Owning A Secondary Company To Compete In The Same Market?

Ed the Roofer

I am not implying a union/non-union double breasted entity.

What would be the upside and the downsides of just opening up a new named business, with its own seperate marketing, to compete in the same field as you currently exert your efforts in?

The learning curve is zilch. The office work and marketing efforts could be consolidated. The "Other" bidder could be your alter-ego company. Advertising expenses would not have to be increased exponentially.

I remember Richard Kaller talking at his past roofing seminars about how his primary company gobbled up and continued on with the competitors business names and gained additional market share for all of the companies as a result.

Ed

POOLMANinCT

ed,

why? seems like a "reverse branding." granted i understand the goal of eds roofing is not to do every roof, but make ed money...

are you throwing this out as theory?

your forgetting a basic phase of planning a buisness, market research
what is eds roofing doing wrong?, what does joes roofing charge? how does mikes roofing advertise?....

take a step back, examine these ? & i think eds roofing will have a few more arrows in its quiver...

ray

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Ed the Roofer

I am just expanding on the 2nd Contracting Business thread, except without the lower quality and lower prices premise.

Also, Kaller was successful.

Ed

AtlanticWBConst

I know a guy in Florida that owns a piano store. He does very well. He makes a HUGE profit just leasing used pianos to parent's who want their kids to learn. Any way, he's done the competative 'companies' thing. He'll puts adds in the local paper with different Piano Business names and different phone numbers going to different phones.
He's been able to essentially 'bid' against himself to get people into his store.

Also, there is a Drywall Supply warehouse (store/company) in my town. In addition to selling, supplying and delivering wallboard supplies, they run 2 different drywall companies (hanging and taping). You drive by and see the trucks parked in the yard. Same company colors, different drywall company names.
Out of curiosity, I called to inquire about 'getting an estimate' from them. When I asked about the different companies, they were really vague, but eventually admitted that they were (both companies)affiliated with their supply company....
I know that they use these companies to bid against eachother to get jobs. (They also can do it cheaper since they are using their own stock materials...)

I'm not passing judgement, but I will say.....In the scenarios above; it's not like it's illegal, but some people would view it as 'misleading'.....

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dirt diggler

Dirt Diggler had a thread about this ....

RobertCDF

I dont see a problem with it... If you had differant sales people it could be a good chance for you to be 2 of the 3 bidders that people get.

Or depending upon how you market you may find that the other name does better in a certain area for unknown reasons.

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Robert Shaw
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Ed the Roofer

Dirt,

Which thread? I saw the one about forming a multicompany conglomerate and I saw the other one by someone else about creatng an intentional illegal workforce company?

But, I did not see one along this similar premise.

Ed

dougchips

Ed, lets say that you have two companies:

Ed's Roofing

Smallville Roofing

If Sally Jones called both companies would you send out two different salespeople? Or if you got the job, would your trucks have two sets of lettering?

Or is the goal to get twice the volume of calls?

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Ed the Roofer

Actually, I do have two companies. The other one is not in my name and was formed by an associate to take over the union new construction projects that the main company was doing. The union agreement has been lapsed for many years now, but the name begins with the letter "A" and still gets phone calls from the free listing in the YP because it is one of the first companies listed.

I have often considered to slightly upgrade that company's marketing. It still gets calls and sometimes when a customer gets a bid from my primary company and needs an additional quote, lets say for an insurance company request, then miraculously, a new quote gets mailed to them.

Since that company did not send out a salesperson to the home, the company that does, will get the job, as long as the prices and specs are similar.

It works, without even trying to fully utilize its alter-ego potential.

Ed

dougchips

Nothing wrong with that until the "owner" of the company wants some of the profit. Is the company set up with a SSN or EIN assigned to his name?

__________________
To get the best replacement windows, or sun rooms contact the replacement windows experts at FHI Vinyl Window Company.

Mike Finley

Economy of scale.

You're fighting for it spliting your resources. You're buying 2 of everything, twice the expenses.

I'd recommend focusing on your company, focus your resources, your man power, your managment, your marketing on one company and grow it big and strong.

99.9% can't even run one company well.

Ed the Roofer

Mike,

Actually it is quite the reverse of what you stated. I don't have to buy another office or hire another secretary or even hire another salesman.

If I wanted to grow it larger, then possibly so.

The actual costs.

Letterhead
Business Cards
Different phone number

Most other costs would be job related. Possibly if I do want to nurture that company, that could be my economy class entity using subcontractors instead of employees.

Ed

Mike Finley

I see, I thought you meant a real stand alone company. You're just basically talking another company name.

I still say no. Still doesn't matter. 2 yellow page ads, two direct mailings, whatever, it's still 2 of what you are doing.

Rather see instead of 2 yellow page ads 1/4 page each, 1 yellow page ad 1/2 page. Instead of 1 direct mail piece of 1000 for each company, rather see 2 mailings for the same company 1000 each, one month apart.

No matter how you structure it, it's still money out the door to make a sale. I'd much rather spend that money on one company.

Still economy of scale.

woodmagman

If your going to have two, then why not four companies doing the same thing .......That does not make sense either, does it?...
If you are doing different types of work then I understand the reasoning, or divisions of a single company. Commercial and Residental...

Ed the Roofer

Example:

No YP for company 2, but the free inline listing under the name beginning with the letter "A" generates a few calls anyways.

Primary company just so happent to send out a flyer to the customer who called the secondary company. Whalla, new lead for primary company with a reputation and a 23 year history and several thousand references.

Point B: YP or direct mail lead get some hits for the primary company. Now, the secondary company sends its flyer to the hot prospect. Once again, whalla! What if they no longer are contacting other companies for quotes, since they have been responded to so promptly from 2 companies already and even if they do contact another company, where ever their price and specs are will probably not be similar to the first 2 company's specifications.

Ed

Mike Finley

Sounds like you have put some thought into it. If you go forward with it, here is the bottom line:

Don't do anything you wouldn't feel comfortable explaining to a news reporter to air on the 6 o'clock news.

If you would feel comfortable explaining everything you are doing to your customers and the media, then you're probably okay.

Elijah

I know of a contractor in Dallas that has 23 different names and numbers in the various phone books around the area. People like to hire local contractors so he makes it look like he has an office in every suburb. He has a team of 4 girls answering all the numbers at the same location who keep it all sorted out.

Elijah

Ed the Roofer

I also have 16 different phone numbers plus my old 1 (800) number that ends in (800) ***-ROOF (7663), for each of the nearby local towns I work in or used to work in. They are all set up as Remote Call Forwarding to my office.

People would prefer to buy from a percieved local contractor. Have your reference lists sorted by towns, so they can get a localized feel for where you do your referral work too.

When I do a measurement in one of the other towns, my pre-appointment package, (aka pre-positioning package) literature all has the proper towns phone number entered into that packages flyers too.

Ed

P.S. Haven't you ever been boggled by the fact that a local townie hired one of the competitors from some other town, or that they hired someone who has no length of being in business or reputation and you did not even get a call for that particular lead?

This is one simple cost effective method to increase your lead generations. Your main company can still solicit or bid the job too. There is nothing illegal about providing a quote or sending out a flyer to what you know to be a very very hot prospect. No other means of generating a lead will provide you as qualified of a hot prospect, or at least not radically stronger.

Ed

send_it_all

That's actually a good philosophy to live your entire life by. In fact, since I'm not really a religious person, I think I'll start a new religion (if it's o.k. with Finley). When someone asks me if I'm Christian, I'll say "no. I'm 6 o clock news"

Ed the Roofer

I try to live my life and run my business as if my most dreaded competitor would know everything I was doing and then see if my actions would give cause for him to trumpet any unethical deficiencies I may be percieved as entertaining.

Ed