When my kids were younger, I would tell them the following story to guide them towards better stability in their life. I would tell them if they had a stool with one leg, it would be very wobbly and unstable, two legs would improve the stability, but three would provide a great foundation for them to sit or stand upon. If they rely simply on friends or money to bring them joy in life, it likely won’t provide them great, long-term stability in life. I would continue to explain that at times friends may move away or fail to support them, family may disappoint at times, and their faith may waver over the years. Regardless, having a three-legged stool in their life will provide them with a better foundation. In my life, Faith, Family and Friends have delivered great stability for me. While my foundational pillars may work for me, it is up to each person to define their own foundational elements.
The same principle can apply to business. For example: It is not enough to just offer a good product or service, you must also have a talented, engaged, and dedicated team, along with a financially stable business model. Each of these elements can be broken down individually:
- How to establish/improve financial stability
- How to engage and foster dedication with your team
- How to expand and improve your product or services.
In this article I will be focusing on how to improve your product and services and in return, explore how to increase stability in the sales channel.
Manufacturers, dealers, and distributors worldwide have experienced a softened residential market for professionally installed consumer electronics, especially within entry level and mid-level projects. In my last article, I discussed exploring commercial opportunities to fill in some of the void in residential projects. Exploring commercial opportunities is certainly an important exercise and worthy time investment. The following are a few other elements to consider:
Leg #1: Product Offering:
While our industry has been built on Audio/Video, Automation and connected devices, many other emerging and thriving product categories exist and could deliver additional revenue for each project, allowing you to increase your “wallet share” on the project.
Although surveillance is not a “new” category, many integrators have not capitalized on this opportunity enough. The reality is the average surveillance investment for a project is $5,100 and could easily increase to $10K or higher. Additionally, surveillance is a thriving product category which is expected to increase to $76B worldwide by the end of 2025. Unfortunately, it often becomes a race to the bottom to deliver the cheapest price rather than delivering an elevated level of comfort and security to the end user. This should certainly not be the case for a product category that delivers security and protection to the end user. Better quality cameras will likely last longer and deliver better perimeter protection, improved night vision, reduced false notifications and deliver many other valuable benefits that should be discussed with the end user.
Additional new(er) product categories that could be capitalized on and put into consideration are: Outdoor living spaces, with landscape lighting, outdoor entertainment, indoor tunable lighting for improved circadian rhythm, health and wellness solutions, energy management and storage solutions. Just to name a few considerations.
Expanding your product offering and increasing the value for each project is an important exercise to regularly invest time and energy.
Leg #2: Recurring Revenue:
Many years ago, with the help of an amazing team, I successfully built up and sold my integration company. A very significant element in the value of the company was my recurring security monitoring revenue. Security monitoring is certainly a great form for having a recurring revenue stream, but many others have emerged or become more popular over the years. A few examples are as follows: service contracts, extended warranty programs, and SaaS (Software As A Service).
Recurring revenue adds great value to your business if/when you decide to sell the company, while also providing a steady and reliable (additional) income stream.
Leg #3: Engage with your customers:
All too often we finish a project and move on to the next one, without further (proactive) engagement with past customers. The consumer electronics industry is constantly evolving and introducing cool and exciting new technology. I think back on the hundreds of past customers I worked with over the years and one thing comes to mind – Many of the older projects were designed prior to streaming media and may have used a two-channel amplifier and speaker selector connected to a stereo receiver. By simply upgrading the customer to a multi-channel amplifier, removing the speaker selector and adding a streaming device, this would dramatically elevate the distributed audio experience for the consumer. Of course, you may not have a massive client list with a similar existing system design, however you can still educate them on other cool technologies to consider as mentioned above, tunable lighting, landscape lighting, energy management, 4K or 8K video, hi-res audio, power storage, etc…
Creating a quarterly newsletter to educate your customer on cool, new technology and trends in smart home lifestyles, such as featuring a recent project, could produce interest in upgrades from a past customer or one of their neighbors, friends, or relatives.
Business is typically not linear over the course of a year or lifetime of a company. Businesses encounter peaks and valleys, just as we may have in our life experiences. Having a solid foundation and expanding revenues streams will help to successfully navigate dips in the road. The “legs” described here are simply examples or suggestions. It is up to each person or business to establish the foundation that best serves their needs. Best wishes to you in establishing your three-legged stool, and a solid foundation, which will ensure success in your business for many years to come.
I would love to hear from you. Please email me anytime at: pete@thebigcorp.com