Bright Ideas: CEOs Keep Their Eye on the Prize
If you want your security business to be more successful then you’ve come to the right place. In a relaxed but frank forum, four of the industry’s top independent integrator company executives come clean on what’s behind their winning ways.
As we sit here today, what are your top two or three operational challenges, and how do you plan to address them?
Lanning: For us it’s product specificity. In other words, we’ve got a lot of products since we’ve seen UTC get jumbled up. I’ve always been an every solution is site specific kind of guy. I don’t want a canned solution for anything; I think it’s the wrong approach to security. So we’ve spent a lot of money on training on a lot of different products and I think that’s going to continue. But we see the impact of that expense on our growth and at some point you can only bring on X volume of training expense per year. I don’t want to stop learning, but it has to be controlled.
Being in Hawaii, another big operational challenge is freight. It’s huge, and we persistently experience delays but the costs haven’t been taken forward because they weren’t anticipated. Then I’m holding off project delivery, trying to anticipate a freight delay or expense that may or may not change from the time we order it until the time we receive the product. This is sometimes triple the cost. We’re geographically challenged in Hawaii.
Other than that, staffing in Hawaii has always been a challenge. It’s about an 18-month process to see if someone is going to fit with our culture. And there’s not many people to pick from. The mainland guys come out and they’re sharp but they leave. The guys out of military stick around a while until their wife wants their children to grow up around family. You invest a lot of money in training and they
don’t stick around very long; two or three years is the average. In Hawaii, anybody who’s smart starts their own company. There are 70 security companies in Honolulu. Most of them are a guy, a buddy and a truck, so their overhead model is low.
Nunberg: My No. 1 challenge is managing growth. What’s new for us now is expanding and having offices in other territories, learning the regions: the way they work, their laws, their customs. Florida is a highly regulated state. South Carolina is almost unregulated. North Carolina has a little regulation. We’re working in Detroit where they have no money to regulate, and Dallas. I was originally a technician, an owner and a sales guy. Now I’m really the CEO and I’m not involved in day-to-day operations but I still touch my customers. I want to make sure I don’t lose sight of where we sit with our customers. Certain customers require handholding and you want to make sure you’re there for them because you could lose them in an instant.
Next is managing payroll. It’s easy to hire people if you feel you need somebody in a particular position. But certain parts of your business are related to growth changes, like we’re currently converting a lot of locations for a large customer. At some point those conversions finish. You don’t want to overhire and then have to terminate, but you also need to balance the ability to install. We’re also creating relationships with different subcontractors in different territories to fill in the gaps, so there’s managing that piece of the business as well.
In the Carolinas, we found there seems to be decent employment there. In Florida, if we advertise for a technician we’re lucky to get one application. In the Carolinas, we get 15 or 20. A lot of those guys are recently unemployed, and then only maybe 10% of them are really decent anyway. You still have to weed through it but at least you have the 10%. I’m constantly evaluating my team to make sure I’ve got the right people in the right position, that they’re the right fit for the company. Most of my people have longevity so it’s hard to make changes, but you have to do what you have to do sometimes.
Budinoff: I think everybody has the same issues with staffing and employees. Being based in Connecticut, we’ve got some very strict regulations on hiring and deploying technicians. Because we border New York, I have to satisfy both states. One requires fingerprinting. We used to be able to do it ourselves, now they make you go to a fingerprinting center. You’re sending a guy off and to meet the code it has to be done within 24 hours, which is ridiculous. If you hire a low-voltage contractor who doesn’t have a license in Connecticut you have to put him through an apprenticeship program that takes two years, 4,000 hours. So you’re kind of handcuffed with how far that person can go in two years, which we all know sometimes you can get a terrific person and train them and they’re ready to go in six months. We can’t get the guy a license. He has to do the two years.
The other big challenge is watching your expenses. At the end of the day it’s just about good business sense. You kind of find, like Jeff said, it’s real easy to hire somebody but then what do you do when all of a sudden you don’t need them anymore? Or we need that new truck and then we don’t need the truck anymore. I’ve got a truck sitting in the yard, what am I doing with it? Fortunately I’ve got a general manager who keeps a real close eye on the financial side so that’s good for us but still, it’s a challenge. Collecting money is another issue we have to deal with.
The other thing Andrew brought up is it’s very easy to buy everybody’s product and try 18 different things out there, but it becomes very challenging to service that. It becomes very challenging to keep up with every time somebody has a new driver released or this or that released, and does that match up with this? As much as we’re getting so IT-centric, that whole IT genre is creating a lot more work than we really ever anticipated …
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