Top 4 CEOs Size up 2009

Jennings: We have 90 percent of our business already committed that we did in commercial this past year for 2009. A lot of it is in health care and assisted-living facilities. Our demographics in Arizona point to a lot of older people, so they’re all aging now and moving into these places. So we do nurse call, access control and everything low-voltage.

Also hot for us is education. The new schools may not be being built, but the old schools are going back and retrofitting. So we know that’s going to be there throughout 2009, too. As far as residential, we’re downplaying that a little bit. Now we’re involved with the custom home stuff where they’re still building homes; maybe not as many, but they’re still building.

As far as our monitoring, I agree with Joe. I asked my banker last week, ‘How are we doing? Is our facility renewed this year?’ He said, ‘John, if everyone’s statement looked like yours, I’d have a really easy job.’ So they like the fact we have a recurring revenue base. It’s there every month and the attrition tends to be OK. A lot of businesses right now in other industries are not as fortunate.

Bourque: I would say the residential market has ma
tured to the point where it’s gone back 10 to 15 years, where, as John was saying, it’s mostly custom installations. Our biggest dollar is back in the custom installation market — the $5,000 to $25,000 residential security packages, and less and less of the $195 packages.

Hassan: Actually, I think what you’re going to find is the reverse, because the worse the economy is the more you need alarm services. So from a residential standpoint, those $195 systems should actually increase because people need security and they need it affordably.

Bourque: Well, October was one of the largest cancellation months we have had yet. The overwhelming response was, ‘I cancelled my cable TV; I have to cancel my security.’

Jennings: Which went first, John, the cable TV or the security?

Bourque: The security always goes first. Unfortunately, there a lot of people out there who have security systems in their homes because they were built-in, or they were talked into buying a security system thanks to a pretty good marketing job back in the late 1980s and 1990s. And those people — a lot of them — never use their systems or do so very infrequently. So when it’s time to cut expenses, we’re one of the first things to go.

What can you do to combat that?

Hassan: Well, we haven’t seen that. Maybe that’s because in Florida tens of thousands of homes were built with security systems installed that were never activated, and we’re growing a lot of recurring revenue by monitoring those brand new systems. We haven’t seen any significant difference in our attrition. We have not done any acquisitions; we generate all our own accounts. We have to get out and find accounts and grow internally because it’s our only channel.

I will say this: We don’t wait for the customers to come to us like maybe we did two years ago when our phones just rang off the hook, and we’ve gotten very aggressive with Web-based marketing, search engine AdWords, getting our guys on the street — all the basics.

There’s not another industry I’d want to be in today with this economy we’re in. I look at the car dealerships and homebuilders. Like John said, we just went through our bank’s annual review and they said the same thing, ‘We wish we were looking at more businesses like this.’ They like the recurring revenue and they like the business model. We have cash flow even when we don’t sell, because of our account base.

I hear all this negativity and that the sky’s falling. I look around and quite honestly, I don’t think anything’s that wrong in our field, at least not the way we play the game. It’s pretty much business as usual. We’re cautious with receivables, credit and overhead expenses; we don’t waste anything because if things get bad, we want to be prepared. But right now, it’s pretty good.

Bourque: The unemployment rate is 10 percent now in my state, which makes a difference. Obviously, if your state or area of operations is hit hard, you feel it.

{Everyone nods and agrees.]

Jennings: Our model may change down the road, but I think people are always going to need security, I think people are always going to be willing to put systems in and increase their security in bad times. I’m a firm believer of that. I’ve been through five or six recessions in my 30-some-odd years of business. I think we need to look for where our challenges and dangers are going to be, because I think they’re out there.

One danger is our accounts receivable. We could all of a sudden see people shut down because they don’t have credit, they can’t make payroll and you’re not getting paid, period. That may happen to us. But what’s the big thing that’s coming at us? I think that as an industry is what we have to identify. I’d be interested to hear what Joe and Joe, and John think.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

About the Author

Contact:

Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].

Security Is Our Business, Too

For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Commercial Integrator + Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add to your bottom line.

A FREE subscription to the top resource for security and integration industry will prove to be invaluable.

Subscribe Today!

Get Our Newsletters