If you have ventured into the commercial segment and are looking to increase your sales volume, sooner or later you will think about all of those school buildings that your property taxes support or the nearby college campus.
Be careful in this segment, as it is easy to make mistakes with school business. Learn from some of the mistakes I made if you are pursuing this area and want to save money.
The first mistake I made was akin to the “smoke-stack theory” of selling, that is, I went after the largest school system in my local area. This county school system had 191 buildings. It took me several months to find out that I was wasting my time: There was an annual contract already in place for the school year and large single bids for major projects; a purchasing department that was just brutal with requirements to even bid; a facility manager that was virtually impossible to see for a face-to-face meeting; and a flooring specification that permitted no “or equal” submissions.
In short, they had a product they liked which I could not buy at any reasonable price, and they didn’t want to change. A nightmare if you’re on the wrong side of it, and an annuity if you are the fortunate manufacturer (or dealer) with that product. After going through all sorts of effort and threatening to file a protest on the basis of unfairly limiting competition, I eventually was able to bid but was not low bidder by several dollars a yard.
While I was trying to break into some school business or land a small school system in my backyard, I decided to pursue a somewhat smaller school system in a nearby metro area (about 30 miles away). I just happened to time my phone call and got an appointment with the facilities chief. At the initial appointment, we established a great rapport, and he said, “I’ve heard about your company and we have a large bid that will be coming out next week. I’ll go ahead and add your name to the approved bid list, if you like.”
I quickly said “yes” and felt that all was right in the world. I asked lots of questions and determined that we could buy the product at the right price. When I reviewed the bid document, yardages and square feet of product were outlined with the notation that if they were incorrect, adjustment might be made. So, armed with the fearlessness of inexperience with schools, and too little information about this school system, I put in a bid and was awarded the job for about $150,000 covering various types of flooring replacement in five different schools.
The quoted yardages and square footage were wrong, asbestos abatement was being done and the resulting floor prep needed to correct shot blasting was a nightmare. The worst thing though was the scheduling nightmare: I had not realized the size of the geographic area of this county’s school system; at least 30 minutes was required to even get to the county, and then another 30 minutes to get to the northern-most school. Each of the five schools was at least 15-20 minutes apart. So much for working in multiple schools each day and being efficient!
I had also not realized that major construction was ongoing within each school, so we could not gain access on any productive basis and even when we had access, we were constantly being stepped on by other trades. By the time we finally finished all five jobs, we had change orders equaling another 20%, bringing the job total to about $180,000.
We got paid for most of the work. I was ready to fire my project manager, found out that my buddy, the facilities chief was a screamer, constantly ready to fire us, and refused to take any responsibility for delays caused by his personnel and inept trades scheduling.
Had I understood the potential for disaster and the complete scope of the plans for the summer construction, I would have bid the job for what it was really worth (and may have not been low bidder). After all the pain and agony, our gross profit percentage on the project was in the single digits!
Well, I learned my lesson from this debacle and went after one of the smallest school systems in my immediate area. They were not nearly as sophisticated in their facility management or purchasing approach. I made friends with the harried facility manager, who was in charge of 12 schools. I found out quickly that the only business I would get this year would be overflow or emergency jobs that his regular contractor couldn’t handle. He had a current contract that would bid again the first quarter of the following year.
One day he said what I was waiting to hear. “Dave, I’m not particularly happy with bottom line pricing and performance of my current contract holder. There always seem to be exceptions to the contract price and I’m paying a fortune for floor prep on every job. Can we talk toward the end of the year and see if you have any ideas for me? Perhaps I need to revamp our bid solicitation for the next season.” Since this was a nearby school system, I was determined to follow up and get a chance for next year.
Lesson: Stay local.Don’t go after the largest local target, but stay local. Allow yourself time to cultivate this type of account, be prepared to do a number of small jobs to pay your dues, and find out if there is the potential to knock out the current contract holder.
Lesson: Adhere to a specific timetable.If you miss this, you are out of luck for this year (and maybe next year) for any real business. 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 end of April or mid-May; and awards by end of May. Most public schools do 80-90% of their annual business when school is out, i.e., from 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 to 11 p.m. or on Saturday or Sunday.
Lesson: Start well-in-advance.In the case of public bids (for public schools and universities receiving state money), you can usually find out the specifics of current contracts under FOIA (Freedom of Information Act), 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. After you get this info, you then need to find out if you can get the specified product, at what price, or if there is a way to do value engineering and provide a similar product.
You should visit the top facility manager most responsible for the scope of the bid specification and find out the dollar potential annually. 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.
One lesson I learned was that bigger was not necessarily better. I stayed closer to home and limited our involvement to local school systems so that their projects could be coordinated with our other work to avoid undue stress on project management and installation personnel.
So, if you’ve decided to go back to school, learn from my mistakes. 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. If you do an outstanding job, you will build an annuity for your company with school business.