Big dollars and big opportunities with schools and colleges: Contractor's Corner - Aug/Sep 2017
By Dave Stafford
If you’ve been met with success in the commercial flooring business, sooner or later you’ll probably think of the profit potential with all of those school buildings you drive by or the local college campus where you’re spending thousands of dollars to educate your child.
Fall is a great time to make plans for this type of institutional business. Perhaps I can save you from the costly mistakes I’ve made. You can make money from this niche and build a long-term annuity, but you should carefully consider these factors: geography, bids and bid awards, large volume and short delivery schedules, and strained credit lines.
GEOGRAPHY IS KEY
The opportunity for most flooring dealers will likely depend on the facilities located in your area. A large, well-funded private university or state-supported college is an obvious target, as are private schools or those operated by religious institutions. Bigger and more complex potential may be with city or county school systems with numerous facilities. If you are considering a move into this business segment, do your research. Write down the names and locations of each and plot the proximity to your company’s location. This will be your raw prospect list; from this, you can begin whittling down to a manageable number on which to concentrate. What you’re after is a list of 15 to 25 prospects that may purchase flooring and installation. One school system may have ten to 200 locations! An ideal selection might be one university, a public school system and a couple of private schools.
The first mistake I made was akin to the “smokestack theory” of selling; that is, I went after the largest school system in my local area. This county school system had about 180 buildings. It took me several months to find out that I was wasting my time: there was an annual contract in place, and large projects were bid separately; the purchasing department was just brutal with bid requirements; the facility manager was virtually impossible to see for a face-to-face meeting; and a flooring specification permitted no “or equal” submissions. They had a product they liked, which I could not buy at any reasonable price, and they didn’t want to change it. This is a nightmare if you’re on the wrong side of it but is an annuity if you are the fortunate manufacturer (or dealer) with that product. After going through all sorts of efforts and threatening to file a protest on the basis of unfairly limiting competition, I eventually was able to bid but was not the lowest bidder-by several dollars a yard.
Don’t go after the largest local target but do stay local. Look at your typical delivery/installation geographic area. I stayed closer to home and limited my involvement to local school systems so that these projects could be coordinated with my other work to avoid undue stress on project management and installation personnel.
RESEARCH, TARGET SELECTION AND TIMING
Early fall is the ideal time of the year to begin calling on your educational prospects. They have just finished-usually by or before Labor Day-their major annual projects. Any mistakes or absolute disasters by their current flooring contractors will be fresh and sharp, and they are more likely to be willing to talk. From this, you’ll be able to gauge your chances of successfully replacing a current supplier or find out if the prospect is unrealistic in his expectations. Time has a way of making the bad things fade and the good seem better. They will already be thinking about what could have been done better or what was left undone until the next season.
I have had the experience, though, that some facility directors don’t want to relive their immediate past and have said, “I am still recovering from this year, so don’t bother me until at least December or January. Then we’ll talk.”
One other reason for pursuit during the fourth quarter is to put your company in a position to compete for the business you’d like to get. Nothing is more frustrating than being told by a facility manager, “I’d really like to do business, but the bids went out in April and are being awarded next week. Why not contact me again in about nine months?” Your ability to position yourself and your products must be timely.
In your qualification process, ask as many of the following questions as appropriate or possible. This will help refine your prospect list into specific potential clients. The best information is gained during a personal visit, with an approach like this: “Mark, I’d like to ask you a few questions about how you handle flooring purchases. This will save you time and keep me on track, and I’ll have a clearer picture of how we might be able to work with you.”
Ask questions like: What is the typical annual purchase volume of installed flooring? What percentage of flooring purchased is carpet, resilient or ceramic? Do you have an annual or multi-year buying agreement? If so, when are bids solicited? Do you use local or regional buying agreements, state or federal government contracts? What is the method used for major purchases, and what time of year is this usually done? How do you handle small or emergency purchases? Do you use a single vendor? How are vendors selected? Is there a qualification process? Would you consider adding another flooring company as an alternate supplier?
With public bids for public schools and universities receiving state money, you can usually find out the specifics of current contracts under the Freedom of Information Act (FOIA), including who got the last award, at what price, what products and services are included, and the term of the contract. This is critical information. When you are trying to do business with private schools or universities, you may find they are less forthcoming with information about what they have done previously, since they are not required to make that information available.
Fine tuning of bid specs may be done between November and January; final approval of the bid document by the end of February; bid publication in March or early April; return date of bids by the end of April or mid-May; and awards by the end of May. Most public schools do 80% to 90% of their annual business when school is out-mid-June until the first of September (around Labor Day). Small projects may be done during the Christmas holiday or spring break. Emergency or unplanned projects will be done throughout the year-but usually from 3:00 p.m. until 11:00 p.m. or on Saturday or Sunday.
TO BID OR NOT TO BID?
What’s the minimum you’d expect an account to purchase, and at what profit percentage, for you to be interested? While a brand new account may purchase smaller amounts to evaluate your abilities, the important issue is the amount they might purchase if you got all of their business. This information should be uncovered during the qualification process. Establish your minimums before you spend a lot of money and time bidding.
Think about your credit lines and how they might be impacted if you needed an extra 15,000 yards of carpet. One approach is to have a candid conversation with your mill rep before you bid the job. Perhaps there is special project pricing on certain products that mills stock heavily. What can they do for you if you are successful and get the bid? “Hey, Jerry. I estimate we may order 10,000 to 15,000 yards of carpet within a six-week period, beginning in late June. Can you help me out by expanding our credit line, perhaps some extended terms? After all, I am going to be using your product exclusively.” The worst possible scenario is when your product is ready to ship, and you discover there is a credit hold. That will do more to send your blood pressure skyrocketing than anything.
Read the bid document and make a checklist of what must be provided and the return date. Many bids have been lost because they were late, a bid bond was not included, qualification information was not provided, or the pricing page was not filled out correctly. Always attend public bid openings and make notes on what other companies have bid. There is often only a ten-day period in which to file a protest. If there were only a few bid responses and the apparent low bidder was unusually low, it might be helpful to have a conversation with your facility manager before an award. Sometimes the extra scrutiny will uncover mistakes that will judge the bid to be incomplete or non-responsive.
AFTER THE BID AWARD
Review the fine print of the award. Were there any changes or “surprises” as to what they expect? Raise the issue now, not when you find out “that all floor prep was to be included” in the product unit pricing. Most facility managers wait to parcel out specific projects. Start pushing for a list of projects that must be done and their priority. They sometimes forget that each project must be measured, substrates evaluated, non-contract items detailed, and everything put in writing and approved before flooring can be ordered. You might say, “Robert, I am thrilled to get the award. To make sure I do the best job for you and avoid problems, how soon can you give me a list of projects and their location within the school system or college campus?” Being organized is critical; you don’t need a salesperson as much as an individual that is pleasant and can carefully coordinate paperwork and project delivery.
WHAT TO EXPECT
The “golden time” for receiving product and getting it on the floor is some six to nine weeks for planned projects with most educational accounts. You must perform within this time period or face a significant, reputation-destroying outcome. Your school or college business has to be a priority, and everyone must be on board with that.
Invariably, there are glitches in delivery and installation. Expect to have problems, stress and personnel challenges. Be willing to pull in extra crews or do some reassignment from other business segments to handle those extra projects. I have seen opportunity in the misfortune of others when they were unable to perform, having once been told by a potential client, “I will never use that company again. Is there any way you can help me out and get product in here and on the floor by next week?” I did it by pulling crews from another job and was assured of business the next year.
The opportunity for big dollars in education is available for you. It does require long-term focus and multi-year planning. Do your homework, get your questions answered, make sure you know the scope of any bids, and be willing to spend the time to build a relationship. Yes, there will be headaches, but if you do an outstanding job, you will build an annuity for your company with school business.
Copyright 2017 Floor Focus