New Markets: Enter With Care

Bill Almquist, president, Almcoe Refrigeration — the Contracting Business.com 2008 Commercial Refrigeration Contractor of the Year, says entering a new market is very much based upon capabilities, and relationships with existing customers. First, you have to assess your talent base.

"You've got to have people in your organization with expertise in the area you want to get into, and that experience must go beyond just one project. It's got to be someone who has first-hand knowledge of working in that refrigeration environment.

Second, prospect among existing customers.

"For example, I would go to a supermarket customer and say, 'We're doing your grocery store refrigeration, what about your distribution center, or your commissary?' Those areas all require refrigeration service. Scour your existing customer base for those opportunities, and find the new business in that area. Once your people and relationships are in place, get on the bid list and go after it," Almquist advises.

Third, align yourself with manufacturers' representatives who handle that type of equipment.

"If it's cold storage, you want to get with a manufacturers' rep who sell warehouse refrigeration equipment. Also, get to know a rep one who sells insulated wall panels and warehouse doors. Get to know them at trade association gatherings, and develop a good business relationship with them," he says.

"The final piece to the puzzle is to scour your existing customer base to see if they have needs in that area. If it's related to refrigeration, then go for it. But, don't go into something you know nothing about. You must have some competency in the area. If you're in the store working on the refrigeration system, why not take on the ice machines, drink dispensers, and HVAC?" Almquist says.

Demand for Remote Services
Bob Axelrod, president, Cooling Equipment Services and CES Mechanical, Elk Grove, IL, has found new business in remote monitoring and systems controls services. Three very diverse customers — a produce distributor, a drug storage and distribution business, and a catering business — are all based in three distant states, yet they all have the same need: close temperature monitoring for the refrigeration needs of perishable items. CES has an advantage in that they custom-design their temperature controls for each unique customer.

"We handle large refrigeration equipment over the Internet with our custom-designed system. It’s represented a great opportunity for us,"Axelrod explains. "It includes remote monitoring and system conrol. We can make adjustments, or determine what’s causing a problem before the owner even knows about it. The controls operate the customer's refrigeration system on a day-to-day basis, so that they don’t have to watch it closely. It also saves them a huge amount of energy."

Axelrod says a contractor who is considering entering a new market must ask themselves three questions:

1. Can you compete? Look at your expertise to be sure you can compete with others. In any market you go into there are already established companies.

2. Do you have the capabilities and the people that are willing to learn — both salespeople and service people —who need to know how to develop an expertise in the system, whether it’s controls or a new type of unit?

3. Do you understand the type of problems that are typical in the sector you’re looking at? What are they looking for, in either a system or company, that will cause them to consider you as a potential provider? Is there a benefit to using your services?

"Every segment has its own problems and requirements," Axelrod warns. "Whether it's a drug company that needs many FDA reports, or a food industry company that needs to maintain temperatures in tight tolerance. It's not like comfort air conditioning, where close enough can be good enough. If they go out of spec on temperature, they may have to throw out millions of dollars worth of product. The customer can help you understand those requirements, but you have to know the questions to ask."

Axelrod encourages contractors to conduct a "SWOT" analysis of your firm’s Strengths, Weaknesses, Opportunities, and Threats.

Strengths/Weaknesses: Know your abilities, and what you have to learn.

Opportunities: Are they real opportunities?

Threats: If you spread yourself too thin, are you leaving other areas of your business open and vulnerable to competitors?

"It’s 95F in Chicago today, and we're three days behind on service calls," Axelrod says. "If we went chasing after a perceived, new opportunity that takes three of our best guys off the street for regular customers, will our regular customers start looking for another company?"

Axelrod adds that pioneering contractors must accept the fact that there's a cost and a learning curve to entering a new market, a cost they will have to pay for, not the customer.

"You're going to make some customers upset with mistakes," he says. "So, you have to be willing to compromise, work with customers and accept the cost of learning."

Selling Energy Services
AAA Refrigeration Services, Bronx, NY — the Contracting Business.com Commercial Refrigeration Contractor of the Year in 2008 (see http://bit.ly/AAACBCOY) — has also found business related to energy services. Jim Kirk, AAA’s anager of energy services, was brought on board last year, to help it expand its energy service offerings. His experience includes 13 years as a field energy manager for A&P supermarkets.