Best Practices - June 2012
By Brian Hamilton
Charles Hollar, owner of commercial contractor Modular Designs of Charlotte, North Carolina has found that a key to his success is his willingness to listen and try new things. Hollar, an active member of the Fuse Alliance (formerly the ReSource Commercial Flooring Network), has picked up ideas from other members at the group’s meetings and has incorporated them into his own business. “With the member network, I try to come back every year with one or two things,” Hollar says.
A case in point is an innovative carpet tile recycling program he began after hearing about it from a fellow Fuse member in south Florida. Rather than sending old carpet to a recycling or reclamation center, Modular Designs takes old tile back to the warehouse, reconditions it using the method developed in Florida, creates samples for his salespeople, and resells it or donates it to charitable organizations. “Carpet never wears out, it just uglies out,” Hollar says. “It’s not applicable for every installation, but when we go out and look at a job, we look at the potential for reuse.” The tile can be sold for a fraction of the cost, about $12 per yard, and Hollar has found many companies are more than willing to use it in certain situations.
“Some customers like it for the price, some like it for the environmental benefits, and some customers look for places to install it. I think we’ve sold and installed close to 8,000 yards of post-consumer carpet tile,” Hollar says. “Right now, demand exceeds supply.” Hollar says he tries to get about an 80% yield on the old carpet. So, if his crews remove 1,000 yards, he can generally resell about 800 yards. Virtually all the cost of the program is labor.
Hollar says he’s noticing other potential opportunities to reuse flooring. He recently saw a customer remove a specialty floating static floor and take it to a new location.
“A long time ago that would have bothered flooring contractors because they didn’t get to sell flooring the second time around,” Hollar says. “But our business model is to be a service company.”
Along those lines, a few years ago Hollar got into the carpet maintenance business as an add-on service for his customers. Not only did that help smooth out his cash flow, but it allowed him to extend the carpet warranty and assure his customers that their investment would be maintained properly.
“We added carpet cleaning as a result of our customers asking us how they should maintain it,” Hollar says. “We used to refer them to another company but our customers came back and said they’d prefer us to do the work. So we invested in the technology and chemistry through Fuse and set up cleaning programs using a low moisture system. It’s still only a small part of the business, maybe about 5%, but it ensures customer satisfaction and allows us to stay close to the account.” With big installation jobs, Modular Designs might have to wait 90 days for payment from an intermediary like a general contractor, while cleaning operates on 20-day terms and it’s working directly for the end user.
“It took about a year and a half to break even,” Hollar says. “Now is the time we need to grow it and add a dedicated sales person. Now our existing project managers sell the service, and we’d like to dramatically grow our cleaning business.”
It’s not uncommon for these maintenance relationships to lead to more installation work, especially for companies that have multiple locations.
“When you install projects every day, you will make mistakes,” Hollar says. “With cleaning, it’s hard to lose a customer if you give outstanding service. We’ve got the keys, we know where everything is, and they don’t want turnover.” In his market, Hollar says there’s only one other contractor he knows of that provides a similar service. Most of his cleaning competition comes from franchises like Stanley Steemer.
Hollar also does some unusual things to market his business. Every year Modular Designs hosts a Chicago Comes to Charlotte event, which is essentially a post-NeoCon affair in which he holds a mini commercial trade show in his parking lot. He invites all kinds of interior furnishings companies, and the event has a Chicago theme, complete with music and food. Vendors pay $200 to set up a booth, which helps offset expenses. Typically, about 300 people attend. “When the market got soft, many of these people couldn’t go to Chicago,” Hollar says. “And it takes time for sampling to get into local reps hands.” The event is valuable for the networking as well as putting Modular Designs right in the middle of the local commercial furnishings industry.
Another new event scheduled for the first time this year—an idea borrowed from an Arizona Fuse member—is an August supplier banquet to recognize top performers among their manufacturers and distributors.
“We want to be true partners with our suppliers,” Hollar says. “So many times it can be an adversarial relationship. We have core suppliers but we want to be fair to all manufacturers.” Hollar plans to honor suppliers for customer service, innovation, attitude and other attributes. Plaques will be presented and the idea is for it to evolve into an event where everyone wants the recognition in front of their competitors.
“Lots of leads come through our suppliers,” Hollar says.
Another factor in Modular Designs’ success, Hollar says, is that he tries to make the business fun for his employees. One way he does that is through a weekly cash incentive program. If the business meets its goals for volume and project mix, everyone in the company meets Friday in the conference room and everyone gets a small cash bonus, “enough to fill the car with gas,” Hollar says. Although the report makes it clear who is stepping up individually and who isn’t performing as well, everyone wins if the team goal is met.
“The nature of this industry is difficult,” Hollar says. “It’s timeline driven, there’s pressure to perform and collect, there’s lots of early hours and weekend work. It’s tough for project managers and warehouse people. So what I try to do is get beyond the drama and deadlines and recognize that it’s just floorcovering.” The cash incentive program “is like a pep rally in athletics. And everyone realizes they are a cog in the wheel.”
FROM PARTNERSHIP TO SOLE OWNER
Modular Designs got its start 20 years ago when a Steelcase furniture dealer in Asheville, North carolina decided to get into floorcovering as a way to expand his business beyond Asheville. The furniture business was much more territorial, and there was little opportunity for growing outside the immediate area. The first four Modular Design stores were opened in Memphis and Nashville, Tennessee, and Jacksonville and Orlando, Florida.
After working for Milliken for 11 years as a territory manager and sales manager, Chrles Hollar pursued opening a Modular Designs in Charlotte ten years ago, initially in a 50% partnership with the chain's founder. That turned out to be a good decision because Hollar didn't have to worry about things like worker's compensation and other administrative details and could concentrate on growing the business, while helping the founder offset some of his overhead for his other locations. Five years ago Hollar bought out his partner, becoming the sole owner of the Charlotte location, and four years ago he joined ReSource network, now the Fuse Alliance.
Modular Designs is strictly a commercial firm and about 75% of its business comes from the Charlotte area. The greatest share of business comes through general contractors. The firm handles offices, healthcare facilities, retail businesses, public spaces and government, and two of its best segments today are senior living and retail. Much of its work is occuied office carpet replacement, using lift systems to replace a few thousand feet every night, without dismantling or disconnecting equipment. Most of that is replacing broadloom with carpet tile.
Hollar does maintain a relationship with the other Modular Designs locations, which can occasionally come in handy if, for example, he needs some extra installers for a job.
Copyright 2012 Floor Focus