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Finding a New Facility: the Best Investment You Can Make

It’s been a while since I received an invitation for a grand opening of a residential systems integrator’s new show room. I’d like to think that the reason isn’t due to waning popularity but rather dealers just aren’t opening that many showrooms as in the past.

Mike Detmer is global vice president for the residential and light commercial markets at LED lighting manufacturer NuLEDs. he can be reached at [email protected].It’s been a while since I received an invitation for a grand opening of a residential systems integrator’s new show room. I’d like to think that the reason isn’t due to waning popularity but rather dealers just aren’t opening that many showrooms as in the past. So I was particularly keen when a personalized invitation arrived for the grand opening event of Crown Audio’s newest location in Winter Park, FL. I’ve known Crown’s owners, Nael and Wael Yacoub, for many years and relied on Nael’s input as a valued member of past Niles Dealer Council events.

Given that many integrators are contracting versus expanding their facilities these days, I truly wasn’t expecting much. But I sent in the RSVP and darted across the state in an effort to offer Crown’s owners and staff my best wishes. Yet when I pulled up to the new location on West Fairbanks Avenue, my expectations suddenly amplified. The facility was a real store, located on a busy street and the valet was busy parking upscale cars and SUVs. Moreover, after mingling with the Crown’s affluent customers, I was certain that opening this location was a well-crafted business venture.

From all appearances, Crown’s newest location looks expensive–a bit more than most integrators would want to spend. Digging deeper in an interview with Nael, however, it turns out that he was able to purchase the facility at a much lower monthly payment than leasing one in the same general vicinity. The combination of low commercial property values and historically low interest rates put Crown in the position of converting its monthly rent into real property equity.

A business owning its own property isn’t a new concept. This is evidenced by Walgreens owning locations in nearly every neighborhood. But considering Nael’s comments may get you to think twice about a new facility for yourself. Here’s what Nael had to say about why his new facility is not only a good tool to grow sales, but it’s a good investment as well:

Crown Audio’s Nael and Wael Yacoub outside their new showroom in Winter Park, FLCustomers Want a Quality Experience. Over the years, Nael said, many of his competitors contracted their facilities and focused more on efficiencies of scale, which sometimes compromised the quality of experiences received by customers. Now there are more clients emerging in the high-end who value premium products, intricate system designs, and a place to go to experience them.

“The high-end customers are out there and we wanted to show them that our business is there to service their needs,” Nael commented. “Surprisingly, by opening a second showroom in a prominent location, business in our first location has grown as well.”

Real Estate is a Good Investment. Because it’s currently a buyer’s market, Crown Audio’s owners decided to forego leasing and to invest in a building. The purchase rate per square foot was lower than lease rates in the same part of town.

“We are literally paying half as much for our mortgage than we would have for a lease,” Nael said in explaining his rationale for buying.

Locate on the Fray of a High-End Area. “We looked for a location that was convenient to high-end home owners,” Nael said. “Because we’re close enough for word-of-mouth to spread but not in the heart of town, we get the benefits of an upscale clientele with reduced facility costs,” he told me. In looking around, I noticed a wine shop, coffee bar, and custom tailor. Like Crown Audio, they are all geared to upscale customers.

Focus Your Build-out on Customer Tastes. Crown’s choice of décor reveals careful thought about who its customer is and what makes them comfortable. “You have to build an environment a woman can imagine in her home,” Nael advised. “Each of our rooms has a clean look and one system–no multiple displays and several popular styles represented. That way we can put everybody in something that matches their taste.”

Don’t be Scared by the Commitment. Judging from the tremendous turnout of customers at Crown’s grand opening event, I have to believe that there is a strong business potential in their area. “This is what people want, and it has to start with us,” Nael stated. “I’m confident that we will be selling highend and custom-installed systems for years to come. Tell your readers not to be afraid,” he concluded.

Expanding as the market grows is a natural evolution. Maybe your business is ready to take a big step like Crown Audio did. If so, be sure to do all you homework and consult with your accountant, real estate professionals, and banker before jumping in. For some residential systems integrators, new facilities can be a great investment.