Business Roundtable: Hurdles Aplenty, and Optimistic All the While
In an exclusive roundtable, executives from four installing security firms reflect on the current state of the industry as well as their respective regional markets. Find out which technologies excite them, the challenges that keep them awake at night, and how they are positioning their companies for success in 2014.
Joseph Menke: It has been really challenging the past few years for us because of the economy, especially housing in Arizona. We had a fantastic 2012, and I think we are the right track [in 2013] compared to , just a little above. I am very pleased with that. We essentially expanded in the verticals we have always played in, so we wanted to increase our fire.
We have done more integration in government, which is our strong part anyway. We have had some really good Homeland Security grants that we performed. And education has been a very big force. We brought on a couple of new school districts in 2013. We have done a lot of cameras, a lot of access control, a lot of managed access, which is becoming more and more popular than traditional access control. All in all we are happy the way 2013 came out.
We do fire inspections but more and more we’re doing installations. We brought on Silent Knight’s high-end line, the Farenhyt line, which seems to have really helped us out. Central Arizona College has been a huge installation for us. That started three years ago and we had to kind of integrate our own emergency notification system.
We used to be around 60% commercial, 40% residential. Now it is like 80-20. Five years ago we had several new homebuilders pumping out houses all day long; we were doing home automation and structured wiring, which was a really big piece of our business. Now home builders aren’t pumping out houses like they were before. So we have really ramped up our commercial end. We were always strong on that too; it’s just that residential is not that big a piece any longer. If there are no houses being built, you have to find something else to change your business model.
What is your business outlook for your company and the industry in 2014?
Campau: It is very positive for several reasons. One thing I particularly love about our industry is that it is wireless and it is affordable. Security used to be for people who had money. Now it’s really for everybody. It is very affordable. We are putting in alarms for $200 and $300 all day long. We
do the integration too, but the piece that is interesting is it is affordable and wireless. We are also a Verizon Wireless premium retailer. We have five retail stores. We have been in the cellular business for 15 years. What is really cool is we sell a customer a cellphone and then we lock them in with accessing their alarm system via an app. They manage lights, cameras, locks from their cellphone.
We’re really not selling alarms anymore. We are selling a lifestyle. That is what we tell all of our salespeople to promote. Lifestyle is a big part of the alarm industry now. So what is my outlook? Extremely positive. I love the industry more than I ever have. I embrace technology. We are riding that bandwagon [of interactive services being marketed nationally]. It actually makes our phone ring because we are the local guy. We have been around 55 years. We promote ourselves as the custom and the family-owned and operated business. We hold our own.
Stone: I see a very positive outlook for 2014, both for our company and the industry. With the threats from cable and phone companies there is also tremendous opportunity. These are multibillion-dollar corporations that are going to spend a lot of money on advertising and increase exposure significantly more than our industry ever could. As long as we can position ourselves to be the experts in security, and keep that message top of mind, we are in a position to deliver a third message. It used to be that security systems were standalone; that was the message, that’s what we talked about. Now its thermostats, lighting control, cameras and a lot of other things.
From my perspective the alarm industry has a distinct advantage. It is a lot easier to convince a consumer that the security provider is able to install thermosets and cameras, etc. The cable and phone companies are going to have a much more difficult time convincing the consumer that they are the right option to install security. Their service has never been good over the years as a rule, at least in comparison to our industry. Their attrition rates are also really high in comparison to ours. They have some significant challenges, but with the increased exposure we will ride that wave of awareness and will be there to provide products and services for our customers.
Whiddon: I have no reason to believe that 2014 is not going to be fantastic. Our company is basically about slow, steady growth. We don’t acquire a lot of other companies, so we’re out there doing the same thing week to week. For over 35 years we have built a name and a reputation in our area. Yes, there are a lot of challenges. I agree that some of these new players [telecoms, cablecoms] have some big hurdles to overcome. But what they do have that we don’t have is millions of dollars to market themselves. That, too, I believe will create awareness. We believe we do it better, we just can’t do it nationwide. There are challenges to meet every day but that doesn’t mean the future isn’t bright. There is success out there; you just have to work for it.
Menke: We are excited. We have some new integrated contracts coming up. We are moving into a new facility, so we purchased a new building in north Scottsdale and we are going to consolidate our two facilities into one 9,000-square-foot facility. We are going to concentrate on the verticals that we did before, so health care, education, government. We are very service oriented. We have been in business for over 20 years; we have had two huge government contracts for 15 years that are going to upgrade in 2014. They are big, integrated access control and CCTV systems. We are very fortunate to have those.
For the industry, I think it is going to keep chugging along. I don’t want to say it but we are still waiting to see how this Obamacare situation is going to affect us.
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