It’s a strange, ironic phenomenon that when people engage maid or housekeeping services they often frantically tidy up their house in preparation for it to be … tidied up. Or maybe that’s just my wife (fortunately she never reads my column) or a gender thing in general since I reason, “Hey that’s what I’m paying them for!” In any case, procrastination (and pride) plays a key role in how that scenario unfolds. And as it is in most situations — particularly your business — procrastination is the enemy.
Actually, it’s probably more accurate to say procrastination makes someone their own worst enemy. It leads to tighter deadlines, higher stress levels, inferior results, damaged relationships and missed opportunities — all things I doubt anyone covets. Thus I firmly believe in the adage, whether it’s maintaining order for your personal or professional life, not to put off until tomorrow what you can possibly accomplish today. That mindset makes it much more likely you will achieve your goals and avert 11th-hour panic attacks. It’s also the concept behind one of the overriding principles of running a successful company — operating the business as if you plan to sell it tomorrow.
That means making sure all accounts and records are accurate and kept up to date, and that solid systems, policies, procedures and practices are in place and followed. Conducting business in this fashion today not only positions a company to be attractive to a prospective buyer in the event ownership becomes interested in selling, regardless of when, but also facilitates smoother and more productive, surprise-free daily operations. Examples of issues that could be hurting your business now and will likely bite you in the butt later include an unbalanced customer mix, possible loss of a top supplier or employee, liability contingencies, existing claims, leases set to expire, inventory shortfalls, insufficient tracking systems and so on.
Always looking at your business through the eyes of a potential buyer was the launching point for a highly interactive panel session, “Business Growth Strategy - What You Need to Know,” one of several presentations I took part in (this one as moderator) at the inaugural Electronic Security Technology Summit (ESTS) in Miami, Fla., of which SSI served as media sponsor. Panelists Amy Kothari (CEO, Alarm Capital Alliance), Jim Quirin (SVP/CFO, Doyle Security), David Stang (SVP, Security Alarm Group, Bank of America Merrill Lynch) and industry attorney Marc P. Katz were barraged with questions, as much from the audience as myself. Yet they proved themselves to be subject matter experts of the highest order, as collectively proficient at resolving finance and management issues as The Avengers are at stopping crime.
A sampling of the inquiries: How can I improve my balance sheet and drop more to the bottom line? What are red flags to avoid in my own books and to look for in acquisition candidates? What is important to buyers in my customer contracts to bring more value to my company? What is the difference in the value of alarm monitoring accounts compared to video monitoring or managed access control? What are service maintenance contracts worth, and what about software support? When you have an integration business and monitoring, how do you value each? I want to double my accounts before selling; what should I do?
What really set the table for the “Growth Strategy” discussion was Kothari’s opening keynote, “Transforming Your Company Into a High-Value Business.” It was there that she covered the following six steps to optimizing your business:
- Plan your growth and exit strategy
- Monitor and manage attrition
- Adopt and follow sound standard operating procedures (SOPs)
- Make sure your accounts have valid subscriber agreements
- Manage installation and monitoring to facilitate account transfer
- Mitigate risk with the right type and amount of insurance
Regarding No. 2, I believe many are unclear how to properly calculate attrition. Here is the formula Kothari uses: Accounts lost in past year + accounts more than 90 days past due ÷ Average number of accounts owned during the past 12 months = Gross Attrition Rate. Of course, figuring net attrition can be much more complicated and subjective.
For a strong example of well-run security businesses, be sure to check out the Marketing Marvel story. Lastly, have you drafted your 2014 business plan? Stop procrastinating!
Editor-in-Chief Scott Goldfine has spent more than 15 years with SECURITY SALES & INTEGRATION. Follow him online via the Under Surveillance blog at securitysales.com/blog.