Doing Commercial Jobs vs. Building a Commercial Flooring Division

A flooring company can do commercial work for years without ever really building a commercial division. We did commercial jobs at Sanford Carpet & Flooring before I would say we had a proper commercial business. A law firm needs new flooring, a church calls, a local business needs carpet replaced and someone refers you to an office renovation.

You quote the work, win some of it, install the floor and move on to the next customer.

That's commercial flooring. But there's a big difference between doing commercial jobs and building a commercial flooring division.

It took me a while to understand that difference and once I did, it completely changed the way I looked at growing the business.

➡️ Commercial work doesn't automatically mean you have a commercial division

Most established flooring companies will eventually get some commercial work, tt almost happens naturally. A residential customer owns a business, someone at a church knows you, a local office needs flooring and a contractor calls because their usual flooring company is busy. See the trends? And these can all be good jobs.

But ask yourself a simple question: When that project is finished, where does the next commercial job come from?

If the answer is... "Hopefully someone calls us." ...then you're still relying on individual jobs.

That was the part of commercial that became interesting to me. I didn't just want another commercial project. I wanted to know where the next one was coming from.

➡️ The customer matters more than the individual job

Let's say you install flooring for a law firm. They may have another flooring project in five years. Maybe sooner. Maybe never. Now compare that with building a relationship with a General Contractor who has projects happening throughout the year. You might start with one job. If you do good work, communicate properly and prove you're someone they can rely on, there can be another opportunity behind it. Then another.

That's a completely different type of customer relationship. The same can apply to Property Managers, Facility Managers and organizations responsible for multiple properties.

The opportunity isn't only the floor you're installing today. It's the relationship behind it. That was one of the biggest changes in how I started thinking about commercial flooring.

➡️ Stop starting from zero

One of my frustrations with the residential side of flooring was how often it felt like you were starting again. You need another homeowner... Then another... Then another.

We spent money over the years on Facebook, magazines, direct mail and other marketing. Some things worked better than others, but the basic problem was always there. You put something into the market and wait for someone to respond but the truth is that you don't have much control over when the phone rings.

Commercial gave us another option. We could decide what type of customers we wanted to work with and we could go into the market and build relationships with them. And if we looked after those relationships properly, we didn't necessarily have to replace every customer after every installation.

One relationship could produce multiple opportunities. That's when commercial started to feel less like a collection of jobs and more like a part of the business we could actually build.

➡️ A commercial division needs more than sales

This is where I need to add a warning. Building a commercial division isn't simply going out and finding a bunch of commercial customers. You have to be able to support the work once you get it. This is something residential flooring companies can underestimate. Commercial has different margins, the sales cycle can be much longer and payment can take longer. You also need people who can read plans and perform takeoffs. You definitely need installers who understand commercial environments and can work around other trades. And most of all, you need enough cash flow to pay for materials and labor while you're waiting to be paid. As the projects get larger, small mistakes can become very expensive mistakes.

You can't build the front end of a commercial division without building the back end to support it. That's why I don't see commercial as a quick way to fix a slow residential business. If you're going to build it, build it properly.

➡️ More bids isn't the same as a better pipeline

There's another mistake I see in how people think about commercial growth. They measure success by how many jobs they're quoting. Twenty estimates must be better than ten! Fifty must be better than twenty! I'm not convinced.

If you're one of ten flooring companies pricing every project for a GC who always chooses the lowest number, you can stay incredibly busy estimating without building much of a business. I've never believed the answer is simply: Put out more estimates and eventually you'll win more jobs.

I'd rather know we're talking to the right customers. At Sanford, our ideal commercial customer was someone who understood the value we brought to their business and treated us as a partner in their success. Price still mattered. Of course it did. But it wasn't the entire relationship. Those are the customers worth building around.

➡️ A good commercial customer can be worth far more than one project

This is where the numbers on an individual job can sometimes distract you. Imagine two opportunities.

1. The first is a large project with a customer you've never worked with before. Ten flooring companies are bidding it and everything is coming down to price.

2. The second project is smaller, but it's for a GC who has regular work and is looking for a flooring company they can rely on.

Which is the better opportunity?

You can't answer that by looking only at the contract value. That's the point! The biggest project isn't automatically the best opportunity. Over time, a good commercial relationship can become much more valuable than one big job. And there's another benefit that I didn't fully appreciate until later. Predictability!

If you've got a group of existing commercial customers who continuously feed work into the business, you have a much better idea of what future sales can look like. That matters while you're running the company. And, as I learned when we sold Sanford, it can matter when somebody else is looking at buying it too.

➡️ Selling Sanford made this even clearer to me

When you're running a flooring company every day, you're naturally focused on today's problems. Crews. Customers. Projects. Cash flow. The next sale!

Selling the company made me look at it differently because suddenly you're seeing the business through a buyer's eyes. Of course buyers care about profitability and fixed expenses. But they also care about what happens next.

Where will next year's sales come from? Nobody can guarantee the future, but a business with established customers providing ongoing work gives a buyer something important: More confidence in the forecast.

If your entire business depends on finding a completely new customer every time you need another sale, future revenue is harder to see. A stable group of commercial relationships changes that. I think that's one of the most overlooked benefits of building the commercial side of a flooring company. You're not only trying to increase this year's sales but you're building something that can have long-term value.

➡️ So what does a commercial flooring division actually look like?

I don't think it needs to mean a huge office full of estimators and salespeople. It certainly didn't start that way for us. To me, the difference is much simpler. You're no longer just accepting commercial jobs when they happen to find you...

✔️You're deliberately building the part of your company that serves commercial customers.

✔️You know the type of customers you want.

✔️You have the ability to price and deliver the work.

✔️You understand the cash-flow demands.

✔️You have the right installation capacity.

✔️You build relationships rather than simply chasing individual projects.

And most importantly... there's a reason for the customer to come back.

That's a commercial division.

➡️ Don't just ask, "How do we get more commercial jobs?"

I'd ask a different question: "How do we build a commercial customer base?" They sound similar. They're not.

One keeps you focused on the next project and the other makes you think about the next five years. When we figured that out, commercial became far more interesting to me because we weren't simply waiting for work anymore. We were building relationships that could create work again and again.

That's what I believe flooring companies should be aiming for. Don't just build a list of commercial jobs you've completed. Build a commercial side of the business that keeps creating the next one.

About Lawrence King

Lawrence King spent more than 12 years building Sanford Carpet & Flooring in Florida, completing more than $20 million in commercial projects and serving customers. After building and recently selling the business, Lawrence founded Commercial Flooring Pipeline™ to help established flooring companies build profitable, predictable commercial divisions.

Are you doing commercial jobs, or building a commercial business?

Commercial Flooring Pipeline™ helps established flooring companies build the relationships, systems and commercial operation needed to turn occasional commercial work into a long-term part of the business.

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