Back in 1997, Andrew Guenther proved that he was a man ahead of this time. Having toiled away for nearly 20 years, first as the owner of alarm installation company and later as a custom audio and video designer/installer, he realized that it was time to get serious about managing his business.
The fact that this realization came when it did–a full year before CEDIA’s first Management Conference in Scottsdale, Arizona–is proof positive of how Guenther has stayed a step ahead of his peers. While other designer/installers might only now be bringing on business partners and general managers to run their day-to-day operations, Guenther made the move five years ago.
Though not completely premeditated, the relationship that developed between Guenther and his eventual partner and CEO, Hal Munter, has enabled Sarasota, Florida-based Advanced Audio Design to grow its operations in three cities and to become a trusted partner to its vendors and customers throughout the country. Guenther’s partnership with Munter is much different now than when it began. When they first met, in late 1995, Munter was an Advanced Audio Design customer looking for a $10,000 A/V package. Things on that project went along swimmingly. Some time later Guenther went searching for capital to grow his business and was directed by an advisor to instead shore up his business operations with the help of a very knowledgeable man. The man, much to Guenthers surprise, turned out to be his very own client, Hal Munter.
Fortunately for Advanced Audio Design, Munter had received top-quality service in his own home installation and was willing to consider a partnership. Due, in part, to the first-hand experience gained by witnessing Guenther and his teamwork on his own home, Munter recognized the great opportunity that a custom installation business might afford him.
“I ended up spending a lot more money than I was expecting to spend on my own home installation, but that was because I didn’t know what type of technology was available,” Munter remembered. “For example I did a Lutron HomeWorks system, but had had no idea it was available before I started the project. Once I saw it and envisioned what it could do, it was a slam dunk.”
Once their agreement was in place, Advanced Audio Design’s staff found themselves led with a balanced leadership approach, combining Guenther’s sales strengths and years of vendor and client relationships, with Munter’s management skills and systematic approach to running a business.
a little background
Back in 1978, long before Advanced Audio Design became one of Florida’s most-respected custom installation firms in Florida, a 16-year-old Guenther was working a summer job at an alarm installation company. He liked the work so much that he soon ventured out and formed his own operation, skipping his senior year of high school altogether. As times changes and technology evolved, he eventually sold off the alarm side of his business, moving completely into audio and video sales and installation.
Munters background is much different. A retired businessman and anti-trust lawyer when he met Guenther in the mid-1990s, he helped turn around his wife’s familys struggling wine, liquor and beer distribution business in Washington, DC, before selling out his interests back to the family and moving to Florida around 1995.
It didn’t take long for Munter to realize that he missed the day-to-day challenges of running a business. That was right around the time he found out Guenther was looking for some help. Evaluating both the strengths and weaknesses of Munter and himself, he found a good match.
“I love the business of running businesses and making them better, and Andrew doesn’t enjoy running a business,” Munter explained. “I don’t like being stuck behind a desk. I like to get out and see people and socialize and meet new people and bring them in,” Guenther concurred. As their roles became more defined over the first few years spent as 50/50 partners, Guenther served primarily as “rainmaker,” spending time with 60-plus employees spread throughout the company’s locations in Sarasota, Naples and Tampa, bringing in new business, heading the company’s merchandizing committee and attending charitable events. Munter, on the other hand, spent his time implementing operating processes, measuring the company’s performance and running the business.
“We needed to have procedures that everybody understood and which performance could be measured against,” Munter explained of his initial focus. “We needed to do a better job of managing our cash flow. If we had an agreement with a customer that provided that they would pay X Percent upon signing of a contract, we needed to collect that money. If there was another percentage due during the course of the project, we needed to be sure we were collecting our money that the customer had agreed to pay.”
With confidence in Guenther’s years of market experience and solid industry relationships, Munter was free to focus on the details of running the business. “The business is pretty straightforward,” Munter noted. “The technology isn’t straightforward, but if you have people around you who know the technology, you don’t need to know it. You have to know the concepts, but in my view, business is business. There are basic business principals that you have to follow, no matter what business you’re in.”
Advanced Audio Design operates retail facilities in its three locations, but Guenther is quick to note that the company is first and foremost a custom installation business.
“We sell virtually no retail product,” Guenther pointed out. “We have designer showrooms in all three locations. There isn’t a price tag hanging on anything. They’re all set up as vignettes. That’s the way it’s always been since the day we started. We sell a system. We don’t just sell hardware.”
Like most designer/installer firms, business for Advanced Audio Design is mostly referral-based, counting on the recommendations of architects, previous customers, interior designers and builders. With the continuing strength of new home building in Florida, most of Advanced Audio Design projects are new, with only a small percentage coming from retrofits. Munter noted that while business had slowed down a bit even prior to 9/11, a rebounding stock market and strengthening economy seem to have helped reverse the trend. “Based on our numbers I think the market is coming back nicely,” he said.
When looking toward the future, Guenther and Munter set a goal that has its roots in CEDIA’s first Management Conference, back in late 1999. It was there that the oft-quoted Michael Gerber, author of The E-Myth, provided Munter with some ideas to live by.
“I came from that conference with something he said which I must have said a thousand times in various meetings in our company,” Munter explained. “The idea was to create a pre-production prototype of a franchise-able product. That means, that anything we do in Sarasota has to be done the same way in Tampa and has to be done the same way in Naples.”
When Gerber first suggested this business model, some scoffed at it, preferring to concentrate only on the author’s other mantra, “Work on the business, not in it.” Many custom installers felt, and still feel, that to franchise an A/V sales and installation process is to take the “custom” out of custom installation.
“That argument is a crock…an excuse” Guenther said, dismissing critics of the idea. “Now, obviously, if there are some market differences that have an effect on the way things are to be done that has to be taken into account, but we have concentrated very heavily on creating this pre-production prototype of a franchise-able product,” Munter added.
While Advanced Audio Design did have a few procedures in place prior to implementing Gerber’s concept, they weren’t yet stated in writing, according to Munter. “We spent a lot of time and effort creating procedures, putting them to paper, checking them out, and this is really important, with the people who do the day-to-day work to see that the procedures are right,” he said. “We discussed whether they could they be improved and how they could be done differently. Then we said, When we go to the next market, this is the way it’s going to be. If our installation manager or product manager in Naples wants to know how we do things, he or she has a manual that they can look at. Or they can call somebody in Sarasota or somebody in Tampa and say, ‘Hey, how do you guys do this because I know we’re supposed to do it the same way?’”
In particular, the company has gone to great lengths to improve its project management procedures, having taken the role away from the people who sell the jobs and leaving it in the hands of trained project managers and their system design teams.
“So we don’t have to worry about how a system is being designed in Naples versus how it’s being designed in Sarasota,” Munter said. “Essentially a system is designed by the same team. If there is a problem with a system in Naples, we can send somebody down from Sarasota and they don’t have to worry how the system is designed. It’s very important.”
The partnership forged between Andrew Guenther and Hal Munter has made this all possible. Running a custom installation company like a real business in an ever-more-sophisticated market, has become the key to survival. Gone are the days of seat-of-the-pants business decisions and hands-on management styles. “In the old days, most of us in the custom installation business either came from retail or the alarm business or were hobbyists,S Guenther concluded. You would install a system, and then you’d go fishing; those days are gone. It’s too fast-paced now to not document, manage and control your processes. If you fail to realize this, your customers will run you around in circles and you’ll never get anything done.”
Jeremy J. Glowacki is editor of Residential Systems.