Commercial Traffic Waterproof Coatings Sc
QC Commercial, LLC (henceforth QC) was founded by Russ Phillips in 2002 as Quote & Jacket Painting. After filing the business as a sole proprietorship on August 1, Mr. Phillips spent the next six months writing the startup strategies and performing an array of startup activities. Generating income was not started by the company until 2003 after it was granted a $60K painting contract as section of a $3M estate house building job in the upscale Wakefield community in North Raleigh. That first year in company QC grossed $190K in total revenue which afforded approximately 25% in pretax gain.
During the very first three years of operation QC competed alone in the residential new construction and existing home repaint marketplaces. With the exception of a handful of estate dwellings, the average job grossed roughly $5K with pretax earnings running in the 20 to 25 percent range. With no salesman on staff and working with a nominal advertising budget, revenues grew to $294K at an uninspiring rate in 2005, affording less than anticipated earnings.
During the business' third year of operation Mr. Phillips decided to left the residential sector entirely and pursue just commercial1 and industrial2 opportunities. Mr. Phillips took out low budget ads in The Blue Book, an advertisements publisher targeting commercial general contractors, commercial property owners, and property management firms. The business grew by another $100K in 2006 while working almost entirely in the commercial and industrial marketplaces. The move from residential to commercial projects resulted in immediate increases in profit margins.
By 2007 QC installed elaborate coating systems for very large and distinguished corporations including Pfizer, Progress Energy, Becton Dickinson, and Merck. At this point QC was contracting through a Construction Manager3 (CM) or General Contractor4 (GC)--never directly with the job owner. The CMs/GCs QC partnered with included Zachary, BE&K (now KBR), MJ Harris, US Builders, and Fortney & Weygandt.
It immediately became clear to Mr. Phillips that the business should only operate within the limits of the commercial/industrial marketplace. After spending several years working as a Quality Engineering Manager in the high-tech world of Printed Circuit Board manufacturing, the Creator was able to identify a level of professionalism and quality control in industrial construction that was completely absent in the residential marketplace. This provided an opportunity for Mr. Phillips to showcase his skill to develop and implement ISO5 compliant operating procedures and, once implemented into the business's operations, distinguish QC from all of the other regional painting contractors.
QC has now established itself as an industrial painting contractor. It recently invested $6K in web site upgrades, business card redesign, new logo and tag line, and a redesign of company clothing, i.e., t-shirts, golf shirts, and security vests, etc. These changes are part of a renewed focus on establishing the company brand. Added proactive efforts are being made to relaunch the firm and are further expounded in Section 3 Marketing Strategy.
QC's active customer base includes commercial/industrial GCs and CMs, along with industrial manufacturing businesses (OEMs)6. Care painting deals with Sara Lee, Tyson Foods, and Herbalife involve the application of industrial, high performance coatings. Due to the complexity of the services provided, QC now charges its customers at a comparatively high speed, especially compared to the residential marketplace. Higher rates are well warranted and pricing aspects are discussed in the following section. The same key variables that drive up the cost of industrial and commercial painting are also variables that pose obstacles for smaller, less established contractors trying to enter the marketplace.
Cost Variables and Entry Barriers
The purpose of this strategy isn't to chide the residential construction industry. There are plenty of builders and subcontractors managing very successful companies working exclusively in the residential market. Nevertheless, it is necessary to point out the differences in a variety of sectors of construction--if for no other motive than to underscore the competitive advantage potential in QC. Most residential building is performed by self-employed (self-performing) builders and subcontractors. Other than superficial reviews conducted by local municipalities, there is absolutely no regulation or oversight on residential projects, especially when it comes to painting. There's seldom a written contract between GC and subcontractor. There are really no change orders, so additional work is performed in the subcontractor's expense since there is no contract. OSHA7 s