Changing Business Landscape: Emerging professionals talk about the commercial contract sector post COVID-19 - May 2020
As the nation looks toward reopening following the coronavirus pandemic, business leaders and employees alike ponder what the new normal might look like and how the changing landscape will impact both day-to-day operations and long-term outlooks.
To gain some perspective on how various aspects of the commercial flooring business will be affected, six of Starnet’s emerging professionals in the commercial contract arena share observations about the changing nature of business during the coronavirus pandemic and consider what may be permanently altered after it.
How will labor be impacted?
Matt Bode, vice president of CB Flooring, Columbia, Maryland
In the long term, if social distancing protocols remain in place, it will mean smaller crew sizes, staggered installation schedules, shortened work weeks for months, possibly years, to come, and as a result, there will be a loss of productivity. There will also be more virtual communication between foreman and mechanics, which people have seen is possible and even comfortable.
In the medium term, there has been a heightened awareness of the risks and safety of the folks in occupations not previously thought to be in danger-grocery store workers, delivery people, construction workers-that have now been deemed “essential.” The question is whether we will have to pay more long term for labor because of that. Construction work for the finish trades has never been a high-wage industry. Are the current labor rates compensating them for the additional risk? Will this reduce profits for flooring contractors who have already booked contract work before this pandemic, which now needs to be installed?
How will coronavirus impact the type of work that contract dealers do?
Kaddy Hamilton, president of W.C. Carpenter, Virginia Beach, Virginia
The slowdown created by the virus is going to create a unique opportunity for reputable businesses to put themselves in a position to capitalize on marketshare moving forward.
As we look ahead, we see tremendous opportunity in the following segments: K-12, higher education, places of worship, (commercial end users), property management and tenant improvement. These are all segments that we work with on a daily basis, and we feel the next few months will be an optimal time for installations if the stay-at-home orders are still in place.
It is important to be cognizant of the situation at hand and realize the current fiscal reality of our nation. While an interior renovation may not be top of mind at the moment, all of these segments do have projects on their radar that maybe they have been putting off for the last few months, many of which already have allocated funds. Our job is to let our customers know that we understand what is happening right now while also creating a sense of urgency for any projects that they may have been on the fence about. These types of customers are essential for good cash flow because you can get deposits on materials and get paid when complete. We have avoided general contractor work for a couple of years now and realize how beneficial it has been to us since then and especially during these unique times.
Another focus of ours has been offering other services, such as painting and furniture, where we see a need that we believe we can handle. We adapt in ways that we find meet our customer needs.
What will be the long-term impact of working from home?
Garrett Ulfig, director of Southwest service of MasterCraft Carpet Service, Las Vegas, Nevada
This new reality of working from home has changed how our team works. My senior estimator and I have been talking for quite some time about getting full set-ups at home to mimic our offices so we can hop on a project or send an email whenever we want. The pandemic forced us to speed up the process.
I set up a Microsoft Teams chat with my core team that I need to stay in close contact with. This has worked out well, and I see it as a tool we will continue to use when we are back in an office setting. It offers one location that we can keep in contact and is better than back-and-forth email.
My typical management style was to walk around the office and warehouse during the day to check in with the team. Now, I check in with our operations and installation managers a couple of times a day, our senior estimator at least once, and our other estimators, office manager and project engineer, as needed. Most other communication is done through Microsoft Teams, text message or email.
Leadership continues to be a challenge. When I have my team all in one place, I can get and gauge their feedback in person. I like to gather my team to coordinate and tackle a project or just confabulate. I can’t do that anymore.
How will the coronavirus epidemic impact the accounting process within commercial dealers?
Jesse Hailey, vice president of operations at Howard’s Rugs, San Diego, California
This sudden change of the business landscape has proven that accounting teams are not prepared to work remotely. How do you process invoices, collect money, cut checks from your dining room table and still maintain the controls required when dealing with money? While the contract signature process moves to mostly digital platforms, many manufacturers and distributors still physically mail invoices and refuse to accept credit card or automated clearing house payments. This could put an end to that process and force companies to move away from the established ways of doing business. With these changes to digital platforms, ownership must be diligent to implement the same level of controls and separation of duties to prevent fraud or embezzlement.
In addition, the sudden halt of business could negatively impact each organization’s line of credit with its bank and also the established bonding rates with its surety company.
However, not everything from the coronavirus is negative. While maintaining a strong bank balance and minimizing the days outstanding of receivables are pillars of a strong balance sheet, I think people are realizing that 60- and 90-day terms are no longer acceptable. There will be more of an emphasis on renegotiating payment terms with owners and general contractors to expedite quick payment for work performed.
How will the way we interact with the A&D community change moving forward?
Stephanie King, design and project specialist at Bonitz, Charlotte, North Carolina
We have been reminded of the importance of staying agile in each of our markets. The types of service some designers respond to, others may not. Customer service practices that previously worked may fall flat now that technology takes precedence in our ability to connect.
With future safety measures in mind, we anticipate future guidelines will be put in place, limiting the amount of interaction a firm has with outside vendors. We have already begun to see precursors to this, such as swapping in-person lunch-and-learns and product updates to a virtual presentation format. We also anticipate firms implementing a much more limited schedule for library updates and potentially requiring an appointment to come into the office, which would mean surprise drop-ins could become a thing of the past. Where our roles required creativity in connection before, that is elevated even more so in a time where access to our customers is a lot less predictable.
We recognize that this is the time for us to leverage our relationships and continue to provide superior service. Now, more than ever, our value becomes more apparent as we can save designers time, streamline the decision-making process and help keep their projects on schedule. Curating physical sample selections remains critical, as designers are still most comfortable making finish decisions with real life samples. As technology increases and online visualizer capabilities grow, we may begin to see design libraries shrink.
Technology has helped me to creatively connect with my customers during the mandated stay-at-home era. Virtual happy hours have been a critical tool, allowing valuable face time with customers. We recognize the value in being a friend first and understanding that this builds trust and community.
What impact will advanced technology have on our business?
James Vanhauer, Jr., vice president of Commercial Flooring Systems, Omaha, Nebraska
As employers and leaders, our immediate behavior and decisions will be some of the most important to date and will impact how we are viewed as an employer of choice. Many decisions we have been making as a company have revolved around how critical technology is going to be to keep employees engaged and productive through our “current normal,” not knowing how that evolves over the next year.
Organizations tend to be resistant and slow to change. It is no different for a small business flooring contractor. We have operated historically and comfortably with weekly large in-person company meetings, consistent exchange of files that contain volumes of paper to back up a project, and verbal confirmation of order and job status. That has all been flipped on its head with the circumstances surrounding this pandemic, though the results are nothing but encouraging. Our IT company was able to set up people with remote access quickly so they can be productive and engaged with our enterprise software while working from home.
We are now exploring whether it makes sense to take our enterprise software to 100% cloud-based application, realizing remote access consumes higher bandwidth on our on-premise server. Cloud-based applications are also more user friendly while working remote than a traditional VPN access can provide.
The weekly meeting venue has changed to Microsoft Teams. The utilization of Teams has shifted some of email communication to instant messaging, freeing up inbox space and limiting the abuse of the dreaded “email conversation” that we have come accustomed to.
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