In an exclusive roundtable, presidents and executive managers from five leading installation firms discuss the current state of the security industry and provide details of how they are positioning their companies for success in 2010.
For many installing security contractors across North America, maintaining or even achieving forward momentum on the slippery slope that is 2010 provokes much contemplation. With forecasters indicating a fragile and uneven economic recovery in the year ahead, questions abound on how best to maneuver and position a security company for success in its given market. To gain insight into potential strategy shifts currently being implemented among members of the installation brethren, SSI conducted a roundtable with a handful of high achievers that together represent scores of decades of successful business leadership.
The two-hour dialogue, held at the recent First Alert Professional Conference in San Diego, included Mel Mahler, chairman of the board and CEO of Nashville, Tenn.-based ADS Security; Pat Egan, president of Lancaster, Pa.-based Select Security; Philip Gardner, president of Wilmington, Del.-based B-Safe Security; and Jim Callahan, COO, and Mike Sandes, vice president, of Atlanta-based Ackerman Security.
In a nutshell, this leadership quintet is building a strong foundation for the future by significantly increasing efficiencies and executing clear strategies that focus on offering customers value-added services. Think recurring revenue.
Along with providing a recap of 2009,what are your sentiments for the coming year?
Philip Gardner: For the last two years we have been aggressively pursuing acquisitions and adding customers on a monthly basis and that has certainly driven our sales. Every month-over month sales increased in 2009, so I am quite pleased with it. The acquisitions I have slated going forward should continue into 2010.
We cover about 90 miles in the Mid-Atlantic region from our headquarters in Wilmington, Del., and in that market the commercial side is still moving. The right legislation is in place for the fire alarm business for inspections and testing, and for AHJ requirements. There is plenty of activity going on. We do about $200,000 a month in new installations in commercial.
Jim Callahan: We were also pleased to have a very good 2009. Our business was up about 17 percent over 2008.We saw a major escalation in our residential business, which I attribute to the constant barrage of news stories in a city like Atlanta. It’s almost a weekly event that a bad guy is reported on television to have kicked in somebody’s door with a gun in their hand. The residential population got extremely concerned about what was going on.
Like many other cities there have been significant cutbacks in police and fire. The combination of those two things really helped drive the residential business. Our 2009 RMR goals were 17 to 18 percent over the prior year so we are excited about that as well.
Mike Sandes: Our focus in 2009 was to get close to the customer base, continue to preserve the [recurring revenue] base. The attrition percentage was down at Ackerman in 2009 and actually it was one of the best years in attrition we’ve had.
When January-February came around after the [presidential] election a lot of the business community was shocked and all of a sudden didn’t want to spend any money. Budgets were cut. Our customers’ perspective was how can we increase our value to them. So the service contract piece of the business was more viewed as a ‘nice to have.’
We had to spend a lot of effort to preserve the recurring revenue. Our monitoring center itself has put some technological advancements in place that allow the customers to save money. For example, we are not rolling a service technician out there; we are downloading into the panel and saving time on service calls.
Mel Mahler: We [ended] 2009 with about $32 million in total revenue and an 11-percent increase in RMR. The total revenue, including system sales, is only up about 5 percent. That is because of the drop we are seeing in commercial. We are up 22 percent in residential versus 2008, and we are down about that same percentage in commercial. Our two biggest commercial customers haven’t gone anyplace else, but they just stopped adding or building.
We hired 10 new commercial reps in 2009 and targeted them into market segments. I really want to be able to crack health care because in our two biggest offices, which are Nashville and Birmingham [Ala.], the biggest market by far is health care.
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