What's the best way for a building services contractor to view the current economic downturn? According to Armando Rodriguez, CEO and president of A&A Maintenance’s New York branch office, “A business owner must always stay optimistic. He must view tough times like these as the glass being half full, not half empty.”
Rodriguez believes BSCs should not panic about the current state of economic affairs but instead keep their focus on being positive and even look for new business opportunities. And as uncertain as things are today, some BSCs are expanding their companies and services into new geographic areas, opening multiple offices.
The way some of the large contract cleaning companies expand their businesses and move into new areas of the country is relatively simple: They just buy an existing business and build from there. This way the necessary structure—from workers and customers to office space—is already in place. The new owners acquire what is essentially a turnkey operation.
However, for the small-to-midsized contractor, buying another firm is typically out of the question. Instead, the moderately sized BSC must take the time to plan a geographic expansion strategy, take advantage of opportunities, and perhaps most importantly, build relationships in the new area.
The Door Opens
According to Rodriguez, the ideal way to expand to a new geographic area is to first have a customer there. “This was initially how we expanded A&A,” he explains. “Having a customer in the new area gave us a foothold, and we were able to develop a customer base from there.”
Sometimes this happens because a current customer in New York, for instance, decides to open a location in Florida. If the relationship with the customer is strong and the service more than satisfactory, Rodriguez says the door opens, and the BSC can take advantage of the opportunity.
“However, a lot of companies are not expanding right now, so this means the BSC must do a lot of research and planning first. If prospects are good that a particular area of the country will see growth in the future, 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 customers in the new area know that will be true for them?”
Some BSCs try to overcome this problem by underbidding the local companies, acquiring new customers because their charges are too low to pass up. However, this can prove to be a “loss leader,” says Rodriguez. “It’s very hard opening new markets. Providing tip-top service and losing money on accounts because of underbidding is a plan just waiting to fail.”
Instead, one of the best ways to overcome the “new in town” concerns 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. “We have all heard it said, and it is as true today as it was yesterday,” says Rodriguez. “People like to do business with people they know.”
Not only may joining trade groups help a BSC meet business owners in a new area, but often the new contacts want to help them succeed and be a part of the company’s success. They will sign on to become customers. At least for A&A, this has been the experience and one reason the company has successfully expanded into multiple markets.
“Keeping costs down when expanding into a new geographic area is crucial,” says Robert Godlewski, vice president of marketing for Powr-Flite, a leading manufacturer of floor and carpet care equipment based in Fort Worth, Texas. “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 Godlewski, is to purchase factory-refurbished equipment directly from the manufacturer. These machines are often available at greatly reduced prices. Typically the equipment has been used by the manufacturer—for instance, just for demos or training purposes—and comes with new-product warranties.
Finally, especially when choosing equipment for large floor areas, he advises selecting machines designed to help improve worker productivity. Because labor is typically the largest expenditure for BSCs, machines that can reduce cleaning time not only cut costs but have a quick return on investment as well.
Are You a Plunge Taker?
With most businesses in the U.S. concerned about just staying “above water,” considering expanding into a new geographic location seems almost absurd. But even though the professional cleaning industry is no longer immune to economic downturns—as it seemed to be in the past—the industry does appear to fare far better than many others during such times.
For BSCs who are considering expanding into a new area, planning, thought and strategy are imperative. “I would also add commitment,” says Godlewski. “Moving into a new area and business expansion in general takes commitment. This is what often differentiates those that succeed from the others.”