Bright Ideas: Rebuild Your Business… Better, Stronger, Faster
With a concept lifted from TV’s “Six Million Dollar Man,” an installing security contractor has overcome hardship by becoming a harder target to economic threat. World Wide Security leadership tells how they retooled to weather a stormy business climate.
The global financial crisis, which our economy continues to struggle with, forced many of us to take a critical look within and get back to basics to discover ways to conduct business differently. At World Wide Security, we looked at ways to keep attrition rates low and build on our greatest asset — our customer base.
We got the process rolling by bringing on a new CFO to reorganize all the company’s financial practices. Having a full functioning in-house financial department allowed us to define business processes and enhance the overall accountability of spending practices. We did not clean house, but instead prudently looked at our available resources and the best ways to spend them to keep us moving forward.
We expanded our workforce in areas to help grow the company, enhanced our work efficiencies, implemented a general ledger package into all aspects of the company and invested in technology to bring to the marketplace. The company’s overall business practices were scrutinized for savings and efficiencies at every level, on a weekly basis.
Following is a more detailed look at how we retooled to become a better and stronger business than ever before, with the hope it gives you ideas to incorporate into your own future success story.
Getting Costs Under Control
Stepping back and managing cash flow was the first step. It is important to figure out where the inefficient spending is taking place and make changes. Analyzing the books will uncover ways to enhance efficiencies leading to increased profitability. Clearly understanding how your business operates from recurring revenue, receivables, attrition and cash flow is part of getting your financial house in order. Being able to demonstrate a solid understanding of your business and present this in a monthly report helped us to obtain the credit we needed to implement our growth strategies.
Part of getting costs under control included a review of our insurance. We shopped everything to get the best possible pricing structure. We also decided to eliminate the practice of billing for service calls, instead customers paid at the time of service, which reduced our days sales outstanding (DSO). One of the most important tasks was to restructure our balance sheet. This included refinancing existing debt and obtaining capital for strategic acquisitions. As an incentive to our service techs, we paid a $5 bonus for every check they brought back for services rendered.
The to-do list was ambitious, especially during economic uncertainty, but in the first quarter of 2010 World Wide closed on a $5 million revolving line of credit with CapitalSource. This allowed us to continue implementing our acquisition plans, expand our sales force and bolster our third-party monitoring operations in our UL-Listed central station. Our revolving line of credit was further increased to $8 million by our bank in 2011. We accomplished this because our bank knew we had an understanding of our business and could demonstrate this.
Our growth strategies were twofold; organic, through our sales force and strategic through industry acquisitions. During the past two years we have acquired more than six area security companies and had annual organic growth in excess of 20%.
Value of General Ledger Software
While a general ledger package was an expense in terms of time and energy to implement, we shifted our focus internally as the benefits of this program promised to be significant. What we hoped to garner from the new general ledger were: controlling inventory, streamlining business practices, enhancing communication across all parts of the company and having a better overall understanding of the business.
The SedonaOffice financial software package for security companies was chosen. To administer the program, we relied on our CFO, the billing department and the IT director. The features of the program allowed us to manage our customers, recurring revenue, simplify our monthly billing and manage our service department. This program has saved a vast amount of man-hours each month and continues to evolve in ways of streamlining our business practices.
The software program has allowed us to better define our business processes. The ability to pull reports and make assessments based on actual data has saved money and provided detailed clarity into all aspects of the business. It is important to note these changes took place over a couple of years, so the investment has been significant.
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