I believe our ranks are swelling with lots of small new companies who are getting into this business. This year at CEDIA EXPO I was teaching classes about proposals and business systems. I asked my class, How many of your companies created a business plan before starting up? Even I was surprised to see only two hands raise in my class of about 90.
At CEDIA I ran into lots of eager young installers who had installation skills, but were quite lacking in schooling and experience in running a business. In response, I have come up with my 10 tips for new CI companies.
1. Study business. New businesses start every day. It all looks so promising from the outside. The hard truth is that 90 percent of those new businesses will fail. If you want to run a successful business, you need more than a desire to be your own boss. You need to study the fundamentals of business and become skilled and clever in sales, management, finance, and the art of managing people. You will need college business classes.
2. Sales drive your business. A common way to enter this business is by selling your labor for prewires and other installations. If all that you sell is your labor, however, you will run out of time before you have enough income. Your installation labor is your ticket to the essential profits you need from selling all the gear. You need a great salesman and a great proposal system that gets results.
3. Work with a well-known A/V distributor. When you first begin, you will have no dealerships for the gear you want to sell. Acquiring important dealerships will not happen overnight. Your distributor is your one-stop shop to get you started selling equipment at a profit. They will be your most important business partners.
4. Buy Quickbooks Pro and hire an accountant who also uses it. Even if you have a well-defined business plan, you must know how you are doing financially at all times. Use Quickbooks to write your checks, handle your invoicing and payables, payroll, taxes… everything. Look at your profit and loss reports and your balance sheet at least once a week. Your secretary or bookkeeper needs to be proficient with this software. Once a month, he or she will check and fine tune things and advise you.
5. Stay lean and mean. Keep your overhead down. Keep next to nothing in your inventory. Inventory costs you money and you do not need it. Order exactly what you need, just before you need it. Plan exactly how long it will take the gear to get to you for your client. If there are changes and you are left with items that you do not need now, try to return them.
6. Use your clients money as operating capital. When you sell a job, get a good deposit right away. When its time for trimout or equipment, bill them ahead of the need. Cash flow management is critical for you to survive. Use their money to finish their job and dont be caught short. Have a line of credit at your bank.
7. Never be the low bidder. If you get the job because your price is the lowest, you will soon put yourself out of business. You need a reasonable profit margin to succeed. When negotiating, you need win/win solutions. Both you and the client must be happy with the price.
8. Be different or die. What is your unique vision? What is the area where you are the very best? You must differentiate your company from the competition. Because being the low bidder is no longer an option, you have to be better and clearly articulate exactly why they want you. Target your market. Choose your products wisely and become dealers for the product lines that you really respect.
9) Your reputation is your future. Be known for your honesty, integrity, good business practices, and great attitude. When someone hands you his or her check, its all about trust.
10) Dont burn out. Be kind to yourself and your employees. Go home at night and be with your family. Make sure there are lots of rewards.
Richard Riehl (email@example.com) is an A/V systems expert and consultant from Los Angeles, Californi