Looking for places to go and people to see about commercial business? By this time, you’ll have already set volume and profit targets for 2013 and have begun executing your new prospects call schedule. Here are some tips for the timing of business you may not have considered. When the snow is flying and many are still hung over from the holidays, there is no better time for new sales calls to…
Schools and Universities
Budgets are being finalized and various projects fine-tuned for inclusion in the summer schedule once funds are allocated. There are two specific areas: annual or multiple-year blanket purchase contracts that come up for rebid, and major projects that are comprehensive with a large dollar volume.
Usually, annual buying agreements cover the basic items in flooring: carpet, vinyl tile, wall base, and installation. Take up and disposal, floor prep, or other accessories may be included. This type of contract is supposed to handle maintenance and unscheduled replacement items. Here there is no guarantee of purchase and the contract is utilized if, as, or when products are needed by the facility.
Such a buying agreement is simple to use, easy to administer, fulfills typical purchasing regulations, and can be a goldmine for the astute flooring contractor! In one example, a small school system purchased over $500,000 of flooring without a single bid because they had a buying agreement in place. So, when making that sales call, ask if they have such an agreement and when it comes up for rebid; also, what are the terms, conditions, and experience required to get an award?
I vividly remember one January sales call to a facility manager. He was complaining about his current flooring contractor who was late in providing products, marginable installation quality, and always had a change order request. Unfortunately, he was in the last year of a two-year annual purchase contract and there was not enough “cause” to terminate the deal. “Dave, I just don’t think I can stand one more year of this,… this @#$%^! And he’ll probably bid again this year.”
After thinking about it, I suggested to him that the bids for this year include an alternate awardas backup to the primary award (which went to the low bidder). This way, if the primary vendor did not perform, he could always use the secondary source. He was delighted with the idea. The following year, the primary vendor did about $3,000 and the secondary vendor some $250,000. Problem solved, and he was a great client for many years.
A major remodeling or a new building with a large expected dollar cost does not fall under the usual blanket purchase agreement. This is prohibited by state or local purchase regulations as well as common sense. The buyer expects to receive a better price when there is larger volume and a known quantity.
Most will hire an architect to develop the project scope or perhaps an interior designer. They will provide a complete set of plans covering everything, including flooring. The opportunity here, for a flooring contractor, is to find out about an upcoming project so as to proffer ideas and flooring products to be used in the flooring finish schedule.
Yes, it will still go out to bid, but you’ll have an opportunity to provide a price and mayhave an inside track with the product selections. Also, there are cases when a review of the flooring scope might allow purchase through a buying agreement; an example would be a new building, but a smaller amount of flooring.
One way you can help facility managers or planners is by providing current informationon the potential cost of flooring projects. Offer to do a preliminary take-off for quantity and a range of dollar figures on a potential project. Just make sure you’re accurate. They will use many of your ideas and you will be seen as a valuable resource.
The government’s “year” may end at an odd time, say June 30 or Sept. 30. This is important to know, since it will determine how budgets are done, funds are allocated and money is actually spent. As with educational facilities, it is important to get to know your buyers, facility managers and their problems.
A January sales call should include a checklist prompting you to ask critical questions, such as fiscal year end; purchasing procedures; blanket purchase order usage; Request for Proposal (RFQ) dollar limits; Invitation for Bid (IFB) frequency of use and use of cooperative purchase contracts.
When a fiscal year endson June 30, most spending has already been done by midway into the second quarter. If one’s fiscal year beginsJuly 1, then budgets are usually being finalized in the first quarter; budgets approved (subject to funding) and bids are being prepared for return in the second quarter; funding approved and purchase awards are made at the beginning of the third quarter and work to commence within 30 days; payment to be made at end of third quarter or beginning of fourth quarter.
With the federal government, a new year begins Oct. 1.
Ask how most purchasing is accomplished, and is it formal or informal? A RFQ is usually classified as a negotiated informal procurementsince the government buyer is asking for the bidder to “propose” what they will furnish; this opens the door for you to suggest a method(s) to accomplish the intent of the purchase that may not have been stated in detail by the buyer.
This is for smaller dollar buys where the end user has money to spend but is not expected to know the fine details. There is usually no public opening of RFQ-type bids and no way to protest.
An IFB is a larger dollar formal bid where the government outlines in detail exactly what is to be purchased and is notsoliciting suggestions from you. In fact, your bid may be classified as non-responsive if you bid on anything other than what is specified. “Dave, if I’d wanted your suggestion and analysis, I would have asked for it.” Yes, that is exactly what I was told when I responded with an IFB!? There may be a public opening of bids and detailed rules to follow if you want to file a protest.
Blanket purchase agreements (usually multi-year) may be set up using an RFQ or IFB approach depending on the estimateddollar volume. Once in place, there is no requirement for further bidding. It is expensive to do a bid and it takes time.
No wonder purchase agreements are used at almost all levels of government.
In the last 10 years, there has been a big increase in cooperative purchase agreementsbetween states, local government, and usage of existing federal government contracts. I expect this will continue to drive down the cost of some items.
Commercial Remodeling and Property Management
This segment is intertwined, providing remodeling and finished tenant space. Actually, the first you’ll hear of a job may be from a commercial remodeling contractor asking if you are interested in “giving me a number on this project.” They’ll work from 3 to 9 months out, so the right January contact may mean delivered business in July or August. Smaller, quick-turn projects offer an above-average profit. That’s what you should be doing in the winter, culling your list.
Armed with a company brochure and a brief verbal intro, go visit your prospects. Research them on Google, including specialty and reputation; ask about how theyselect their subcontractors or what buildings they manage. Do they work with a single flooring contractor or bid out everything to everyone? In what dollar limit projects are they most frequently involved?
Get on their list, and if project managers make the awards, then spend time with them. A property management company looks for someone qualified to do flooring repair work; that may be your ticket into their business. Offer quick response time and fair pricing.
Don’t let the winter doldrums get you down. Extra effort and new prospects can ensure a busy summer and profitable fall.
Dave Stafford is a flooring industry veteran who retired as executive vice president of Commercial Carpets of America (“CCA”), a major independent flooring dealer in northern Virginia. Dave has served as vice chairman of Floor Covering Installation Contractor’s Association (FCICA), and is currently a member of their Industry Relations Committee. He was honored in 2007 with Honorary Lifetime Membership for his contributions to the flooring industry. Dave provides consulting services in government contracts and business operations.