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Since we ventured out of our local market more than a decade ago by targeting electrical packages nationwide, Colonial Electric Supply has learned the hard way the challenges of operating in new territories. It should be no surprise that Colonial was not welcomed with open arms in new markets – far from it. The last thing local industry participants wanted then and even less so today in a slower economy is added competition vying for the few local construction projects moving forward.

New entrants to a marketplace should expect almost immediate negative press about their firm. There are a lot more locals than there are of you and the competitors are very crafty at how to plant negativity. Competitors will use phrases such as “the word around the industry is … ”, or “we don’t say bad things about anybody but these guys are well known for … ” –  and then the rest of the sentence is always a slam. The more extreme types might even use the internet to pump out negative comments.

To compound matters, the people who work for your customer or who are working alongside you on the job may also be ready to magnify your every misstep. Many times, these individuals have already forged relationships with those at the local company you displaced and are therefore disappointed at your arrival. A new entrant might have im­pressed the person at the top who selected their bid – usually thanks to an aggressive price – but beyond that person, you’ll need to earn respect from the rest of the people on the job .

Crisis Management

We try to prepare our prospective customers for this. We walk them through what will likely happen and how we want them to play it. We enlist current customers to give us references to help balance out the negativity. Like a political campaign, quick responses to the mudslinging are needed. The more bad press gets out there and grows, the harder it is to slow down.

Building relationships with members of the local community can really help your chance of success. We’ve seen this done in many ways. Some get in with the politicians, some donate to local charities, others meet with inspectors or code officers or sponsor local industry events.

We have found that building relationships with entities local to the project is paramount. Over the past few years, we have learned to initially reach out to local manufacturer sales agents. This group is particularly resistant to us since we may have underbid  the local distributors at bid time and they are therefore trying to save face by not selling us.

However, we professionally try to point out the alternates that could be used to satisfy the job need. And because we’ve been operating out of territory for so long, our reputation of successfully gaining specification approval usually precedes us. In the end, we try to water down the high emotions and move toward a business relationship. For example, we say something to the effect of “we didn’t expect you to be waiting for us with open arms, but now that we are here, how can we participate together?”

We’ve seen subcontractors have similar success by partnering with local entities. Partnering with a local who has built up a staff of competent project management personnel can be a huge benefit. On the other hand, many other contractors just move in and meet the expectations of the contract.

Even so, these contractors seem to develop a staff consisting of a mix of local hires and transplants from their out-of-territory head office. There are many things unique to every locality, and gaining insight from the locals as to the customs, regulations, building codes and other nuances of a job can help prevent costly and wasteful blunders. 

A contractor will need to also develop local distribution sources. Assuming the contractor has a good credit rating, this is usually not too difficult. All construction distributors are looking for new business so a migratory contractor will likely meet eager distributor salespeople quickly. It will be helpful to learn about the pros and cons of the distributor community right away.

One must resist the temptation to just sign up with the big, recognizable national distributor; people make or break any distributorship. Just because the national brand does well in one market does not mean they do well in all of them. Again, efforts at networking with the local construction community ought to pay back dividends when selecting local distribution and other vendors. The locals will be able to enlighten you on who has the biggest and widest inventory, best delivery and most competent customer service people.

If you are a distributor that is drop-shipping product to the job, you will likely run into logistical issues. For example, over-the-road shipping companies have trouble finding and delivering to job sites. Once a distributor overcomes that challenge, it also needs to understand onsite storage.

Contractors are sensitive to this and usually coordinate incoming freight through product release scheduling. However, that allotment of space may not account for wrong or damaged products. If something like that occurs, the distributor needs to get the material off the job in a hurry or it might disappear.

Although there can be many advantages to focusing your resources on areas outside of your locality, just as many challenges also exist. Companies that expand geographically need to be ready for a slew of problems that, initially at least, will reduce or eliminate profitability. Once new competition is discovered, immediate opposition from any number of areas will appear, negativity will mount and your company and its practices will be under a microscope.

Those companies that are successful at migrating have been able to overcome those challenges through some sort of local partnering and relationship building. In the end, many firms will dabble in out-of-territory work from time to time. But because of the risk and investment needed, few will ever probably make it an integral part of their business model.

Steve Bellwoar is president of Colonial Electric Supply, a family owned and operated electric and lighting solutions company with 20 distribution offices nationwide, headquartered in King of Prussia, Pa. Bellwoar can be reached at:

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