My benchmark for success is RMR (recurring monthly revenue) growth. I suspect it is for most of you, too. Read on to learn why I am so driven to grow RMR for our company.
My RMR perspective has been shaped by many people but none more so than Ron Davis of Davis Mergers and Acquisitions Group. Ron, who also pens this publication’s “The Big Idea” column, is a friend, mentor and icon. You may not have met him but you have surely benefitted from his force for change in our industry. His impact and message was a simple question, “What business are you in?” The real answer Ron would lead us to conclude was RMR. Your vehicle is your security company with the products and services that generate recurring revenue.
RMR makes our company more valuable. Estate planning, exit strategy and bank loans are all tied to the size and multiple of RMR. However, RMR is not real unless it is on a contract. These contracts allow me to have the line of credit with my current banker. Believe me, in a bank audit you will find out real quick if your contracts are not in order, and how quickly you will get them in order to stay in compliance.
RMR is also your pathway to profit sustainability. Cash-flow management is made easier when you have RMR to get you through tough times. I know employees, vendors, taxes and, most importantly, the stockholders who get paid are appreciative of RMR’s effects. In my case, making family members happy makes me happy!
What is your “trigger” or “motivator” for growing RMR? Mine is pain or fear, which I believe if molded properly can be a superior driving force for positive growth in our company.
While on trips to New York for ISC, I made it a habit to meet with my banker. One of the observations by his senior management was: “Mike, your company is not growing its RMR like the other companies we provide our banking services to.” That really put me on notice, and on the flight back to Washington (with my tail between my legs) I devised a plan to grow my RMR by 35%.
This was a BHAG (big hairy audacious goal) if ever there was one for our company. How was I ever going to get buy-in from my core team? I knew this would rock everyone with my question: “How can we grow our RMR by $50,000 in one year?” The reactions included: “What drugs are you on?”; “What is the best we have ever done before?”; “What did we do last year or the past three years?”
We would need to work together to grow our RMR like never before. We identified all of our RMR opportunities with existing clients and new potential clients. You would be surprised how many RMR opportunities you have. Write them down as we did and guess what? You can build a sales and service program that will grow your RMR. If you do not have at least 10 RMR opportunities on your list, I challenge you to go back to the drawing board and get honest with your list.
Our list helped us decide what resources to use, which people would be pointed toward the highest return and growth of RMR. I will tell you we did not grow our RMR by $50,000, BUT we grew it by $36,000! That was still record growth for RMR in our company.
Michael A. Miller is President of Moon Security Services, and Past President of ESA.