Outpacing the Competition With Fire Service Agreements

Recurring monthly revenue (RMR) is the Holy Grail of growing businesses. RMR creates value and growth opportunity for your company incrementally by adding new services, and thereby separating your company from the competition in the marketplace. Business models based on RMR provide a means for fire and life-safety installing service companies to be profitable each and every month.

The recurrent profits delivered as the result of a servicing agreement allow companies to continue to show a guaranteed revenue flow — even during difficult economic times — that extends into the future by 24, 36 or 60 months. A prime example of this is the prolonged construction slowdown, which began in many regions of the country as early as 2008.

During this period many companies, specifically fire and life-safety installing companies that relied on the build-spec model, were severely impacted and found it necessary to make adjustments to their business practices on the fly simply to survive the crisis.

Having to react in such a manner in order to weather difficult economic conditions is not a business plan that can continue to foster growth into the future. Many of the fire/life-safety industry’s most successful businesses build free cash flow and net worth by continually compounding RMR.

RMR programs that are currently providing business-building revenues for many fire and life-safety installing companies include service contracts for fire systems that they install or take over from competitors as a standard form of business. These contracts mark the beginning of adapting to a sizable recurring revenue stream that when fully developed could surpass the revenue earned through the long, hard hours of installing and servicing of UL alarm systems.

If You Don’t, a Competitor Surely Will

It would be a business sin for any fire/life-safety installing company to pass up the opportunity to administer a service agreement to monitor a newly installed fire alarm system. Most business operators in the industry are aware of and carry service contracts for fire suppression systems that are installed and required by law. Why then are so many fire/life-safety installing companies not inclined to adopt the RMR model by offering alarm system monitoring service contracts?

Do not leave alarm system monitoring RMR for someone else to capitalize on. All UL 864 alarm systems need to be monitored by a service provider. Fire alarm monitoring contracts can provide your company with an additional monthly stream of profitability that many installing companies are missing out on. Someone is monitoring that alarm system and gaining the monthly revenue, it may as well be you.

For an installing firm, implementing a monitoring program does not need to be costly as there are numerous UL-Listed alarm monitoring companies to partner with. Contract central stations, third-party monitoring companies and wholesale monitoring companies are all terms used in the parlance to refer to companies that provide alarm monitoring services based on a portion of the fees charged to the end user. These companies provide staff and maintain equipment and the monitoring dispatch software that the service requires to represent your company seamlessly.

These third-party monitoring providers offer a great opportunity to allow installing fire/life-safety companies to quickly adopt an additional RMR stream by capturing alarm monitoring revenues. Installing contractors that add the focus of offering monitoring services to their portfolio of services are on their way to making their clients more “sticky” and less likely to be pursued by less forward-thinking competitors. 

Tom Kenty is General Manager of AES-IntelliNet for alarm monitoring. He can be contacted at (978) 535-7310, ext. 109.

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