Strategic Exchange - June 2008

By Geoff Gordon

It seems that everything you read or hear about in the media today is negative. The war in Iraq plods on, oil prices are at record levels, the economy is struggling, food prices are at all time highs and even the president has record low approval ratings.

With that said, isn’t that the norm to sell newspapers and to grab viewers? After all, it is an election year. It is interesting that in spite of all the negativity there are many businesses that are holding up surprisingly well.

I recently attended the annual meeting of the ReSource Commercial Flooring Network in Savannah, Georgia and was pleasantly surprised by the upbeat mood of virtually all the attendees. It would seem that the commercial flooring market continues to be strong despite the struggles taking place on the residential side of the business. Flooring contractors across the country were all reporting relatively robust business. Many felt that 2008 would be one of their best years!

One of the greatest advantages of working on the commercial side of the business is that many of us deal in multiple market segments. In California, where our company is located, we enjoy a very diverse and extraordinarily large economy. We focus every day on strategies that will deliver business in the hot market segments here. In our state, healthcare and institutional projects continue to be very strong. The apartment business has never been better, as many people are no longer qualifying for home mortgages. Retail renovation work is very strong—many chain stores are upgrading their aging properties to attract new customers. Corporate work has dipped but there are plenty of companies that are also renovating and/or moving to new and different locations (downsizing). Even the hospitality segment has brought us some nice renovation work for high end hotels and restaurants.

The point in all of this is, don’t buy into the negativity that sometimes seems all around us! How many customers are buying commercial floorcovering that we don’t even know about? The way to beat the blues and to grow your business is to sell. Sure, all flooring contractors bid work—that is a key component to all our businesses. But the best and most profitable business comes from getting out to see customers, i.e. coming out from behind your email and cell phone. We have found that networking is also a key to growing our business. Organizations such as IIDA, IFMA and BOMA have brought us new customers.

After spending 25 years on the manufacturing side of the business for both Armstrong and Designweave, it was clear there were literally thousands of customers purchasing floorcovering. After moving to the dealer side in 2003, I realized that you can end up in your own little world, sometimes worrying more about protecting your existing accounts than growing the business. For a company to survive, you must always be looking for new customers. You also must weed out the bad customers. Cash flow is tough enough without having to put up with companies that consistently pay in 90 to 120 days.

As a carpet manufacturer, once we took the order there was not much else to do except ship on time (for some manufacturers this is more challenging than others!). On the dealer side, we work hard to get the order and even harder to install the job on time and meet customers’ expectations. This doesn’t take into account the time and effort we put into analyzing the job to make sure that there are no “time bombs” such as moisture that can come back and haunt us later.

Flooring contracting can be a mundane, tedious job if you let it. We work hard to keep our company vibrant so that our employees feel they are part of something special. To be a vibrant company, you must always analyze and react to the changes in the marketplace. Carpet tile is really taking over from broadloom so we have worked hard to improve our lift techniques. Hard surface has made huge inroads into healthcare, retail and institutional so we have focused on more training for our hard surface installers. Ceramic and stone have become a factor in almost every segment so we have refined our estimating to address this.

The contracting business is tough enough so we also emphasize fun. We have periodic luncheons for our employees and celebrate all birthdays. We have holiday parties and give awards for outstanding achievements in various categories at our annual sales meeting. It makes everyone feel that they are part of a family.

One of the toughest hurdles we face today as flooring contractors is the increased aggression of our suppliers. It seems that many vendors will go to any length to secure projects. We are in a world of selling direct and when times get lean it seems that many of our suppliers submit to selling the customer direct even if it isn’t in the customer’s best interest.

End users are always operating under the guise that buying direct from the manufacturer saves them money. This is not always true because there’s a lot that goes into the operational aspect of flooring. Where will the goods be delivered and stored? How will the material be staged at the jobsite? What is the condition of the sub floor? Who will be responsible for the various transitions between different types of flooring?

As contractors, we have to keep building on our expertise and continue to promote to the designer and end user what we do best. There are many kinds of products that have proprietary installation techniques. We provide a problem-free environment including securing the material and getting it expertly installed with the least amount of inconvenience to the customer. It is what we do!

When a customer buys material direct, who determines what the right quantities are? Who is responsible for all the planning prior to installation? Who accepts responsibility if there is a failure? Our role in the installation process should never be diminished. We are not installers, we are flooring contractors who manage, estimate, consult and ultimately install all types of flooring products. We know the pitfalls of using the wrong products in the wrong applications. Our experience is second to none.

Lastly, business is about intensity. How much intensity do you bring to your customers and your employees? Any jobsite problem can be overcome. The key is to take the phone call right away and do what you tell your customer you are going to do. Too many salespeople hold off making the call to an angry customer. The more time that goes by, the angrier the customer gets. Nip it in the bud right away. Take care of your employees and show them that you care. Helping an employee succeed at work is one of the greatest joys of being a manager.

In this world of negativity, my best advice is not to buy into it. We can all create our own success!

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