smartHOME News
Bigger Not Necessarily Better; It Takes Focus on Your Business Model
Here’s the rub. Either you can aim at fewer but higher level, luxury homeowner clients, or you can cater to a lot of clients, each with fewer and lower cost needs. At the end of the year, profit and revenue could be the same no matter the avenue taken, depending on clients, overhead and type of design and products installed. Electronic systems contractors (ESC) who
specialize in or handle some home systems can be as big as a Magnolia/Best Buy or as small as a single person. A firm can take on everything from security and lighting to energy management, whole house audio/ video, home theater and central vacuum. Others specialize in a specific area, such as whole home audio. Still others have a
HOME SYSTEMS INSTALLERS: REVENUE BY PRODUCT SEGMENT
2009
Home Theater/Media Rooms Distributed Audio/Video Systems Integration Structured Wiring Lighting Controls Security/CCTV
Home Networking Telephone Systems
Service and Recurring Revenue IT Services
Central Vacuum Other
2007
24% 27%
24% 26%
9%
7% 7%
5% 6%
5% 4%
2% 2%
5%
1% 2%
3% 5% 0% 10% 20% 30% average percentage of gross revenue by segment
Systems integration continues to grow while,
for the first time
in the CEDIA Benchmarking Survey, recurring income and services are being tracked.
11% 13%
12%
mixture of residential and commercial clients. Insight into the paths
taken and results reached is
in the latest Custom
Electronic Design & Instal- lation Association (CEDIA) 2010 Benchmarking Sur- vey, which took a snapshot in 2009 of members who agreed to participate. It fol- lows a survey released in 2008 based on 2007 data collection. The Indianapolis- based association anticipates the project
as an annual
event moving forward. For the latest CEDIA Benchmarking Survey,
the
average respondent had $1,107,000 million in revenue with about nine to 10 people, according to Ray Lepper of Home Media Stores, located south of the James River in the Richmond, Va., suburb of Midlothian. A past president of CEDIA, Lepper serves on the association’s Best Practices Action Team. In the previous study, with data collected in 2007, the aver- age respondent did about $1 million in rev- enue, had eight employees and performed 72 installations. Consistently, the survey has shown that,
Home projects are getting more complex and more often involve systems integration and home networking, according to the 2010 CEDIA Benchmarking Survey.
are in many cases better positioned to take advantage of home computer and com- munication platforms, but, at this
time,
while distributed audio and visual as well as home theaters and media rooms are the top revenue sources, those companies with larg- er annual revenue report growing interest in systems integration and home networking, although the latter garnering a smaller seg- ment of total revenue. The big bites —home theater/media rooms and distributed audio/ video — each generated 24 percent of rev- enue in the most recent survey. CEDIA members as compared to home security dealers and installers, for example,
are not as well positioned when it comes to recurring revenue from, say, traditional alarm monitoring. Home energy manage- ment and video surveillance may prove the tipping points in the future, however. “My prediction is that as more devices connect and communicate in the home, there will be more recurring revenue services that remotely monitor those devices and their system performance and maintenance,” observed Lepper. Generally,
detailed benchmarks, best trend
analysis
the survey report provides practices and respondent
representing
company information in such categories as strategic and business planning, financial
October 2010 125-SH
PHOTO COURTESY PR NEWSWIRE
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