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9 Things Alarm Companies Must Do in 2012

Ken Kirschenbaum offers a nine-point checklist for alarm companies to have a successful 2012.

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Unless you read this magazine backwards, which many people actually do, you are at the end of SSI‘s 2012 Industry Forecast Issue. That means it’s time for my 2 cents, only what I offer is more along the lines of action items to help you make it a successful year for your business. Hopefully, you’ll feel like the best was saved for last. Here we go:

1. Contract scrutiny by potential buyers, and judges who are charged with enforcing your contracts, will be more stringent. Update your contracts. Your contracts are the most important asset you have in your business. It’s your contracts that will protect you from liability and build equity in your business. Your goal for 2012 should be significant RMR growth. I predict the multiple paid for state-of-art contracts will increase this year.

2. RMR growth will depend not only on aggressive sales efforts but diversification of your services. Subscriber-enabled monitoring services permitting them to view data, listen to audio, and arm and disarm systems will become more popular moneymakers for alarm dealers. Also remember it’s important to balance your sales, if possible. That means not limiting yourself to just commercial or residential; just leasing or sales; just intrusion or fire.

3. Check your insurance coverage. Not all insurance companies are the same and not all premiums are equal. You want to be sure your E&O coverage is current and in sufficient amount. Take some time to evaluate your life, health and disability insurance needs and be sure to look for competitive pricing.

4. If you are still conducting business in your own or an assumed name, you need to incorporate. Do it now. You don’t want to continue to invite personal liability for your business activities. I recommend a business corporation, subchapter S election.

5. Make sure your license to conduct business is active and up-to-date. Be certain you know all the requirements in all the jurisdictions you do business. There are all kinds of regulations that go along with licenses, many of which affect your employees. Be compliant and avoid heavy fines and possible suspension or loss of your license.

6. Review your accounts receivables. In our economic environment it is essential to stay on top of your receivables. You may need to become more aggressive with your collection efforts and procedures. Don’t carry subscribers in default, which means falling out of their regular payment schedule or more than 30 days in arrears.

7. If retirement or sale is remotely in your future, start thinking of an exit strategy. If transition to family members is your plan then perhaps you need a trust, and should start transferring stock to that trust or to your kids now. If you think you might sell out, then you need to start running your business like a business.

8. Try to pay down debt. Manage your business to operate within its means. Working harder and making better sales decisions is a better way to raise money. Selling your subscriber accounts and contracts is like selling your soul to the devil. If you belong to a dealer program or group that encourages you to sell your subscriber accounts, then get out and pick another dealer program.

9. Make sure you are getting the best deal from your suppliers, including your central station and equipment distributors. Times are tough for them too and they are looking to hold onto good accounts, like yours. Be sure you have your own line into the central station and that your control panels are remote programmable. If you now own your radio network, then your contracts probably have to be updated. 

Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. ( His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.

The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.


Article Topics
Business Management · Legal Briefing · Managing Your Business · All Topics

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