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A Litmus Test

A litmus test, as anyone who has ever taken a middle school science class knows, is a common indicator used to test materials for acidity. This term, however, is also a colloquialism used to describe any social indicator for classifying someone or something, either favorably or unfavorably. In the custom installation industry, for instance, the perceived success or failure of a trade show often serves as a litmus test for the health of our market.

Such was the case at CEDIA EXPO this past September in Denver and at EHX last month in Long Beach, California. Those two shows, only two months apart and two states away, offered markedly different results. One seemed to indicate a healthy and prosperous market, and the other just the opposite.

It would be much too easy to point to the struggles of a single event like Fall EHX and say, Here we go again… Homes arent selling, retail sales are down, and that sub-prime thing has scared everyone away. On the contrary, in this case I dont believe that the lukewarm results of one trade show are a fair indicator of the health of our market. There are many reasons why I would argue that the sky is not falling.

To start with, November is simply an awkward time for a trade show in this industry. Fall EHX never quite found its footing like the spring event has. Compound that with the fact that it is jammed between two major western U.S. trade shows within the same five-month period, and location is no longer a good hook. Lets also not forget that this years event was held the week before Thanksgiving, which is not exactly a great time for anyone to travel.

This is not to say, however, that our business is immune from the slow housing market. I would contend that integrators who have placed all of their eggs in one production homebuilder basket are now the most vulnerable to dropping home sales. When times get tough, production builders who may have once held partnerships with three or more integrators during boom times will retrench with only their top-performing partner. The other integrators will be left out in the cold, often with no Plan B in their pocket. Those with a Plan B are the ones who never seem to panic.

Todd Sandler, of Naturally Wired in Overland Park, Kansas, has learned to diversify his business offerings to handle market fluctuations. In my sidebar article with him on p. 48 of this issue, Sandler explains how he has managed to weather the storms that occur from time to time as one area of AV installation slows down and another picks up. In its 12 years of business, Naturally Wired has branched out to handle not only new construction and retrofits, but also light commercial AV integration and home networking opportunities. This wasnt something that Sandler did in reaction to tough times; it occurred organically over time and has served him well.

Sandler is only one of many savvy business owners that Ive met over the years who have realized that its just not wise to count too much on one AV specialty. Sandler, like other best-in-class integrators also knows how to market his business to keep the ever-important referral network flowing.

The key is to let potential customers know that you exist. The majority of the world still does not know what our industry does. CEDIA is doing a better job of spreading the word, but the onus is really on individual businesses to find their own local partners and to come up with their own creative marketing solutions for their specific regions.

If you havent already figured it out, use whatever time off you get during the holiday season and come up with a plan for diversifying and marketing your business. Heres to making 2008 your breakout year.