New Markets: Enter With Care

Aug. 1, 2011
Three refrigeration contractors found new business by exploring opportunities among existing customers, in areas they knew well.

Bill Almquist, president, Almcoe Refrigeration — the Contracting 2008 Commercial Refrigeration Contractor of the Year, says entering a new market is very much based upon capabilities, and relationships with existing customers. First, you have to assess your talent base.

"You've got to have people in your organization with expertise in the area you want to get into, and that experience must go beyond just one project. It's got to be someone who has first-hand knowledge of working in that refrigeration environment.

Second, prospect among existing customers.

"For example, I would go to a supermarket customer and say, 'We're doing your grocery store refrigeration, what about your distribution center, or your commissary?' Those areas all require refrigeration service. Scour your existing customer base for those opportunities, and find the new business in that area. Once your people and relationships are in place, get on the bid list and go after it," Almquist advises.

Third, align yourself with manufacturers' representatives who handle that type of equipment.

"If it's cold storage, you want to get with a manufacturers' rep who sell warehouse refrigeration equipment. Also, get to know a rep one who sells insulated wall panels and warehouse doors. Get to know them at trade association gatherings, and develop a good business relationship with them," he says.

"The final piece to the puzzle is to scour your existing customer base to see if they have needs in that area. If it's related to refrigeration, then go for it. But, don't go into something you know nothing about. You must have some competency in the area. If you're in the store working on the refrigeration system, why not take on the ice machines, drink dispensers, and HVAC?" Almquist says.

Demand for Remote Services
Bob Axelrod, president, Cooling Equipment Services and CES Mechanical, Elk Grove, IL, has found new business in remote monitoring and systems controls services. Three very diverse customers — a produce distributor, a drug storage and distribution business, and a catering business — are all based in three distant states, yet they all have the same need: close temperature monitoring for the refrigeration needs of perishable items. CES has an advantage in that they custom-design their temperature controls for each unique customer.

"We handle large refrigeration equipment over the Internet with our custom-designed system. It’s represented a great opportunity for us,"Axelrod explains. "It includes remote monitoring and system conrol. We can make adjustments, or determine what’s causing a problem before the owner even knows about it. The controls operate the customer's refrigeration system on a day-to-day basis, so that they don’t have to watch it closely. It also saves them a huge amount of energy."

Axelrod says a contractor who is considering entering a new market must ask themselves three questions:

1. Can you compete? Look at your expertise to be sure you can compete with others. In any market you go into there are already established companies.

2. Do you have the capabilities and the people that are willing to learn — both salespeople and service people —who need to know how to develop an expertise in the system, whether it’s controls or a new type of unit?

3. Do you understand the type of problems that are typical in the sector you’re looking at? What are they looking for, in either a system or company, that will cause them to consider you as a potential provider? Is there a benefit to using your services?

"Every segment has its own problems and requirements," Axelrod warns. "Whether it's a drug company that needs many FDA reports, or a food industry company that needs to maintain temperatures in tight tolerance. It's not like comfort air conditioning, where close enough can be good enough. If they go out of spec on temperature, they may have to throw out millions of dollars worth of product. The customer can help you understand those requirements, but you have to know the questions to ask."

Axelrod encourages contractors to conduct a "SWOT" analysis of your firm’s Strengths, Weaknesses, Opportunities, and Threats.

Strengths/Weaknesses: Know your abilities, and what you have to learn.

Opportunities: Are they real opportunities?

Threats: If you spread yourself too thin, are you leaving other areas of your business open and vulnerable to competitors?

"It’s 95F in Chicago today, and we're three days behind on service calls," Axelrod says. "If we went chasing after a perceived, new opportunity that takes three of our best guys off the street for regular customers, will our regular customers start looking for another company?"

Axelrod adds that pioneering contractors must accept the fact that there's a cost and a learning curve to entering a new market, a cost they will have to pay for, not the customer.

"You're going to make some customers upset with mistakes," he says. "So, you have to be willing to compromise, work with customers and accept the cost of learning."

Selling Energy Services
AAA Refrigeration Services, Bronx, NY — the Contracting Commercial Refrigeration Contractor of the Year in 2008 (see — has also found business related to energy services. Jim Kirk, AAA’s anager of energy services, was brought on board last year, to help it expand its energy service offerings. His experience includes 13 years as a field energy manager for A&P supermarkets.

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"Many refrigeration contractors now have someone on staff to manage the energy management systems in customers' stores," Kirk explains. "This is something we can now offer as a value-added benefit to our customers, above and beyond system service and installation. At AAA, we have 80 vans on the road. There's a lot of expertise in the company for many topics, such as applying variable frequency drives, to air handlers, to energy management systems, and more.” Additional AAA energy services include LED case lighting retrofits, ECM motor upgrades, and anti-condensate heater controls.

"At AAA we're always looking for new and innovative ways to help our customers achieve greater bottom line performance," Kirk says. "In our market, energy costs are one of the top expenses for a typical customer. With proper maintenance of systems and careful application of capital improvements, you can have a great impact on energy usage."

"Many large chain stores have an energy department and an engineering staff. They often receive calls from the big name manufacturers who'd like them to try their products. The smaller, independent grocers don’t have that, which is why we're here. We're calling on smaller stores, with one-to-three outlets. We service many of those customers, and we’re now serving as energy counselors for them."

Kirk says customers appreciate having AAA as a sounding board for new ideas. "When they receive some product literature in the mail that tells them they can save 20% in energy costs, they send it to me. I evaluate it, and make a recommendation. I perform facility audits, and make recommendations to the owner on technology upgrades, with cost and return on investment analysis. If they say they want a Brand X VFD, we’re fine with that, as long as we’re confident in the unit," he says.

Finding new ways to make money is essential, if not tricky, in a toubled economy. Consider the practicalities of moving your business into a new venture, and ask for advice from a trusted financial advisor. If the benefits outweigh the usual growing pains, go for it.

Service Tip:

Refrigerant Receivers

Q: What are refrigerant receivers, and when are they used?

A: A receiver is primarily a liquid storage tank for refrigerant which is not in circulation. Small packaged systems using capillary tubes may have very small charges, and if the operating load is fairly constant, careful design of the evaporator and condenser may allow the elimination of the receiver. If the condenser has volume enough to provide storage space, a separate receiver is not required. This is common design practice in water-cooled units with shell and tube condensers. However, on practically all air-cooled units equipped with expansion valves, a separate receiver is required. There are two basic designs for receivers which may be of either vertical or horizontal construction. The most common receiver is the “flow-through” type, (shown at top), in which the liquid from the condenser enters at the top and the outlet draws liquid from the bottom in a separate connection. A “surge” receiver (bottom) has a single connection for the transfer of the liquid refrigerant. In this design, the connection is at the bottom of the receiver, with a tee connection. One side of the tee is connected to the liquid return line from the condenser. The other side is connected to the liquid supply, which feeds the evaporators.

The advantage of the surge receiver is that it tends to preserve any ambient subcooling which is contained in the liquid returning fromthe condenser. The disadvantage is that during high ambient conditions, when there’s very little ambient subcooling available, there may be a tendency to have “flash gas” in the liquid supply. During high ambient conditions, with a "flow-through" receiver, this may not be as much of an issue, since the liquid refrigerant in the receiver may actually pick up several degrees of subcooling as it travels from the inlet to the outlet.

Copyright 2008 Emerson Climate Technologies, Inc. All rights reserved. Used by permission.

About the Author

Terry McIver | Content Director - CB

A career publishing professional, Terence 'Terry' McIver has served three diverse industry publications in varying degrees of responsibility since 1987, and worked in marketing communications for a major U.S. corporation.He joined the staff of Contracting Business magazine in April 2005.

As director of content for Contracting Business, he produces daily content and feature articles for CB's 38,000 print subscribers and many more Internet visitors. He has written hundreds, if not two or three, pieces of news, features and contractor profile articles for CB's audience of quality HVACR contractors. He can also be found covering HVACR industry events or visiting with manufacturers and contractors. He also has significant experience in trade show planning.