Although small businesses vary widely on the surface, they experience common problems at similar stages in their development.

For owners and managers of small businesses, particularly alarm businesses, understanding the trajectory is crucial in anticipating key requirements at various points.

For instance, the problems of a six month-old, 10-person business can rarely be addressed properly by following advice aimed toward a 30-year-old, 100-person company. For the former, cash-flow planning is paramount; for the latter, strategic planning and operating control are most important. Reviewing the stages can help you see if a decision you may be contemplating currently makes sense for your particular situation.

Stage I: Start Up

In this stage, the two main challenges of the business are obtaining customers and delivering the service contracted for. Among the key questions are:

• Can we provide services well enough to become a viable business?

• Can we expand from those few key customers to a much broader base?

• Do we have enough money to cover the cash demands of this start-up phase?

Your organization is a straight-forward one–you (the owner) do everything and directly supervise any staff. Systems and formal planning are minimal to nonexistent. Your strategy is simply to remain above ground. You are the business–and the major supplier of energy, direction, and (of course) capital.

Stage II: Growth

If your business gets through start up and now has a good base of customers, satisfies them and receives referrals, then your company is in the growth phase. The key problem shifts from mere existence to the relationship between revenues and expenses. Your main issue becomes how to finance growth to a size large enough to earn an economic return.

The organization becomes less simple. Your company, which up until now may have had a limited number of employees, will begin to grow and require other managers to take over certain duties.

Basic financial, marketing, and production systems now become more solidified. You may consider a dealer program with a partner that has well developed management processes and your growth in mind.

Stage III Sustainability

As the business matures, you and the day to day tasks of your business separate. Your managers pick up more and more duties. Many companies continue for long periods in this stage, particularly if the owner is strategic and the company continues to adapt to environmental and market changes.

Among the important tasks are maintaining profitability and developing your managers to meet the growing business needs. This requires hiring with an eye to the future rather than the current condition. It is in this stage that many strategic owners realize how beneficial it is to look for potential partners with whom they can share some of the burden and sell some accounts to keep the organization stable.

If your company does not have continued growth and seems to only be replacing customers that are lost year after year, it may be time to consider whether making an investment in new growth or making the decision to exit is the next obvious step.

Stage IV: Sunset

The greatest challenge entering this stage is trying to maintain equilibrium. If the company hasn’t been able to maintain a low attrition rate while integrating critical budgeting and planning tools, it will head into the sunset stage sooner. Unfortunately for these businesses, it is usually the inability to keep reinventing itself that triggers a slow death. Owners must anticipate and manage the shifting factors as they become important to the company.

Summary:

While each individual company is unique, to a great degree a company’s development stage determines its opportunities and challenges. Knowing what stage your company is in enables you to make more informed choices and to prepare yourself for the next phase. By finding a trusted partner, you may be able to minimize your risk. Contact ACA to have a preliminary discussion about the stage of your company and find out more about how we can help.

Industry PULSE

Security Matters Issue One, 2016

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One of the major challenges of running a small business is the fact that both the problems faced and the skills necessary to deal with them change as the company grows.

What’s the ONE THING your clients want most from you: It’d be easy to just say “everything they ask for,” but the real answer is, if I can’t meet absolutely every one of their needs, they want clear and concise reasoning as to why that is. Everyone wants to be spoken to like another human being and not a financial asset, and wants to be offered solutions as to how they can best handle any situations that come along, instead of just having policies and procedures read to them.

What’s the most interesting project you ever worked on or client you’ve served: He’s since passed away, sadly, but I had a dealer years ago who had lost a leg (I don’t remember how) and would, upon receiving any praise for anything, exclaim “not so bad for a one-legged man!” You could set your watch to it. I know that’s an odd answer, but it’s definitely the most memorable client I’ve served–and certainly the only one with a catch-phrase.

Your biggest pet peeve: I see the need for micromanagement in some circumstances, but mutual trust that ACA and a client are working in each others’ joint interest always establishes the best long-time working relationships. Whenever one side begins suspecting that the other side is trying to get one over on them, it can deteriorate fast, especially if that suspicion is baseless, as it often is. It’s always my goal to put a lot of trust in my clients and hope they’ll by extension put a lot of trust in us.

What’s the best lesson (or best advice) you ever learned from a mentor: Whenever something’s been delegated elsewhere, do your own follow-up and make sure that it’s being handled properly. Don’t just put it out of your mind because it’s now someone else’s problem.

What word, phrase or buzzword do you most overuse? I say “follow up” about 100 times a day, minimum. I even said it in my answer to the previous question. It’s a problem.

If you could trade places with one person for a day, who would it be: It would be a huge lie if I didn’t say Leonardo DiCaprio, so I guess I’d better just say it. If it’s all-time? Eh, probably still Leo.

What is your greatest extravagance? Travel. I don’t take long trips to any one place so I can try to get away as often as possible instead, with as much convenience and comfort and as few limitations as possible.

What’s the best piece of business advice you ever received: Find what you enjoy about what you do, hone in on it, and develop a love of it. It makes your job much easier if you have passion for it, even if that passion needs to be developed over time.

Favorite place/locale to do business: If I could work from a quiet coffee shop every day, I would. But I definitely don’t understand how people can work with any more distractions than that.

If there was one thing you wish you could change about your job, what would it be? Right now they’re doing construction on the floor above me and I’m hearing someone hammer repeatedly, so that coffee shop I mentioned is sounding like a nice improvement at the moment. Other than that, it’s going pretty well.

TEAM MEMBER Spotlight

Michael DeNight, Dealer Program ManagerTo be successful, a Dealer Program needs someone to take ownership of how the program functions, ebbs and flows. They make sure the member’s needs are met, questions are answered in a timely manner, and communications are constantly open. We are so fortunate to have that special manager, for more than nine years now. If you are in our Dealer Program or have worked with Dealer Relations, you have likely had the pleasure of working with Michael DeNight.

Security Matters Issue One, 2016

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We’ve been hearing about the 2G sunset for nearly two years and know that it’s imminent and has a huge impact on our industry. Even with all of the information that has been floating around, there are still legal questions that business owners are asking, so we reached out to one of our industry legal experts, Wendy Carlisle to shed some light.

As far as the 2G sunset goes, what is the true date that business owners should anticipate the signals no longer being sent?

Jan 1, 2017 is the date that business owners should assume signals will no longer be sent at all. Over the past couple of years, the service has been slowly dwindling, with limited areas of coverage, but by this coming January, service providers have indicated the service will be fully shut down. Most dealers have known about this for years, but the window is now fully closing. Dealers have only until the end of the year to get any lagging customers switched over to the new platform.

Must the service providers AT&T, Verizon, etc. make this information available to consumers?

It’s possible they’re doing that; but most alarm customers aren’t paying attention. Alarm customers are relying on the company that provides their service to keep them informed. This sunset doesn’t affect your cell phone, because cell phone coverage was converted a while back, so I don’t think alarm consumers have any idea that they may have obsolete technology in their house unless they are specifically told by their service provider.

What legal notifications must a business owner give their monitored customers to identify that their panel will no longer be sending signals?

I think it’s very prudent for business owners to send out letters and emails to their monitored customers–including however customers are used to being in communication with you. If they still

have no response, business owners should be specifically targeting those customers, that have not yet converted, through additional follow up calls or letters. They should use any means they can to get in front of the customer and inform him. Just as important, business owners should be documenting every communication they send out. That way if a customer comes back and claims a loss, the owner has proof that the customer has been notified. Keep detailed records so that you can say, “You were sent a letter on X date and called on Y date,” etc.

Are dealers required to send a certified, signed receipt letter giving notification that signals will no/are no longer be sent?

No. By law, if something is sent by mail, there’s an assumption in the courts that the person did receive the notice so regular mail is fine.

What ramifications may an alarm company owner have if a panel is no longer sending signals and they have given notification to the subscriber about the 2G sunset and the subscriber has not agreed to upgrade their system?

Any ramifications are going to depend on what the contract says. Most contracts will state that you are providing a service for a fee, and will have clauses in them regarding notification. It doesn’t mean that a customer won’t try to make a claim against you. They may hire an attorney or take you to small claims court if their alarm wasn’t working and they were robbed, for example. However,

if you get in a situation like that, but can prove that you’ve made attempts to notify and upgrade them, legal action will likely be shut down quickly. That’s why its important to be able to show what you’ve done to communicate. If you haven’t kept records or evidence, it’s just your word against the customers.

Think about this: When a car manufacturer does a product recall, for example, they keep very detailed records of how many notices they sent to you and at what address. They keep this information for years, in the event there is ever an occurrence.

What about installing equipment–is there anything to worry about?

A few years ago, people were still installing 2G, but that doesn’t seem to be an issue anymore. Having said that, if anyone still has that equipment, it’s important they don’t install it–but I think everyone knows better than that by now.

What else should dealers know?

I think customers have a better understanding of “sunsets” because they are used to technology becoming obsolete; but you’re always going to have a subset of people who complain. It’s good to determine an overall policy about how you’re going to treat your customers, while knowing you may want to deviate from that policy on a case by case basis depending on the customer, the length of time they’ve been with you, etc. to ensure you keep your best customers.

The Upcoming 2G Sunset: Q&A with Attorney, Wendy Carlisle

Security Matters Issue One, 2016

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Happy Spring to all of you and I hope business is booming!

As the days get longer and the sunsets later, it reminds us that we don’t have the luxury of waiting much longer in making decisions regarding the 2G sunset. It’s important that we’re all prepared with a well-thought-out plan on how to best serve our customers as 2G products and technologies are

forced to evolve in order to continue to support services, including security monitoring.

The most important first step is to notify, inform and educate all of your customers on what it means when the cellular companies cease supporting the 2G technology. After December 2016, many customers with 2G technology will no longer be able to be monitored and will no longer be receiving a service for which you can receive recurring monthly revenue. I know many of you have been talking to your customers; we believe as the time gets closer, they will be more and more responsive, so continue to reach out. It’s also a great time to promote home automation upgrades and potentially get new contracts and incremental recurring monthly revenue.

We have reached out to many of our trusted advisors on this subject and are happy to share the views of our attorney, Wendy Carlisle (Carlisle Associates). See our 2G interview with Wendy on previous page.

Finally, as spring gives way to summer, there’s always a danger of losing some of our business focus; however, we see the summer as the BEST time to refocus on your core strategy and measure every action, every day, against your strategy and long term plans. Keep two key questions in mind:

1) How does what we’re doing contribute to the bottom line?

2) How are we going to stay ahead of the competition?

Enjoy the season, but maintain a keen focus on pushing your business forward and driving the momentum you’ll need in the back half of the year when the 2G issue becomes more and more real.

Enjoy! Amy

Amy Kothari President & CEO

The Acquisition Handbook Whether you are looking to grow your business by acquiring another company or you’re ready to sell your business, you want to know what’s in store for you. If you’re considering selling, your goals could range from selling all of your accounts and making a complete exit, obtaining capital to achieve your company’s growth objectives, or even finding ways to pay down your debt by selling a portion of your assets. Regardless of the type of sale you’re considering, you’ll ultimately need a qualified buyer and should be prepared for what the transaction is going to look and feel like. The flip side holds true if you’re the purchaser. You will need to be the trusted and experienced buyer; therefore, the following information applies no matter what side of the transaction you may be on. Understanding the business plan, attrition, operations and financials are just a few of the key facets of determining whether or not an acquisition makes sense. Many attempted acquisitions have ended in disappointment due to a lack of adequate planning or inattention to a key element. We’ll cover some of the most important aspects of a thoughtful acquisition in this whitepaper.

Check Out ACA Marketing Services! The customizable and exclusively branded materials are designed to help Dealer partners achieve their business development goals, sustain levels of growth, and ensure a clear-cut way to communicate with customers and prospects. If you are a current ACA partner, you may access these materials with your existing company store login. If you are not a member of ACA’s Independent Dealer Program but would like more information on the store or program, contact us now.

Kelly Bond Receives ESA Award Our own Kelly Bond was honored with the Sara E. Jackson Memorial Award at the 2016 ESA Leadership Summit for her dedication and

volunteer leadership as Chair of the ESA Membership Committee and ESA Youth Scholarship Task Force.

Security Matters Issue One, 2016

Call 888.885.8656 | Visit alarmcapital.com

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