IN Customer markets ranging from coffee shops and gas stations to banks and grocery stores, local building service contractors have had to adjust their business approaches in recent years. While some of these small shops still exist, national and large regional chains, with hundreds or thousands of locations, have largely taken the place of corner stores, community banks and family-owned restaurants.

And, with this change has come a similar shift in the way small building service contractors approach and serve these types of accounts. Previously, small, local BSCs serviced local customers; word-of-mouth worked as well as any fancy proposals or expensive marketing campaigns.

Now, facility and procurement managers in faraway places handle contracts for the entire region or chain — and they want to deal with as few service providers as possible when doing so. This means 10-employee contractors whose bread and butter used to be local banks and restaurants will find themselves shut out by bigger companies — firms that can handle providing service to hundreds of locations across the region country.

But, some contractors say there’s still space for everyone at the national-account table, if they consistently provide good service, use their size as an asset, no matter how big or small they are, and know how to appeal to the customer, directly or indirectly, for their business.

The big guys
First, the bad news: Small companies will never win national contracts. That much is a given. BSCs need to have the infrastructure, geographical reach and connections to be able to service hundreds of locations uniformly, either directly or through subcontracting. Also, their sales and marketing departments often lack the sophistication needed to sell to a large, far-away customer, says Rick Diamon of SMS Assist in Wheeling, Ill. Contracting managers for these large, national accounts turn to large, national contractors to handle them.

For instance, national accounts make up a good chunk of Newton, Mass.-based UNICCO Service Co.’s revenue, says George Lohnes, vice president of marketing.

“A good estimate of our business would indicate approximately one-third of our revenue would come from multi-location accounts,” says Lohnes. “The vast majority of these accounts would also be considered national or large regional.”

While UNICCO prefers to self-perform as much work as possible — in order to control quality and deliver the same services across its portfolio — sometimes, it’s just not practical.

“Logistic challenges are always present when these bids get larger, particularly when some of the more remote locations are also smaller facilities,” Lohnes says. “Often, neither economics nor logistical considerations make self performance a strong option in these cases.”

In those cases, UNICCO will still self-perform the work as much as possible, but seek out subcontractors to handle specialty work or remote locations.

Enter the little guys
BSCs wanting to partner with large companies such as UNICCO have a few options. Lee Fahrenkrug, owner of First Choice Cleaning in Neenah, Wis., says large firms often contact him.

“Most of the sub-contracting I’ve done was with large national janitorial or facility maintenance companies that take care of the facility maintenance for large national accounts [such as] chain stores etc,” Fahrenkrug says. “For the most part they have contacted me, saying, they need someone in the local area to handle this account locally. Basically you take care of their customer for them and they share part of the income with your company.”

Another way to grab a piece of a national account is to join a network for that purpose. For instance, SMS Assist specializes in servicing these national, multi-location accounts, especially restaurants and retail stores, but it doesn’t have branches in every state. Rather, it has a very extensive list of subcontractors — more than 600 affiliates nationwide, says Diamon. When a national or large regional customer contracts with SMS, the company can tap its affiliates to handle both specialty services (such as windows or hard-floor refinishing) and general janitorial services wherever they’re needed.

Rapid growth has fueled the need for even more affiliates, but SMS won’t accept just any company into its affiliate network. There is quite a bit of research and vetting, Diamon says.

“We look at the work that they do, the pricing they’re used to, and a lot of compliance-related things — insurance, payroll taxes and legal papers,” he says. “We need to learn as much as possible, because we have to protect ourselves and our client.

“We often turn people down, if they run their business in an unstructured manner,” Diamon adds. While a company doesn’t need to be big, or in business for years, to join the SMS network, they do need to be financially stable.

Regardless of who approaches whom, smaller BSCs need both a strong business in their local market, and flexibility to work under another company’s standards, says Lohnes.

A few caveats
BSCs who have financial stability and flexibility and who want to work as subcontractors or network affiliates need to ask themselves a few questions, says Fahrenkrug.

“It all boils down to a couple [of] things: how bad do you need the work and what are you willing to do to get it,” he says. “[The] first rule of thumb is to make sure that you make a profit on the entire deal. They will usually quote you non-negotiable, low prices on various parts of the job, and if you can do the job and make a profit, you usually take it. I can assure you that in these situations your profit margin will be minimal.”

Contractors also need to be aware of what they’re empowered to do without permission, what needs to be discussed with the primary contractor first.

“You are very limited as to what you can do, especially when it comes to good customer care,” he says. “Every time the customer asks you to perform a special task — and they always do — you must have permission to do it and negotiate the cost with the primary contractor. The whole process takes a lot of time and extra energy on your part and the customer ends up suffering as they wait for the decision and the work to be done. Bottom line: It makes your company look like the bad guy.”

One way around this is the Internet; SMS uses a computer-based communication system so all parties in an account know what’s going on at any given time, and subcontractors can respond more quickly to their customers’ needs, says Diamon.

Still, with determination, communication and hard work, BSCs of all shapes and sizes who want to do so can have their piece of the national-account pie.

“It generally works out,” Fahrenkrug says.




POSTED ON: 9/1/2005