Maintenance: Commercial Floor Care: Contract dealers benefit from offering floor care - Apr 2017
By Darius Helm
Floor care and maintenance has been a growing part of many contract dealers’ operations in the last few years, and those who have entered into that business have nothing but good things to say about it. Nevertheless, the bulk of contract dealers don’t offer maintenance, despite the fairly reasonable investment involved, the profitability of the venture and the broader benefits of adding this service.
Floor Focus’ most recent contract dealer survey (December 2015) showed that the bulk of contract dealers don’t do any form of maintenance at all, and on average maintenance accounts for less than 5% of total revenues for 70% of surveyed dealers. The good news is that, compared to the previous survey, 40% more dealers reported that maintenance accounted for 10% to 20% of total revenues.
However, floor care programs generate much higher profits than the selling and installation of the flooring itself, where narrow margins on the product limit the gains. That may be why, while contract dealers regularly report getting into floor care and maintenance, none has so far reported getting out of that business.
MAKING THE CASE
One of the biggest gripes in the contract dealer community is the disconnect between their unmatched knowledge of product and process and their opportunities to leverage that knowledge. By and large, contract dealers work with general contractors. Some have limited interactions with architects and designers. But few dealers have contact with end users-after all, the general contractor is not inclined to introduce subcontractors to the higher-level decision makers. Often, they never even meet the end user. They don’t have that relationship.
The most important benefit of contract dealers operating a floor care business, bar none, is that it gives them that direct relationship with the end user. Alan Hill, vice president of maintenance services at Texas-based Business Flooring Specialists, notes that it keeps them in front of the customer all the time. He adds, “If you don’t, you might not see that customer again, and by the time you cycle back for new flooring, there might be new people there.”
The other major benefit of a floor care operation is that it offers a steady stream of income, unlike the project-based flooring contractor work that the contract dealer is accustomed to. As Mike Patton, CEO of DSB+, which has operations in and around San Francisco, puts it, “Now on January 1 of every year, we have a book of business on the maintenance side, and on the product and installation side we have a deepening and continuing relationship with the end user.”
Nevertheless, many contract dealers are reluctant to expand into floor care because it’s an entirely new business-new skill sets, new equipment, new contracts, new technicians. They are wary of moving beyond their core competencies. After all, their current business model has worked for decades and has gotten them to where they are today.
Unfortunately, that kind of thinking only applies to a world where nothing changes or evolves. In this case, everything is changing. Competition among contract dealers is fiercer than ever, including from Johnny-come-lately residential dealers looking to shore up their own businesses through diversification. Budgets are tighter, with the more savvy end users realizing that they have to maximize every investment, and that often means making their sizeable investments in flooring last as long as possible. These people have crunched the numbers, and their calculations reveal that, to keep their work places looking good-and, where relevant, to sustain their brand images-it’s cheaper to maintain their flooring than to replace it more frequently. And then there’s the inconvenient truth that if the flooring a contract dealer installs does not hold up well in the long term, it will hurt the dealer’s chances of securing a new contract with the end user once that floor needs to be replaced.
Many contract dealers may take comfort in the possibility that the end user will hire a professional floor care operation to maintain the flooring that the contract dealer installed, ensuring that the flooring will last for a long time and look good all the way through. And that does often happen. But in those cases, the contract dealers have implicitly allowed other entities to establish a relationship with the end user, relinquishing the opportunity to form long-lasting partnerships with the people who control the purse strings. Ultimately, they’re putting themselves at a competitive disadvantage.
As Charles Darwin famously put it, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Or, in 21st century phrasing, “You either evolve or dissolve.” So says Usher.
To get new business, most of the contract dealers try to make some introduction with the end user by the time the project is completed, but in some cases they might have to go as far as tracking them down online, through LinkedIn and the like, to make that initial contact. And once they do, they generally go over, with the facility manager, tenant or developer the maintenance requirement of the different floors that were installed.
When it comes to selling the program, it’s not about just the hard numbers, though the math is fairly convincing. It’s also about not damaging an investment, and that’s usually all someone in business needs to hear to get their attention. If the potential client has always relied on janitorial services, contract dealers will need to make the case that they’re not getting the most out of their investment in flooring, both in terms of its general appearance and its longevity. In fact, Joe Carmichael, vice president and principal at ACS Flooring Group, often recommends to the end user that they not permit janitorial services from using their cleaning systems because of the potential for damage.
Getting into floor care is an investment, but not a major one. To get through the door, it generally means buying a vehicle, one or two pieces of equipment and some chemicals, and finding a couple of professionals to run it. And there’s a lot of help out there.
Commercial contractor groups like Starnet and Fuse are strong advocates for floor care programs. Starnet, currently celebrating its 25th anniversary (see page 49 for a separate report on Starnet’s anniversary), launched Starnet Floor Care in 2012, bringing in Eric Boender, a commercial floor care veteran, to run the program. At the time, there were about 15 Starnet members doing floor care in around 25 locations. Now, 40 of Starnet’s 170 North American members offer floor care programs, accounting for 70 locations.
Boender was tasked with developing the program, creating various standards and training programs, and identifying key suppliers of maintenance chemicals and equipment. His early efforts focused on deep cleaning carpet, resilient and ceramic products, and has gradually evolved to include high performance coatings, grout coloring and polishing concrete, terrazzo and marble-which has grown to account for 35% of total floor care revenues. To set standards, Starnet brought in several carpet and resilient vendor partners to sit in the committees, including major manufacturers like Mannington, Roppe, Atlas, Bentley, Armstrong, J+J Flooring, Tarkett and Masland.
Boender notes that, not including transportation, the investment in equipment and chemicals for carpet and hard surface floor care comes to around $15,000. And that includes Starnet’s training program, which features a week in Columbus, Ohio, working with two of Starnet’s most experienced floor care providers, Rite Rug and Legacy Commercial Flooring.
Starnet members who do floor care offer extended warranties, like lifetime installation warranties. Boender reports that the most successful operations assign a division manager to run the program. Several Starnet members report that floor care revenues account for up to 15% to 20% of revenues, and in some cases 50% of profit.
The Fuse Alliance, a member-owned commercial flooring contractor group, grew out of the ReSource group, which was originally a division of Interface. Fuse bought the rights to the group in 2005 and launched its network the following year. Currently, the group has 94 members representing over 170 locations in the U.S. and Canada.
Fuse has always vigorously encouraged its members to develop floor care programs, and it helps members network with each other to gain the knowledge they need to get their businesses going. Its preferred supplier list helps direct contract dealers toward equipment and solutions already vetted by group members. At the firm’s annual meeting last month in Austin, Texas, the agenda included a session on how to grow one’s business by getting into floor care and maintenance.
The firm also has its sights on end user relationships. According to Geoff Gordon, the executive director of Fuse, the next level for Fuse Commercial, the firm’s national account program, is for members “to be more active calling on the end user as a service provider.” He adds, “There’s an opportunity to approach them from the service side. We think the problem-solving aspect of what we bring to the table is important.”
CONTRACT DEALER NOTES
ACS Flooring Group, a commercial flooring contractor operating in the Houston markets, became a Starnet member three years ago, and less than two years ago, it got into the maintenance business with a dedicated division, ACS Maintenance Solutions. Joe Carmichael, vice president and principal, was originally attracted to the notion because of the margins associated with it.
Guided by Starnet, the firm invested about $35,000 in a van, equipment and cleaning solutions, and the program was successful almost immediately. The business has already grown to include three vans, more equipment and a team of six technicians.
While the profit potential is what originally attracted ACS, the broader benefits quickly became obvious. “It just keeps you in front of the end user,” says Carmichael. “If you just install the carpet, unless there’s an issue, you’re not going to see those clients a lot. This [maintenance] is something to follow up on, and it helps build end user trust. I’m confident that, when they’re up for a lease renewal, we’ll be the first call.”
According to Carmichael, some clients-generally those that have used maintenance programs before-will sign up for floor care at the beginning. Others will call when they have the need, and at that point they’ll get on the program. And those for whom floor care and maintenance is a new concept will ignore his calls until a few months down the road, once they’ve accumulated some stains and spills, and then they’ll reach out.
The goal is to secure regular customers and put them on a standard maintenance program-generally consisting of heavy traffic areas four times a year, conference rooms and cubicles twice a year, and private offices once a year-though there are plenty of clients who instead choose to deep clean the whole space twice a year or on some other schedule.
The firm is still on a learning curve, Carmichael reports. For instance, it is constantly improving at reaching out to end users upon project completion to recommend its maintenance program.
“We’re up against janitorial services a lot,” says Carmichael. “And I have to explain the difference.” For one thing, janitorial services focus on the entire space-cleaning everything from toilets to windows to floors-and as such their arsenal of cleaning equipment and solutions is limited, and it’s generally not targeted at the specific surfaces that are being maintained.
Also, ACS offers a wide range of specialized services, including upholstery cleaning, like chairs and panels, polishing concrete and refinishing terrazzo. And the firm will maintain all the floors, regardless of whether it installed them.
Messina Flooring, a commercial flooring contractor based in northern Ohio since 1989, got into the floor care business five years ago. The firm, which has been a Fuse member since it was still the ReSource group, had been considering floor care for a few years, but it all came together when the firm’s president, Mike Messina, found a partner in Brent Adams, who had worked for another contract dealer that operated a floor care division.
According to Messina, Fuse has always tried to get members to grow into that market. But he, like many others, was wary of just jumping into it without having someone experienced on the application side, like Adams.
Messina Flooring started by offering resilient floor care to clients in healthcare, the firm’s biggest market sector. Messina and Adams found that many hospitals were reluctant to sign contracts due to tight budgets and a tradition of relying on their environmental services teams, but ended up coming to them when they needed restorative maintenance, and the relationships grew from that point on.
Resilient floor care currently accounts for 55% of maintenance revenues, followed by carpet at 25% and ceramic and stone at 20%. All of Messina’s floor care technicians are IICRC certified in carpet cleaning, hard floor maintenance and odor control. The firm also uses Vital Oxide electrostatic spray technology to disinfect healthcare environments. The technology, which encapsulates and neutralizes pathogens, can disinfect a 10,000 square foot room in 15 minutes.
The philosophy behind the firm’s floor care business is based on providing value to the end user, says Messina, and not on chasing the highest volume maintenance programs, so Messina embraces new technologies that, for instance, reduce cleaning frequencies. In fact, once the firm has floor care programs in place, its technicians will go beyond the specified floor plan programs to do spot work at no extra charge.
Messina Flooring’s maintenance operation consists of two vehicles, equipment and cleaning solutions, and six technicians. In addition to standard floor care, the firm does some upholstery cleaning along with specialty services like concrete polishing.
RD Weis, a contract dealer headquartered in New York City, operates a maintenance business along the Eastern Seaboard from New Jersey to Maine. What’s unique about RD Weis, a Starnet member since 1997, is that it started out as a commercial maintenance company, back in 1990, and didn’t get into the product and installation business until 1994. Founder Randy Weis added the flooring contractor business as a defensive maneuver in response to the threat by DuPont, whose new business model was promising to do everything from installation to maintenance to recycling.
According to Weis, it was easy to go from maintenance to product because “in maintenance you’re a demand creator, while with product you’re satisfying demand that someone else created.” Weis studied up on project management, brought in new people, did some personnel shifting internally and started competing. Within a couple of years, the contract dealer business surpassed maintenance in revenues.
Weis credits his end-user relationships on the maintenance side for giving him a key advantage in the market, especially starting out, when his regular contact with end users kept him abreast of plans for moving, replacing carpet or any other decisions that involved flooring. Hearing about it early on would often allow him to get ahead of the project. Weis adds, “It doesn’t always happen, but that’s the plan.”
RD Weis does most of its business in the corporate sector, followed by retail and education. The firm also does maintenance in the healthcare and hospitality sectors, but Weis reports that competition in those sectors is with internal environmental services operations, while corporate and retail rely more on out-sourced janitorial services.
Weis says that the maintenance business is more competitive than in the past, like in the 1990s, when there were more industry-wide initiatives and high-profile programs. Weis adds, “And the biggest competitor is the apathy of the large corporation.”
In those big firms, the procurement process is different, and it can be harder to build direct relationships with facility managers. “You bid, and you might never meet anyone at all,” says Weis.
Weis’ maintenance business, which is run as a separate division, has a dedicated team of 40 technicians with about 15 vehicles. While many of its maintenance customers are also clients of its contract dealer business, the majority are customers they work with independently.
Business Flooring Specialists, a contract dealer and Fuse member headquartered in Fort Worth, Texas, has been in business for 14 years, and it has been doing floor care since almost the beginning. Alan Hill, a 20-year veteran of commercial maintenance, was brought in nearly nine years ago as vice president of maintenance, and he got the firm set up with new procedures and software. Most of the firm’s business is in the corporate sector, where carpet care dominates, and it also does a lot of work in healthcare, which is dominated by resilient and hard surface flooring. The firm also does sealing and polishing of stone, concrete and VCT.
According to Hill, “The profits of maintenance are the best you could ask for.” The rule of thumb he operates by is that a good technician should do at least $150,000 in business a year. Currently, Business Flooring Specialists has a dedicated team serving the Houston and Dallas/Fort Worth markets of 20 to 25 technicians, ten of whom focus on carpet. Hill reports that the fastest growth is currently in epoxy floors and concrete polishing.
This year, Business Flooring Specialists is focusing on going after the accounts it’s working on with general contractors to identify the end users up front and build relationships with in the process.
DSB+, a contract dealer headquartered in Livermore, California, has been serving the San Francisco Bay Area for 20 years. Seven years ago, the Starnet member launched its floor care business, Premier Maintenance Group, in part due to demand from end users for additional services.
According to Mike Patton, CEO, before the decision to go into floor care, there had been constant ongoing discussions about maintenance and floor care providers to look after the end users’ substantial investments, but the firm didn’t have a good floor care company to send to clients so it limited its involvement. But the Great Recession caused businesses to take a closer look at their operations and figure out how to do it better. DSB+ meanwhile did the same, and decided it could be that floor care company.
“It was one of the best decisions we’ve made in our 20 years in business,” Patton says. He points out that his firm installed over $30 million in flooring last year alone, and without a floor care program in place, end users with flooring investments sometimes in the millions of dollars would be left in the lurch. He sees it as natural that those end users would turn to the flooring specialist, the contract dealer, to fill that role.
Patton’s firm joined Starnet 15 years ago, and it was through the Starnet network that DSB+ (which was called DS Baxley Inc. until 2013) was connected to a member in Los Angeles with over 20 years of maintenance experience. Patton flew down to take a look at the operation and immediately saw the merits. That contract dealer was so convinced of the potential of Patton’s venture that he offered to put up half the money for half the company on the spot. When Patton returned and told his partners what had transpired, they realized that that they had better do it themselves.
To create its Premier Maintenance Group division, the firm raised $250,000, and bought a building, new vans, equipment and uniforms. It started off focused on carpet, then quickly expanded to hard surface flooring, and over the next few years the firm also added other services, including concrete polishing, floor leveling and moisture control. Patton says, “Our elevator pitch is that we provide product, consultation, installation and maintenance services for all commercial floor types.” Currently, the firm has half a dozen office staff, 12 technicians in the field, four vans and over $100,000 worth of floor care equipment.
Patton, who is currently the chair of Starnet’s Floor Care Advisory Panel, reports that he’s looking at new opportunities, including maintenance of building exteriors, like deep cleaning and high tech coating of cladding, and maintaining and coating outdoor pavers.
In the mid 1990s, Shaw Industries got into the contract dealer business, acquiring dozens of contract dealers around the country. The firm currently owns 27 Spectra Contract Flooring businesses. In 1996, Shaw purchased Bell-Mann, an Atlanta-based contract dealer established in 1971. Bell-Mann already had an established maintenance operation, which at the time was focused on carpet.
Over the last 20 years, the Atlanta contract dealer, which does business as Spectra Contract Flooring Georgia, has diversified its floor care to include hard surface flooring, ranging from LVT and VCT to rubber and ceramic tile, and it even does artificial turf. It has a dedicated maintenance division with account reps, technicians, equipment and supplies. For carpet, its cleaning solution is Shaw’s R2X.
The goal of the operation is to develop service agreements for regular cleaning schedules that are put together following a consultation and walk-through, and tailored to meet the client’s specific needs. The contract dealer doesn’t do stone polishing, but it will clean furniture and paneling. Total sales for Spectra Contract Flooring Georgia topped $60 million last year, and while the bulk of that comes from product and installation, the maintenance business yields higher profits.
There are several established suppliers of floor care equipment and chemistries, including XL North, Don-Jon and Neverstrip, along with new suppliers like Foaming Floors. In recent years, most of the development of new chemistries has been on the hard surface side, including treatments for LVT, ceramic tile and stone. The expansion beyond traditional maintenance to restorative services like tile and grout restoration and concrete polishing has pushed suppliers to develop new floor care programs.
One market leader is XL North, a division of Textile Rubber & Chemical and sister company to XL Brands, a leading producer of flooring adhesives. XL North dates back about a dozen years, during which time it has worked with the leading manufacturers of both carpet and resilient flooring to create floor care chemistries, including specialty products for linoleum and rubber. It’s a preferred supplier for both Starnet and Fuse.
According to Bill Luallen, national sales director, in recent years the carpet industry has moved beyond its reliance on hot water extraction to embrace processes like low moisture encapsulation. New solutions offer soil protection and even refortify acid dye blockers, which applies to nylon carpets, since olefins and PET don’t have dye sites. It’s not uncommon for inexperienced service providers and janitorial services to use cleaners with alkalinity above 10 pH, and that can permanently destroy dye site blockers. That’s why the Carpet and Rug Institute’s Seal of Approval program (see box on page 65) caps cleaning chemistries at 10 pH.
Manufacturers are constantly pushing the envelope on materials and constructions, Luallen reports, adding, “They’re constantly looking toward new chemistries and techniques to maintain those floorings in a more efficient way.”
XL North’s most recent carpet cleaning introduction, Grab Fortify, is a low moisture chemistry that both cleans the carpet and refortifies dye blockers, in addition to other fiber protection. The chemistry is designed as a productivity tool that should extend the cleaning cycle.
On the resilient side, the firm has come out with new solutions for rubber flooring, which XL North reports is a growing business. Rubber is more pH sensitive than vinyl flooring. In addition, variations in rubber compositions-like paraffin, oil and clay content-require that the firm work closely with manufacturers to provide chemistries appropriate to its products.
Another supplier is NeverStrip Floor Coatings, also a preferred supplier to both Starnet and Fuse. The Chicago firm was started seven years ago by David Beedie, who has a background in floor coating manufacturing, and it specializes in hard surface and resilient flooring chemistries.
As Beedie explains it, for the last 50 years, hard surface flooring has been treated with a floor finish or wax that serves as a sacrificial wearlayer that requires a lot of maintenance-which translates to higher costs. NeverStrip, as the name suggests, produces a new generation of chemistries that don’t easily wear off.
Its original product, mostly targeting LVT and VCT, is a two-part water-based urethane that provides the flooring with a much more durable finish. Since that introduction, the firm has come out with 30 to 40 new products with a broad range of characteristics, from a single coat of urethane for VCT that will last five years between recoats to state-of-the-art Micron technology for polishing natural stone, concrete and terrazzo. For now, the Micron system is the firm’s hottest product.
NeverStrip works with flooring contractors, about 30% of whom have maintenance divisions, along with janitorial contractors and specialty floor maintenance contractors. Starnet and Fuse members make up about a third of its total customer base.
NeverStrip currently has five categories of products: Thin Film, which is the urethane system for VCT; Micron; Tile and Grout; Instant Film, a treatment that cures within two seconds under UV light and is generally applied to LVT; and High Build, a coating with a thickness of 20 mils or greater, generally for high performance applications like commercial kitchens.
The most recent addition to the list of floor care suppliers is Foaming Floors, a business barely six months old that has already attracted the attention of contract dealers and maintenance technicians all over the country. The brain child of Brian Miller, owner and general manager, Foaming Floors is a carpet cleaning process that has been in development for the last couple of years and has a half dozen utility patents pending.
Following his graduation from Ohio University in 2011, Miller, who had previously worked in floor care and maintenance for Rite Rug, returned to the contract dealer, working under Bob DeWeese, the firm’s operations manager, followed by a stint in Denver, Colorado with Acierno and Co., another contract dealer, then with XL North to get a better understanding of chemistries.
Along the way, he developed his idea, a piece of equipment designed for use in low moisture cleaning systems. The invention is a cart bearing a liquid chemistry that is frothed with an attached air compressor into a dry foam that in turn travels by hose to a Whittaker system (a standard carpet cleaning machine with counter-rotating brushes), where it is injected between the two brush heads.
According to Miller, while existing systems require two technicians-one to spray the cleaner and the other to follow behind in the Whittaker-and can cover 1,500 to 2,000 square feet an hour, the Foaming Floors technology only needs a single operator and can cover 4,000 to 5,000 feet per hour. Also, the dry foam, which is infused with Intercept disinfectant, cleans better than the liquids, according to Miller.
The product was soft-launched last summer and tested in the field, and was formally launched at the beginning of this year. And many of the leading commercial contractors have already ordered the machinery for their floor care businesses.
The Carpet and Rug Institute launched its Seal of Approval program around the turn of the century. It started with vacuum cleaners, originally certified under its Green Label program with a pass/fail system, in a more thorough program that measures the efficiency of the machines in various conditions. The current program covers five categories: cleaning solutions, extractors, vacuums, interim cleaning systems, and deep cleaning systems.
CRI also offers a list of certified service providers, with certification based on the use of Seal of Approval cleaning equipment and solutions in day-to-day operations. Currently, there are 1,103 Seal of Approval certified service providers-the program was launched in 2006. Most of those providers are small companies, often family owned, along with franchises like Stanley Steemer. A handful of those providers are specialty flooring retailers with maintenance programs.
One such retailer is Atlanta Flooring Design Centers, which is headquartered in Suwanee, Georgia. The firm, which opened as a full-service retailer in 1985 in a 1,200 square foot operation, has since grown into a major business, with eight locations totaling 110,000 square feet across five states, and annual revenues estimated at $90 million. The firm ranked 29th in Floor Focus’ most recent Top 100 list of retailers and residential contractors.
Atlanta Flooring Design Centers, founded by president and CEO Donny Phillips, started doing maintenance in 1997 with a carpet cleaning operation, investing in a truck and some equipment. Unlike contract dealers who work with GCs and struggle for access to end users, retailers like Phillips work directly with the end-use customer on the residential side, so it’s a case of building off of the already-established relationship. And that ongoing relationship, even if it means contact every two to four years instead of a lifecycle range of seven to ten years, drives future flooring sales.
The firm’s floor care business runs from a single van, and both of the technicians are IICRC certified carpet cleaners. For Phillips, floor care is not a major source of revenue, but it plays a vital role in sales over the long term. “The most important part is that it’s about customer service,” says Phillips.
However, not all of its flooring sales are to the end user. The firm also does a lot of builder business, where it interacts with the developer or home buyer and not the home owner. And it also has a sizeable commercial business, where it also offers floor care, with portable units and machinery for cleaning not just carpet, but also VCT and ceramic tile.
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