Marketing and Sales for Commercial Millwork
Commercial work can bring headaches and heartburn. But if you're willing to risk that, how do you position yourself for that market? February 17, 2011
Question
What is the best way to market commercial millwork? Is there a good way to increase sales? Is a commissioned salesperson the way to go in this area or is it better to have a salaried estimator who gets new business, builds relationships, and estimates?
Forum Responses
(Business and Management Forum)
From contributor W:
Commercial mill work is usually not "marketed." It's usually bid. If you don't know this, then I suggest you hire somebody who is familiar with the business because you are about to jump into the deep end without knowing how to swim.
From contributor H:
Commercial millwork is all about the bidding. Know your costs really well. Hunt for jobs that match up with your capabilities, prepare for a 5-14% success ratio and prepare to walk away when the job isn't profitable for you (and know when that is). If you have a commercial lead or two, ask them these kinds of things. You might get an interesting perspective from them and maybe some business too. Even in this tough environment contractors often don't buy the low bid. They buy the bid they can rely on to do the work.
From contributor R:
There are a number of ways to market commercial work but the most basic is to go out and get some and do a really good job. This will involve being low bidder for a few jobs, and entails some risk. You can minimize the risk by taking the AWI Project Management seminar, which will give you some positive background on how to make your way through a commercial project. Follow Contributor H’s advice above, and be sure you are equipped to do the work you are bidding - residential kitchen makers are often poorly set up to do laminate work for instance.
Start with small, simple projects and do them really well. Many commercial contractors are looking for conscientious, responsive, quality minded subs, and while you may have to be low bidder to get schools and other public work, there is a steady stream of private work that often goes to the best sub, rather than the cheapest. If you keep at it, and pay attention to the good contractors are, you'll develop negotiated relationships, and start getting bigger projects that are mutually profitable.
When you have developed competence, go talk to the bigger commercial shops in your area. They too are looking for quality subs to do their overflow work, or to send projects that are too small, or that don't fit their schedule. Present all of your bids in a clear, detailed format that is very specific about what rooms, elevations and items you are including, what you are excluding, what your schedule will be, etc. Even if you are not low on the first dozen jobs, you will get the attention of estimators and project managers who are looking for professionals to work with.
Develop a wide range of competence and include everything that is shown as custom woodwork on the plans. Your customers are looking for a one stop, no hassle shop that will get them through a project smoothly, and they hate it when you refuse to do an integral part of the job, or worse yet get a contract and then say you didn't include something crucial. Read the local business magazines and make cold calls when new projects are announced.
Invite architects to lunch and learn sessions at your shop. Invest in a lunch and show them how clean, efficient and productive you are and how good your work is. They will direct private customers and general contractors to you. Get to the point where you can bid everything, public and private, that is out there. The more you can bid, accurately and quickly, the more likely it is that you will be the only bidder on a few projects every month.
From contributor E:
To contributor R: we did almost all the things you mentioned. Your advice is good. However, after developing a good reputation with GC's in our large metropolitan area, we gave-up anyway because of the hassles. While it's true that some GC's are looking for conscientious, responsive, quality minded subs it didn't stop them from playing all the usual games to delay payment. We finally got fed-up with them and left the commercial cabinetry business. It took months to stop several of the GC's from asking for bids from us.
From contributor L:
I agree with what Contributor R said but we will no longer bid most government work. It usually goes so cheap we can't maintain a profit and do a quality job. We have worked on making the contractor’s job easier. We are a one stop shop, provide detailed professional shop drawings and don't nickel and dime the contractors for every minor change. We take special care to make installation easy and always deliver on time. Some but not all GC’s will appreciate the extra effort and give us jobs that on which we are not the low bidder. We will not bid to at least half of the GC's in the local area. Their practices raise our costs. We've established good working relationships with other shops in the area and cooperate on some types of jobs. There are risks there so beware. If you are not selling at low prices you have to keep your reputation in tact! You will need better financing to enter the commercial market, delays are common in both the construction schedule and payments.
From contributor F:
The best way to market commercial millwork is to focus on what you excel at and market that niche. The easiest way to find commercial work which can lead to the most frustrating jobs is to use builder’s exchanges, Bluebook, etc. That is the work that 90% of the time price wins. Yes you can bill for engineering, yes you can billed for stored goods if you bond them, yes in some instances you can get a deposit but don't count on it. You can sell what you do well or you can sell what they market is offering to purchase, it can be two different ways of dealing with customers. There are a lot of quality generals out there, you just need to find them and provide what they want when they want it in the manner the want it for a profit.
From the original questioner:
Everyone who has posted here has valuable information. My concern is trying to bid commercial work on a commission only basis. I personally find this to be a flawed method of obtaining work in the commercial realm. I think it should be a salaried estimator who can also handle marketing as well. I am curious to see if my way of thinking is on target or is a commissioned person the way to go.
From contributor W:
Well you're exactly right - commission only sales are a dead end. I have seen complete companies brought down by a single salesman/estimator that underbid lots of work just to rack up sales. A salary plus some commission as incentive works ok but the best way is for you to come up with a pricing method and then review the bids before they are let. Salary only for estimating jobs is probably the best way but you still need to be the one in control of your pricing. If you don't know your costs as well as a sell price from your estimates you're playing with fire in this market no matter how you pay your estimators.
From contributor J:
The estimator has to be accountable at the end of the job. If they are commission and pricing low just to get work and in turn a large paycheck it will catch up with the company. Even a motivated salary estimator will cheat pricing to get jobs. You have to have a pricing system in place and years of experience, never bid low for work and maintain a mark up at all times. We review our quotes at the end of jobs when the hours are handed in as well as the actual materials list. We take note on things that took longer/shorter than quoted.
