Moving Up And Out
While the current economic environment appears to be improving — though it is still quite fragile — that does not mean that building service contractors (BSCs) cannot grow their businesses or look for new business opportunities.
One opportunity being pursued by some BSCs is expanding their companies by offering services in new geographic areas.
Some large contract cleaning companies can do this by buying an existing business and taking the structure — from workers and customers to office space — already in place and building from there.
However, for the small- to medium-sized contractor, buying another firm is typically out of the question.
Instead, these BSCs must take the time to plan a strategy, take advantage of opportunities and, possibly most importantly, build relationships in the new service area.
The Door Opens
According to Armando Rodriguez, chief executive officer (CEO) and president of A&A Maintenance in New York — with offices in Miami, Chicago and Boston — one way his company has expanded into a new geographic area is to first have a customer there.
This opportunity may present itself when a current customer in one area of the country decides to open an office in another.
If the relationship with the customer is strong and the service is satisfactory, the door is now open for the BSC to extend its reach into that area.
However, growing the business in this way may prove difficult, as not a lot of companies are opening new offices right now.
Rodriguez says, "The more likely scenario is for the BSC to do a lot of research and planning first to see if the prospects appear good that a particular area of the country will see growth in the future. If so, opening an office there may turn out to be a good idea."
One of the first challenges when expanding into a new geographic area is convincing potential customers to hire your company.
A firm may have terrific references, provide excellent service and have competitive rates in one location, explains Rodriguez, "But, how do you convince customers in the new area that these claims will hold true for them as well?"
Some BSCs try to gain new customers by underbidding the local BSCs'' prices.
However, this can prove to be a "loss leader" and, according to Rodriguez, "It''s very hard to open in a new market in this way. Even if you provide tip-top service, if you''re losing money on accounts because of underbidding, it''s a plan just waiting to fail."
Instead, one of the best ways to overcome the "new in town" obstacles is to develop personal relationships with business and building owners in the new locality.
Joining local trade associations and business groups is an efficient way to accomplish this.
"People like to do business with people they know," says Rodriguez. "This is as true today as it was yesterday."
Joining trade groups will not only help a BSC meet business owners in a new area.
Many times, the new contacts want to help the BSC succeed and to become a part of the company''s success.
To do this, they often will sign on as customers.
This has been the experience for A&A Maintenance and is one reason the company has successfully expanded into multiple markets.
"Keeping costs down when expanding into a new geographic area is crucial," says Mathew Perry, product marketing manager for Powr-Flite. "BSCs must watch their expenditures and select cost-effective equipment that is durable and helps improve worker productivity."
One way to do this, according to Perry, is to purchase equipment from manufacturers'' "outlet stores."
The machines offered there are often available at reduced prices.
The equipment may have been used by the manufacturer for demonstrations and training purposes or they may be older models no longer manufactured.
Such equipment generally comes with a warranty.
"In addition, BSCs can save funds by selecting multitask or multiwash machines," adds Perry. "Multiwash machines are designed to clean hard surface floors as well as carpets, matting and even escalators. Obviously, one machine that can clean multiple surfaces provides a savings."
Finally, especially when choosing equipment for large floor areas, Perry advises selecting machines designed to help improve worker productivity.
Because labor is typically the largest expenditure for BSCs, machines that can reduce cleaning times not only cut costs but have a quick return on investment as well.
Are You A Plunge Taker?
With many businesses just keeping their heads above water, considering expanding into a new geographic location may seem absurd.
However, business consultants advise that companies that can and do take advantage of the opportunities available today will position themselves for future growth and success as we come out of the economic downturn.
For BSCs who are considering expanding into a new geographic area, Rodriguez and Perry agree that planning, thought and strategy are imperative.
"And, I would add commitment," says Perry. "Moving into a new area and business expansion in general takes commitment. This is what often differentiates those that succeed from the others."
Robert Kravitz is a former building service contractor and author of two books on the industry. He may be reached at email@example.com.