Industry@Work

Sleeping on a business plan can turn your dreams into your worst nightmare

• By Karina Sanchez
• Apr 02, 2007

SECURITY installers out there know that business isn’t getting any easier. Installers today must face issues not thought of 10 or even five years ago. Technology is evolving so quickly that it’s a constant battle to just develop the know-how to keep systems updated. Moreover, end users are now more informed about technology and its abilities, highlighting the added importance for installers to offer specialized services to its customers and, at the same time, increase profits in this highly competitive market.

The integration business is challenging because in the security industry, issues such as convergence and scalability are huge and require understanding from professionals now, not three or four years from now. For many installers, when it comes to contracting work, managing projects and negotiating bids, risk becomes the most important factor of success or complete failure.

Electrograph’s Display Technology Experience 2007 show hit Dallas two months ago, offering its reseller partners educational tracks and networking opportunities to help make their business more profitable and efficient. Brad Nelson, president of Sound Solutions Northwest Inc., offered a session on reasons why your company may fail and how to fix it. Though the A/V market is not entirely similar to that of security, there are business practices and challenges that are felt across all verticals—not just security or A/V.

Managing Business
A business can fail for any number of reasons, and that’s why it’s important to help prevent failure before you’re caught in it. In doing so, Nelson suggests creating a business plan. A business plan is designed to help prevent a company from becoming unmanageable. Its principle is based on having the ability to understand current performance versus historical performance.

“A business plan that is not written down is just a dream,” Nelson said.

And without having a plan written down, the damaging effects on a business can become a real nightmare. With the amount of mergers and acquisitions the security industry is seeing, more and more businesses are expanding. Security hardware manufacturers are converging with software developers, hoping to create an increased profit, but also faced with an added workforce to employ and cash-flow issues.

Though many in the industry are excited for the idea of convergence, the actual act requires much more preparation. Nelson said that a symptom of not having a business plan is that companies are constantly surprised by financial results—more bad than good. It’s never a good sign when a CEO gasps at the increased labor costs garnered after a merger.

“Uncontrolled growth is more destructive than sudden loss of revenue,” Nelson said. “This can be the most destructive thing that happens to a company.”

Uncontrolled growth can initiate financial issues and employee satisfaction challenges, as well. Without a business plan in place, there are no records—neither archived nor current—that follow the business’s performance over time. And not knowing what to do when faced with challenges can break any hopes for a bright future in the security marketplace.

The Effects
The effects of an out-of-control expansion are felt through all levels of a company. While those at the top are surprised by random successes, workers on all tiers feel the stress and chaos that come with a demand for longer hours and increased productivity.

Employee satisfaction is a big issue for companies when expansion occurs. Many times, expansion is misconceived as an added workforce and added benefits, which allows employers to take on more projects or jobs in the installing business. In reality, employees become tired and feel burned-out because of these added stresses and increased hours. This, in turn, affects the services and products a company produces.

“Declining quality and customer support are effects of expansion out of control,” Nelson said. “And you also see loyal customers becoming unhappy.”

Keeping employees is one thing, but keeping a solid customer base is also very important. Oftentimes, employers are focused on the bottom line, forgetting about the people who actually make things happen. And if you’re in the installing business, your employees are the lifeblood of your operation. They’re the ones who not only install products on one end, but on the other end, act as the customer service team and system operation trainers. And when a company’s product, services and training are tarnished by employee dissatisfaction, employers are sure to see the effects in declining customer satisfaction.

How to Recover:
The first steps in recovery are easy and, if done properly, can foster promising results. Obviously, if an installer is losing loyal employees or experiencing high turnover, there’s a problem. Having a business plan in place is key when starting any new project or work.

In keeping finances in place within a business plan, Nelson suggests creating both a budget system and an accounting system that allow for comparison between what was actually spent versus planned expenses. In addition, Nelson said that employers must have eight to 10 metrics to monitor, and create an executive management staff to regularly schedule reviews of each job. Just keeping close records of monetary expenses can help alleviate the effects of out-of-control expansion.

Project overbooking, for example, can damage employee satisfaction. Nelson suggests allowing management to provide controls to avoid booking too much work.

“And this is sometimes really hard to do because you want to be successful,” Nelson said. “But you need to be objective.”

Be objective in the way that you plan your current projects and future ones. With expansion, there are opportunities to take on more work when the time is right, not straight out of the starting gate.

Nelson also recommends having a staff resource plan that allows you to monitor resource use and allocation. For example, have sales pipelines. This will help streamline employee productivity and cost savings at the same time.

One thing is certain in business—there will always be challenges to overcome. And the best way to face those challenges is to plan ahead. Seek out those issues and remedy them ahead of time.

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