How to Increase Profits, Maximize Cash Flow, and Increase Referrals

My friend Tim is a pioneer in our business and one of the very first custom integrators I ever met. In the early 1980s, years before a group of visionaries founded CEDIA, Tim closed his high-end audio store to pursue whole-house integration. I still remember him showing me my first completely automated home theater. He pushed one button and the lights dimmed, a screen and projector dropped from the ceiling, shades lowered, and a VCR started playing John Carpenter’s The Thing in simulated surround sound. I was impressed and thought there might be a future in this stuff.

Mike “Sparky” Detmer (mdetmer@nilesaudio.com) is president of Niles Audio

Tim!” I answered, after I recognized his phone number on my caller ID. “Long time no talk, what’s new with you?”

“Mike, I’m specifying a job for a client and had a few questions about the new Niles DS loudspeakers with rear wave control, so I thought I’d get the info from the horse’s mouth,” he joked.

After answering Tim’s product questions, our conversation turned to business and the state of the industry as it comes back from the recession. I was concerned that the downturn affected Tim more than larger integrators in the area, yet he commented that his business was better off now than ever before. And when I asked why, he said it was because he was now “controlling” his business, or enacting business practices based around certain precepts designed to increase profits, maximize cash flow, and–believe it or not–increase customer referrals.

When asked to share his precepts for this article, Tim offered these five suggestions that you can use to ensure your business prospers:

1. Define the systems you specify. Tim views his installations like pouring concrete. “Go in once, install the system, and never go back,” he said. “Always make sure that your client knows exactly what they will get, and don’t play the upgrade game,” he emphasized. Now this may fly in the face of what some manufacturers recommend, but from Tim’s perspective, he can’t make enough incremental revenue from upgrades to justify the jobs.

2. Document everything. “I do jobs that can be as far as 6,000 miles away, so I need to know every component, its location, and every connection path that enables me to get through the installation quicker and without having to run out for parts during the job. Plus, proper documentation forces me, and my crew, to slow down in the front end of the project and speeds us up during the actual installation. In a LAN-based world this is vital.” Tim told me that he uses AutoCAD for the documentation process because it is “common language” to most architects.

It’s important to schedule meetings with your clients to discuss project milestones at the end of each phase. Don’t move into the next phase of a project without client sign-offs.

3. Don’t assume everything works. “Never deliver sealed boxes,” Tim said. Meaning, he tests every system locally before delivering it to the job site. That way he can maintain 100-percent quality control. Yes, it costs him more, but remember Tim charges a premium and gets referrals from clients that are amazed everything goes in smoothly and operates perfectly the first time.

4. Don’t do too much yourself. For this Tim has a multi-pronged approach. He uses proven experts whenever possible, running wires for example. Plus he won’t take on more work unless his time will allow it. “I just turned down a 69K job,” he told me. “I am completing a job and don’t have the time to properly stage the new work within the customer’s timeline. So I referred him to another integrator.” I know that doing this takes courage and discipline, but for Tim, it is an essential component in controlling his workflow and hence his quality.

5. Service your customer through education. “We believe in complete client education throughout the bid, design, and installation phases. There are scheduled meetings with our clients to discuss the project milestones at the end of each phase. We will not move into the next phase of a project without client sign-offs,” Tim concluded. “An educated client is a happy one, and someone who will give me a referral to the next job.”

So now that you know what a pioneer that has survived the ups and downs in the market does to drive his business. What are you going to do today that is different from yesterday to improve your custom installation company?