Can Residential Firms Hack Commercial?

A message to residential firms trying to make it in the commercial market, and vice versa.

It really took me back when USAV‘s K.C. Schwarz told me his commercial market focused group had partnered with residential market buying group ProSource to create CI Edge, a group catered to firms with small-to-moderate commercial businesses.

In essence, CI Edge is for commercial firms in the $3 million to $10 million range and residential firms that are diversifying into commercial. The reason it struck me is five years ago when we launched Commercial Integrator we treated the topic of residential firms diversifying into commercial — something that about 70 percent of them were doing back then — like taboo for our brand.

I had worked for residential market focused sister publication CE Pro for nearly seven years before becoming editor of CI. Anybody who knew me (if anybody), knew me as a residential market writer. Parent company EH Publishing is known for its residential coverage. As a new publication for the commercial market, we were concerned over the potential perception that CI was for residential firms diversifying into commercial as opposed to dedicated commercial integrators and specifying consultants — even worse, that we were buoying competitors to our target audience.

So one of my first questions for USAV was about whether or not its members would see this as a training-the-competition scenario. CFO Chris Whitley said there hadn’t been pushback from the dealer advisory council.

“There is a little bit of a rub,” Schwarz acknowledged, “but it will increase their buying power, so it will be more competitive.”

Logic Integration CI Summit, which is co-located with CE Pro Summit. It’s a rare setting that has top commercial integrators mixing with top residential integrators.

It was at CI/CE Summit 2014 where USAV and ProSource got the idea for what became CI Edge. During a “Live at CI Summit 2015” recording of an AV Nation podcast I pointed out that most residential firms diversify into commercial — in fact, this year’s CE Pro survey of the 100 highest-revenue residential integrators found 96 percent did commercial jobs in 2014 — and asked why more commercial firms don’t do residential.

“Completely different worlds,” said host Tim Albright, director of operations at programming house Innovad. Panelist Matt Scott’s London, Ontario-based Omega Audio Video manages to strike a nice balance between commercial and residential offerings. Diversifying from commercial to residential, as his firm did, and working “in two completely different realms,” isn’t his recommendation. “As much as they connect the product lines are different, the suppliers, the manufacturers — as much as there is crossover, there isn’t crossover.”

Some firms do both well, but it’s rare. In September 2013, CI featured Lone Tree, Colo.-based Logic Integration on our “Analyzing the Resi Factor” cover. When we posted the article online we used the headline, “How a Residential Integrator Went Commercial … Successfully.

Other firms that excel in residential and commercial include Kensington, Md.-based Casaplex, a perennial CI Industry Leader, and Jacksonville, Fla.-based Fultech Solutions, a residential firm that didn’t diversify but went all in investing in its commercial business during the recession.

To the question of whether or not residential firms can make it in the commercial market, I say most probably can’t. However, the ProSource members who join CI Edge will gain advantages that may lead to me eating my words.