The Cream Rises
Since I invited myself to write a guest column, I've thought about what style of story to write, for instance; there's the 'We're in the trenches with you' viewpoint, there's the helpful hint; 'Practice your Demo', new product; 'Blue-Ray sweeps field', there's the Joe and Ernie story; 'Joe and Ernie built this business on good customer service' or the ever popular; 'Eddie added installing electronic dog runs to his business, and now it's doing fine' or my favorite; the 2 month serial; 'Now is the time to rehab your demo room', followed by next month's 'Convert it into offices.' Honest, these are all paraphrases of stories I've seen in the trades in the last 6 months.
The problem is; most of that stuff is horse hockey. Your suppliers, the Trade Magazines, and our Trade Associations are giving lots of advice, and some of it is valid. The trick is to filter out the nonsensical, the self serving and the just plain stupid. Our country and the world are in tough economic times, the number of TVs sold in the US declined by 8% last year, and the number of LCD's sold decreased by 13%. I guess the truth is, they don't know what to do.
People, and I include the rich, who are not normal people, are buying less, budgeting carefully, and cutting discretionary spending. People will still want to feel good and want nice things, like home theaters, they are just going get them more slowly and carefully. With new and used home sales off, and some Real Estate markets vastly overbuilt, the usual 10-15% that people spend when moving into a new home goes away, as well as the prewire business.
To gather anecdotal evidence for this story, I went to my barber and my wife's hairdresser to find out the monthly state of the economy, and I consulted with a seller of fine imported dishes ($9k a place setting). They say it's going to be hard times. Haircuts are way off, and only Abu Dahbi is buying plates. By the way, these are all women, and since women buy or approve the purchase of most of the family electronics purchases these days, none of them is going to be buying a new TV. So, on the economy, what do we know or think we know? We know that Washington DC and New York think it's going to be bad. My sources confirmed that.
Custom Electronics Installers, Designers and Salespeople are part of the discretionary economy. If you consider yourself part of the construction trades, you are part of the 'optional' or feel good trades, like landscapers, painters, and carpet or floor laying people. The new houses that are being sold are smaller, and have fewer amenities than ones sold just a year ago. Want amenities? Shop the real estate foreclosures. Even the basic 'Must-Have' trades like electricians, plumbers, and carpenters are feeling the pinch. A local building company, known for doing million dollar remodels, in one of the richest zip codes in the country, said in the Washington Post, that it's surviving on $500 - $1500 repair and remodeling jobs.
Now is the time for you to sharpen your pencils, shop suppliers, buy from the low cost supplier, and be truthful about it when asked. Cut your hours and costs to the bone when estimating. When the economy goes south the first thing that people do is hold off buying a new TV. So when the industry buzz says that TV sales are down, and we are awash in unsold inventory, be careful about buying or accepting anything into your own inventory, it might be there a while. Buy from the out of town supplier, Internet or Big Box store? Heck yes, if their delivered cost to you is less than what your local wholesaler is offering!
Stone masons, landscapers, and tree people tell me that jobs under $2k sell, everything else walks. Base your system quotes on that, if you need volume. Forget about quality for now, forget about polished demos, just make sure everything works, and go for the lowest common denominator.
What not to do? Base your business plan on sales to builders. Buy everything that your wholesaler says you need, or is a great 'deal'. Maintain an inventory of anything other than the most basic needs.
If you don't think your customer is shopping the Internet, or won't buy from Big Blue because they live in the 'certain' zip code, think again. Companies like Staples, Office Depot, and others are in your community and on the Internet offering cheap installs and low cost hardware. They already have a foothold, and they need to justify that bricks and mortar cost. Guess what? The installers you laid off last month are now working for Zip Installations, AKA Office Depot's new contract installers.
To a certain extent, you can appreciate the client who supplies his own flat panel and mount for install, because your downside is limited to a botched installation. You don't have to order, stock, move or otherwise assume any liability for the product, which the client paid to have delivered, and now, after you 'hang & bang' it, can now charge an hourly rate to integrate into his system. He may have gotten it for a better price than you could have through your local wholesaler, and can now afford to spend some on programming a remote.
If you have a good base, dedicated sales, watch your costs, and think about what you are doing, you might make it. Think about what you are doing right, do more of that, rather than the unproductive stuff. Remember, annecdotally at least, jobs between $500 and $2000 sell. Concentrate on selling them, not on the hard stuff. Next month; 'Model Railroading: Threat or symptom?'
Stumble It!