Diversification in a Maturing Market: Why Add These Services to Your Security Company
Security vet Al Colombo shares add-on services that you should consider making a part of your business — ranging from home automation to the Cloud.
When a local market matures, it often results in less and less business for security companies that specialize in alarm system sales, installation and service. One of the most effective ways to combat this problem is “diversification” into other areas, some of which may actually overlap with security and life safety.
According to The Free Dictionary, the definition of ‘diversification’ is: “To extend (business activities) into disparate fields.”
Wikipedia goes one step further by defining ‘diversification’ in terms of the ultimate benefit it offers a security company experiencing a downturn in local business primarily due to market saturation.
“In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets. If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents.”
Diversification Into Home Automation
One possible solution is to expand your offerings to include home automation (HA) products and services. The great thing about this scenario is that there are HA systems on the market that use an alarm control panel as a means of operation. Examples include Alula, HAI (Leviton), DMP, Napco and others.
As with anything new, it’s sometimes difficult to start something new as it takes us out of our comfort zone. There are three basic ways to overcome this:
- Install a HA system in your own home. You might also consider subsidizing the installation of HA in all your employee’s homes, especially that of your technicians. By the time they’re done installing these systems on a company-wide basis, they’ll be well on their way to knowing how it’s done. Not only will this give you a new source of revenue, but it will up your game by giving your brand a new, high-tech appearance.
- Find a technician in your local market who knows and understands HA. If possible, hire him and have him work directly with each crew leader and eventually assign another helper to assist him in his own crew. If hiring another tech is not an option, find a local tech you can partner with who will work with your own installation crews installing and servicing HA systems. If you take this option, be sure to expose your crew leaders to this individual so they can learn a thing or two about installing and servicing these unique systems.
- Send one or two of your best techs to factory school. Here they will learn how to install HA systems as well as service them. Not only will they come home with the knowledge they need, but they’ll carry factory certification — something you can use when you advertise HA to your local market. Those who return with certification will usher your security company into a new era, a new life.
Adding Gate & Cloud Systems to Your Portfolio
Let’s say that you own a sizable alarm company that focuses primarily on the installation and service of alarm systems and access control. You happen to work in an area where there’s a high concentration of manufacturing, which is not at all unusual.
Many of these clients have a separate gate company install their motorized or hydraulic gate systems. These clients routinely ask you to connect your intrusion alarm system and access control systems to them.
As long as your alarm company is doing well, as long as you’re growing, it’s fairly easy to overlook the fact that many of these companies pick other firms to do them in gate work. However, when the alarm/access system side of the business begins to slow down, you should consider asking them if they’d consider using your firm, especially if the gate companies involved come from other communities instead of your own.
Add Cloud-Based Services
Another great expansion tool is third party, Cloud-based services such as ACaaS, VSaaS, SaaS and any other you can think of. All of these and others will help your firm to continue growing despite market oversaturation.
Another issue to consider, whether you’re experiencing a downturn in local business or not, is how do you know when it’s time to diversify into these and other areas? See the next page for more thoughts on this topic.
In conclusion, the need to diversify can come from an assortment of causes other than a maturing local security market. No matter how you get there, when you do, consider diversification, be sure that the skill sets you and your employees already have will enable you to make the transition with minimal effort and cost.
If you would like to discuss your situation with a 45-year security professional, email me at Security.Sales@tpromo.com. Please include your name, title, company, number of years in the industry and any other information that seems pertinent.
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