don’t understand that there are some customers who just want “some gray commercial carpet that will last for the entire five-year lease term.” Although your commercial customer may ask for suggestions, they usually have something already picked out. If they have a lot of specific information, such as face weight, density rating, wear warranty, and complete appearance description or manufacturer and product name, that should be your tip off that you are not alone in pursuing this business. There may even be someone pushing a particular product. In response ask a few questions yourself: “Are you getting several prices on this job?” or “Are you working with anyone on this particular project?” What you really want to find out is who is specifying the product to be used. Is it one of your competitors? Because if it’s an interior designer or architect calling the shots, it becomes more difficult to offer your version of a specified product. Then ask about money: “Have you established a budget for this part of the remodeling project?” “How much were you expecting to spend for this carpet?” and “Are you satisfied with the prices you’ve already received?” You would be amazed at the answers you get from clients, up to and including being handed several other proposals from your competitors to review! If you are lucky you may be the first person contacted. You can ask leading questions about the buyer’s priorities. This is a golden opportunity to advance your agenda and specify the product you feel is right. Make sure the product you are specifying will be available to meet the client’s project schedule. Absolutely nothing is more frustrating than having a client fall in love with your product, only to learn it takes 10 weeks to produce it. That’s not going to work on your client’s three-week deadline. Installation Timetable:Most residential jobs are completed in a set time span: usually one or two days, with the work being handled by a well-qualified two-person crew. Language skills and a professional appearance are extremely important for residential work. That may be less so with commercial work where three to four-person crews are the norm. Commercial projects often require work after normal work hours or over a period of weeks, all of which may wreak havoc on your installation department. One question to always ask is this: “How much time do I have to complete installation and when must the work be performed?” With Main Street commercial replacement work, the job takes place after the store closes. This can mean an 11 p.m to 6 a.m. workday! A dental office or bank may have a project begin Friday night and continue throughout the weekend until Monday at 7 a.m. Invariably, schedules will be telescoped since flooring is at the end of the project timeline, so the four days you thought you had for completion may be reduced to three days. The other factor is timing. A residential customer may want it “this weekend” but it is generally not a deal breaker if that doesn’t happen. Commercial jobs are far less flexible. Deliveries, advertising, and reopening schedules are planned well in advance with little room for change. There is also the issue of liquidated damages which means you may be financially liable if there are delays. Terms, Conditions and the Proposal:Your residential customer may typically pay you a 50 percent deposit, with the balance paid upon completion of the job. That type of expectation could cost you a commercial job. While that approach may be okay on a quick-term Main Street like a small office project or restaurant, always ask what your client expects. This is part of the qualification process. It will help you decide whether to go after a particular job. You will frequently hear something along these lines: “The contract outlines our terms and conditions. We will allow you to requisition for payment of materials received and installed and for labor performed by the end of the month. We will process your requisition and pay by the 25th of the following month.” There is nothing in this statement that provides for any up-front deposit. It is assumed that you will use your credit line to front the money for product purchases. About the best you can really expect is to receive payment within 45 days or so after requisition. If you push for a deposit, it may work if there is a strong product specification, and you either have the support of the specifier or the manufacturer is rigid in requiring a deposit. If they will not agree to a deposit, you may be able to negotiate a partial or full payment for materials received. An inspection by the buyer is typical and the retailer provides a bill of sale to his client. This is one reason that you should discuss any upcoming commercial projects with your product supplier, in advance. They may offer special extended terms; I have seen 30-day terms pushed to 120 days. It is critical that your proposal be clear, in writing, and very specific on what you are offering. If you get the project, before you pop that champagne cork, make sure the contract reflects what you have offered before you sign it.
