Best Practices - October 2012
By Brian Hamilton
Scott Appel and brothers Bill and Joe Hamad formed Touch of Color Flooring ten years ago in Harrisburg, Pennsylvania and have grown the overall business into a $17 million enterprise this year. In addition to Touch of Color Flooring, the business added Touch of Color Design Group, and this year plans to get into the retail segment with the first of five Big Bob’s franchises that it plans to open over the next five years in the central Pennsylvania area. Much of the partners’ success has simply sprung from their willingness to work hard and take risks.
Touch of Color Flooring, which is by far the largest part of the business, serves the multi-family, builder and commercial channels, mostly with base grade carpet and vinyl, although recently there’s been a push into better goods and doing more vinyl plank, laminate and tile. Customers who want wood looks generally use LVT and the firm sells little wood. “During the downturn customers started to go backwards and were looking at price per foot rather than long term cost,” Appel says. “Unfortunately, there was a lot of short term thinking.”
Touch of Color Design Group serves remodelers, builders and designers with pricier products, including high-end custom porcelain tile, better carpet including Mohawk’s Smartstrand and Stainmaster products, and cherry, mahogany and other luxury hardwoods.
Last year the firm had $12 million in sales and next year it’s projecting sales of $25 million, with about 50% coming from multi-family, 30% from builders, 10% commercial, and the rest a combination of showroom sales and contractor cash-and-carry.
“Multi-family is a good channel for us,” Appel says. “This year it’s up 25% so far and in general is very healthy. Occupancy rates are at a ten-year high and customers are raising their rents.”
With the significant sales increases, as well as its impending entry into the retail arena, the company has been on a hiring spree, adding 12 people this year (total of 40 employees), including a director of sales, director of operations, and estimators and project managers.
Most businesses will say that their people are the reason for their success, and Touch of Color works hard to make sure they get the best people, according to Appel.
“We hire for attitude,” Appel says. “Someone might have 30 years of experience but if they have a bad attitude we’re not interested.”
New hires are put through an intensive interview process. The directors interview each candidate and there are second and third interviews. The company checks resumes and backgrounds.
“We used to hire quickly, on the fly, and sometimes a person wasn’t vetted well enough and we wished we’d never hired them,” Appel says.
“We look for people who fit our company culture. We make sure we take care of the customer first and foremost because without the customers, we don’t have jobs. We look for people who are committed to customer service, and not necessarily industry veterans. If they’ve been in the industry for a long time, we look for particular expertise because they can teach us and help us with issues that come up.”
Appel says his firm provides a lot of ongoing employee training and “Floor Expo has helped us tremendously.”
Most of Touch of Color’s promotional activities have fallen along the lines of networking. The firm doesn’t advertise in traditional media but promotes itself heavily through trade associations, such as area apartment associations, by sponsoring “Best of Living” events. It also does a lot of charity work.
That’s all about to change, however, as the firm gets involved with its Big Bob’s franchises. Appel says the firm will go full bore into social media, among other activities, for all its divisions. In addition, it plans to revamp its website, part of a rebranding effort next year. Appel admits that Touch of Color Flooring’s current website “isn’t all that effective.”
Appel overall describes his operation as “lean and mean,” perhaps reflecting the firm’s beginning. All three partners are very involved. Appel mostly handles sales, relationships and procurement. Bill Hamad, the former installer, runs the technical side of the business, along with the commercial division. Joe Hamad oversees the day-to-day operational activities. “We’re very efficient and we’re okay with being cheap,” Appel says. “We wear that as a badge of honor. We don’t like to waste anything,” he says, and office paper even gets reused.
HUMBLE BEGINNINGS FOR TOUCH OF COLOR
Touch of Color Flooring actually got started in a townhouse to service the multi-family market. The garage served as a warehouse, the office was Joe Hamad's computer and Scott Appel slept on a mattress in the corner. Before forming the business, Scott was a high school teacher, Bill Hamad was an installer, and Joe was in graduate school in psychology. "We started from the ground up, and we're scrappers to make the business what it is today," Appel says. "We're very dedicated and we work very hard. We've grown every year, even through the worst years of the recession."
A year after forming the business, the partners used a space in a bad part of town as a warehouse. They pulled rolls of carpet off the trucks onto furniture dollies since they didn't own a forklift. They also had no racks in the warehouse and carpet would often get wet during a rainstorm. Seven years ago they moved into their first real warehouse, 5,000 square feet with a forklift and racks but not showroom. That's when Touch of Color joined Floor Expo. Today, Appel serves on Floor Expo's Multifamily Solutions board and says the networking there is invaluable.
Two years later the partners purchased their first building and they're about to move their corporate office into larger quarters. Appel says the partners signed on with Big Bob's because they thought the company was a good fit and they give franchise owners wide latitude in how to run the business. "We realized we had too many eggs in the builder basket and were looking to diversify," says Appel, who describes that segment as still the worst channel, with the highest amount of overhead and headaches.
"We like the outlet store model and the cost of entry is low." He says the partners didn't hesitate to invest, even in this down market. "We're very aggressive and not worried at all. We have a good plan in place with a solid strategy and we're excited.
Copyright 2012 Floor Focus