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Best Practices

CEDIA Survey Offers Business Benchmarks

Statistics from CEDIAs first Industry Best Practices Survey indicate that residential electronic systems contractors who have written strategic plans experience twice as much growth as those who dont. In addition to providing a detailed analysis of eight business operations categories, the survey also indicated that one additional full-time sales employee increases revenue by an average of $1 million, and that a written marketing plan will increase the effectiveness of each sales employee in a company.

A full report from the survey, with conclusions drawn by independent research firm RSM McGladrey, will be made available for free only to CEDIA members who participated in the survey. However, CEDIA has released key data points to the general public as a way to encourage more participation from its members when the next survey is delivered in the first quarter of 2007.

Our goal is to get more participation next year, which would give us better number and more validity to those numbers, said Larry Dashiell, CEDIA treasurer and Best Practices chairman. This time around, however, we generated some really good key indicators people can use to help the direction of their company and to measure themselves against some of their peers.

The long-term goal of the Best Practices Survey, Dashiell explained, is to create a roadmap for how to operate and grow an electronic systems contracting business. From personnel, financial and risk management to strategic planning, marketing, and customer relations, this survey lays out the benchmarks for the residential electronic systems contracting industry, he said.

The challenge, according to Dashiell, is to generate data that CEDIA members can really trust as valid. Were using what are called scatter graphs instead of bar graphs so you can see the outlying companies and try to pull in and see what the average is, he explained. Were really trying to make sure that when we put information out that they are not your typical inaccurate industry survey numbers.

Using data from the report, CEDIA also will develop new supplemental materials for its CEDIA University core curriculum courses and industry seminars, such as a strategic planning guide and written examples of business and marketing plans.

The CEDIA Best Practices Survey includes great detail on daily operations, such as how often business leaders hold staff meetings and how much revenue is typically needed to support additional technicians and designers, Dashiell said. There is no other resource out there that offers specialized benchmarks for Electronic Systems Contractors to gauge against their industry counterparts.

Survey respondents reported that 65-75 percent of their revenues came from the audio-visual category as a whole, primarily in the home theater and distributed audio segments. Home networking is the second highest category representing 10 percent of overall revenue for residential electronic systems contractors. Many companies indicated that they sub-contract out security systems because it is not within their core competency.

Overwhelmingly, the most effective form of marketing for residential electronic systems contractors is customer referrals. More than 88 percent of respondents have high or moderate success with customer referrals. Yellow pages, store events, Internet, and direct mail were mentioned as other forms of marketing used, but only Internet marketing generated high or moderate success with more than 25 percent of respondents.

Dashiell said that CEDIA hopes for more participation from its membership in the first quarter of 2007. Those residential electronic systems contractors who participate in the 07 survey again will receive the confidential report for free as well as a detailed report that shows their companies stats compared to industry averages in all eight business operations categories.

Its really important to get full participation in the survey, Dashiell added. Next year we want to dig even deeper and try to give the business owner a better understanding of when you need to add a person to your company, for example, or when to know that youre at the limits of that persons performance. Of course theres going to be a lot of variables to consider within these results, but done the right way, this can be a very valuable tool for CEDIA members.

Residential electronic systems contractors who are interested in participating in next years survey should contact Tabatha OConnor at [email protected] or 800.669.5329.

Jeremy J. Glowacki is the editor of Residential Systems magazine in New York City.