The Power of Structured Wiring

October 31, 2002 SSI Staff

Introducing a new product or new service into an existing business is not always easy. A lot of the work has to be done at the same time you are bringing in this month’s revenue numbers.

However, the profitability and business-building aspect of offering structured wiring to home builders can represent an easy launch site for new home systems, business ideas and revenue expansion.

Wiring Helps Ready New Homes

The structured wiring business is an easy step to the home automation market, or what is now called the home networking and automation (HNA) market. (Based on our research, it is clear that home automation is increasingly about home networking and people bringing to the home their office experience with integrated systems and the Internet to create a more convenient family lifestyle.) In interviewing HNA dealers and integrators across the United States, one of their favorite sales techniques is visiting as many home builders as they can in hopes of selling them structured wiring systems.

The home building industry has been booming for three years running, and a 1.75-percent prime rate has enabled builders to borrow money cheaply to buy real estate and build new houses. Builders have found that a nominal investment in structured wiring enables them to make claims to prospective homebuyers on their new houses being “future-proofed,” “ready for integration,” “designed as full home control homes,” “smart homes,” and so forth.

Home builders may not be interested in installing all the systems that can operate through the wiring system due to the expenses involved, but the payoff from just the wiring system makes sense to them.

However, not all builders are investing in structured wiring. Low-end homes don’t receive the level of promotion of high-end homes, and some builders who count the cost of every nail may not be interested.

1 Service Offering Leads to Another

Sales in structured wiring provide dealers and home integrators healthy profitability. HNA dealers and integrators say it is the most profitable product they sell, with a gross margin of 50 percent.

But perhaps more importantly, offering structured wiring is profitable because it may not be to one house – as with an existing homeowner – but to hundreds of houses, depending on the size of the builder’s project.

The next course is the installation of security systems. If a builder wants security systems installed before its houses are sold, the structured wiring supplier stands a good chance of getting the job, whether or not the security system is integrated into other home functions.

After security systems, other revenue possibilities are: the creation of a monitoring contract; the possibility of a maintenance contract, depending on the scale of the home systems installed; and the beginning of a new referral network from all the families in the builder project who have used the services of the structured wiring dealer or integrator.

Joe Freeman is CEO of J.P. Freeman Co. and J.P. Freeman Labs in Newtown, Conn., providing research, consulting, testing, and system design services for the security industry. Freeman can be reached at (203) 426-6023 or E-mailed at [email protected]. Visit his company’s Web site at www.jpfreeman.com

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