Keys to Going Commercial

The first thing residential CE pros ought to know about being a commercial integrator is that it's completely different - "totally, 100 percent, 180 degrees different than residential," says Dan Fulmer.

He ought to know. For 15 years, Fulmer has been CEO of Jacksonville, Fla.-based Fultech Solutions. As of a little over a year ago, he also heads up Fultech Commercial LLC, a new division that now accounts for 50 percent of overall business.

For most CE pros, the migration to commercial is a little less calculated. Westborough, Mass.-based simpleHome stumbled upon it, says founder Mark Komanecky. He recalls his six-year-old company picking up an early commercial client as an anomaly. However, "more recently, we have started to get more interest in our solutions from commercial clients."

About 80 percent of CE pros did light commercial work in 2009. It's a bizarre trend, according to Jeff Kussard of distributor Capitol Sales, who has worked in the custom electronics industry for over two decades. "Less than 20 years ago it was usually the other way around," he says, adding that the path of the construction industry will make "the reverse trend pick up steam over the next few years."

Since the rush to commercial is expected to continue and residential CE pros ought to know what they're in for, we asked Fulmer and Komanecky for advice based on their experiences.

Should You Change Your Name?

Most CE pros never consider changing their name and breaking off a division to tackle the commercial market. That was the case for simpleHome until recently.

As commercial projects became less of an anomaly and more of a business strategy, Komanecky became more cognizant that simpleHome "has an obvious residential slant." That's not uncommon. A glance at the CE Pro 100 shows 17 companies with "home," "house" or some other residential word in their names.

simpleHome now plans to change its name. "We feel it's important to establish a new commercial brand, which is separate and distinct and consistent with our commercial solutions."

Fultech Solutions never had a "residential" name, but created a new name for different reasons. "It was pointed out by our legal and tax consultants that having two entries was prudent for both liability reasons and tax purposes for general bookkeeping," Fulmer says. "If one company was to get sued or have an issue legally, that would not affect the other company."

Fulmer likes having separate books for residential and commercial, because he finds that they're two different animals. Even though some products and technologies cross over, he finds the vendors and margins vary substantially.

It goes without saying that the decision to add a new name for a commercial division depends on individual companies' situations, Kussard says. "I'd say that the separate brand approach is apt to work when there are resources available for building and cultivating a following that is distinct from the company's core business. However, if the owners are more interested in carefully testing the waters before committing to a new path, it's best to build on the reputation they built in the residential market."

Do You Need Separate Staffs?

When Fulmer rolled out Fultech Commercial, he also hired a new staff. "I have started and organically grown one company over 15 years and didn't want or need the 'start-up' time," he says. "So we decided to hire experienced sales people, a buyer and the crew so we were pretty much a turnkey operation on day one."