Commercial flooring is often talked about as a single market, but for dealers looking to diversify beyond residential, nothing could be further from the truth. Healthcare, education, hospitality, corporate and government projects each come with their own customers, buying processes, performance requirements and challenges. Understanding those differences is the first step toward building a successful commercial business.

For dealers exploring commercial opportunities, understanding the nuances of each market segment can help them make smarter business decisions, avoid costly missteps and focus their efforts where they’re most likely to succeed. More importantly, some segments are easier to navigate than others, and those areas may be more opportunistic for dealers looking to expand.

“The most accessible entry point is the corporate segment, specifically local tenant improvement (TI) work and property management,” said Eric Ruppert, vice president of soft surface product development and marketing for Engineered Floors (EF), which includes Pentz Commercial Business. “These are relationship driven, negotiated deals where speed and budget rule, making it easy to position quick ship modular carpet tile and LVT,” he explained.

Shannon Crider Langley, director of brand strategy and experience for Shaw Contract, noted that education, lower-acuity healthcare and some hospitality jobs are good starting points, too. “Education projects often offer predictable specifications, standardized product requirements and established purchasing vehicles such as corporate contracts and state contracts,” she explained. Meanwhile, medical office buildings, urgent care and other health centers, “provide an opportunity to learn healthcare requirements without the complexity of acute-care hospitals.”

It’s best to start expanding in an area where the dealer already has some experience, advised Fred Reitz Sr., vice president of sales for commercial, AHF Products. “Start with the segments that look most like the business you already run,” such as Main Street, corporate and hospitality.

Leveraging existing relationships is an ideal way to expand project scope, said Erin West, senior director, strategic partnerships for Mannington Commercial. “Light commercial, small office and retail is a more natural bridge,” she said. “[TI] work for small offices, boutique retail buildout and small medical or professional suites often comes through the same general contractors and designers a residential dealer may already have relationships with. Order sizes are manageable and the specification process is less formal than institutional work.”

Learning Curve

On the flip side, some commercial segments are much more complex and are not ideal for dealers looking to grow into that business. “Healthcare is probably the single steepest climb,” West said. “It requires understanding infection control requirements during installation and products like sheet vinyl are more complex to install. Plus, navigating a buying process that runs through facilities management, infection preventionists and a GC construction team simultaneously. The specification and submittal process is far more rigorous, and mistakes are costly both financially and reputationally.”

In addition, government projects, “often involve detailed bid requirements, compliance standards and procurement procedures,” Reitz said. “Neither [healthcare nor government] is off limits to a retailer, but both take more homework than the others.”

Given the differences in capabilities and requirements for different commercial segments, suppliers encourage dealers to specialize in one or two areas before taking on too much.

“It is much easier to build credibility, processes and expertise in one or two segments than to try and cover the entire commercial market from day one,” said Dave Capalbo, vice president of retail sales for Karndean Designflooring. “The dealers that succeed usually start focused and expand over time.”

Narrowing a focus accomplishes two things: it allows the dealer to gain more expertise while also minimizing risks and mistakes. “Specialization allows dealers to develop expertise in segment-specific requirements, specifications, procurement processes and installation challenges,” Langley said. “Dealers who focus on one or two segments can build credibility, learn segment-specific best practices and develop specialized installation and project management expertise before expanding.”

At the same time, “attempting to pursue all segments simultaneously can increase risk because requirements vary significantly between healthcare, education, hospitality, government and corporate environments,” she stressed.

“Dealers who try to master all of them at once usually end up mediocre in each,” West said. “Commercial credibility is earned through depth — not breadth — and that takes time and experience.”

Still, Reitz said dealers should not be afraid to test the waters. “It’s more important to get started than to pick the perfect specialty. Start with Main Street; these are locally managed projects and you know the buyers.”

Know the Limits

While some commercial segments have lower barriers of entry, it is incumbent on the dealer to know the scope of their limits — and to know if a project is outside their capabilities.

“The most frequent mistake at first is treating a commercial job like a bigger residential job,” West said, and making mistakes such as quoting the job based on square footage and material cost without accounting for other factors such as a GC’s timeline. “Dealers often discover mid-project that they’ve under-resourced the labor of simply managing the job, separate from installing it.”

Preparation — or lack of it — also can be a critical error. “The most common mistake is underestimating subfloor preparation and failing to conduct proper moisture testing, which leads to catastrophic failures,” said Katelin Ahern, senior director of residential marketing, EF.

The installation crew must be trained for the commercial job. “Another major error is utilizing residential installation crews for commercial applications,” Ahearn added.

“Sending an undertrained crew is probably the costliest mistake,” West stressed. “Commercial installs may have welded seams, moisture mitigation to commercial standards, acoustic considerations, need asbestos remediation, or widespread subfloor prep to meet ADA requirements, etc. It isn’t something a strong residential installer automatically knows how to do.”

Residential dealers may consider partnering with established commercial dealers. “A good rule of thumb: if the project requires specialized installation, extensive phasing, heavy compliance requirements or manpower you don’t currently have, it may be better to partner with someone more experienced,” Capalbo said.