REDBAND: Growing Pains – Are you setup to scale? by Jason Griffing

pizap.com13747582808501

Many integrators are suddenly finding themselves in a challenging, but enviable position.  Work is getting busy, very busy.  In fact, at time it can feel too busy.  However, recent history has reminded us that the business of Systems Integration can be a feast or famine proposition.  So despite full bellies and overflowing plates, we’d be well advised to keep asking for more.

It’s been said that in business “you’re either growing or dying”.  Might sound believable, or even compelling on the surface.  But I’ve come question the saying’s validity.  In fact, I believe that if we’re not careful we can be both… growing and dying.  The danger lies in pursuing growth for growth’s sake, while ignoring the need for systems and infrastructure that will support the increased workload.

Unlike other trades, Systems Integrators typically don’t have the luxury of being able to fill holes in their business with cheap labor.  Little of what we do is repetitive, and even less of it is easy. In our field, qualified labor doesn’t come cheap.  Even assuming we’re able to find the qualified help we need, the custom nature of each project dictates that there will be a long learning curve for new employees.

Given these challenges, it is imperative that we think critically about how best to prepare our businesses for growth.  It is important to hunt down and eliminate performance bottlenecks wherever they can be found.  In my years of experience working with numerous firms of various  sizes, I have seen several patterns that tend to repeat themselves with surprising regularity.

The Inability to Delegate:

Early in the life cycle of a business, a founder will often “hire” him or herself to perform daily functions within the business.  Initially this is done out of necessity, as the owner simply can’t afford to hire others to perform these tasks.  It is not uncommon, and in and of itself not necessarily bad for business.  The problem is that many owners never learn to let go of the reigns.  So the pattern continues not out of necessity, but out of habitually.  And eventually becomes a bottleneck to the company’s growth.

Much has been written about the difference between working on your business and working in your business.  If growth is your goal, spending less time on the latter is the only way get there.

Are you the only one doing Sales in your company?  What about handling service calls and continual project management?  Make it a top priority to find help with the high-level tasks at your business right away.  It is the only way to ensure that you yourself are not the biggest barrier to the growth you seek.

Lack of Backend “Systems”:

Having qualified help, however, is only half of the battle.  We also need systems and infrastructure in place to support our operation.  In a blogpost I previously wrote (5 Lessons Systems Integrators Should Take From the IT World), I made mention of the need for widespread adoption of PSA software in our industry.  There are many tools available to help us design and sell systems.  But any integrator worth his salt knows that designing and selling systems is just the beginning.  We also need tools to help manage and support our existing client base.  This is where PSA software comes into play.

Industry specific PSA tools do exist. For example Simply Reliable’s SmartOffice and Tigerpaw’s Service Management Software.  Other solutions targeted at the IT world, such as Autotask and Connectwise, can be “tweaked” to meet the specific needs of our industry.  Which specific platform you choose is less important than the fact that you chose one to begin with, then commit to it.  Any enterprise software can only be as good as it’s implementation.  So be prepared to devote the time and resources necessary to successfully roll out the software and to get your workforce trained on it’s use.

The Break-Fix Business Model:

The third major barrier to scaling a Systems Integration business is the continual use of the break-fix business model.  This is a term borrowed from the IT world that refers to a purely reactionary stance towards customer support issues.  It’s a business model that we desperately need to move away from.

The systems that we put in place, especially at the high-end, are tremendously complex.  The fact is that at one time or another every single one of them will fail in some respect.  The decision to deal with these problems in a reactionary manner costs us more than money, it also costs us our client’s good will, something which is much harder to earn back.

Products like the Invision platform from ihiji are making it easier than ever to provide proactive, off-site support.  Structuring long-term client care plans that include these remote-monitoring capabilities represents the next step in our industry’s growth.  Failure to adapt to these new practices will ultimately result in a bottleneck whereby the cost to service and support an increased workload will limit your ability to keep growing the business.

So while we’re holding our collective breath, and hoping that busy is the “new normal”, don’t forget to ask yourself, is your business set up to scale?

Have other thoughts on the challenges facing a growing Systems Integration business?  Please let us know in the comments below.  We’d love to hear your thoughts.

RedBandJGriffingFinal

Jason Griffing has 10+ years experience in the AV industry.  He is currently a Project Manager at DSI Entertainment Systems in Los Angeles.  Jason also blogs at IntegratorsAcademy.com and can be found on Twitter @JasonGriffing

Comments

  1. Jason,
    Nice post.
    Unmanaged growth can easily be the kiss of death for many small businesses, including integrators. Integrators can use the current situation to become more selective, focusing on more profitable work.

    In addition, they can make their organizations more efficient, leading to better long term survival when times aren’t so well endowed. Many integrators discovered during the downturn, much to their dismay, it’s easy to get sloppy when times are relatively flush.

    Use those lessons to streamline organizations and create and nurture profitable relationships that can sustain you when things take a turn for the worse, as they inevitably will again someday. One of the most important relationships to strengthen and grow are those with your existing customers.

    History and research has shown that marketing to existing customers lower sales costs, compress the sales cycle, and increase average transaction values.
    Once again, thanks for the info!

    Steve

    • All great points Steve. The only way to survive in down markets, and indeed to thrive in up markets, is to build and maintain long term relationships. Not only with your clients, but also with key partners like builders, architects, designers, and consultants.

      Having the time and resources needed to really nurture these relationships seems to be where most get hung up. Focusing instead on short term profitability. Which at best will leave them treading water.

      Thanks for chiming in!
      JG

  2. Mark Coxon says:

    Jason, great intro post for RedBand.

    Many small to medium integrators struggle with processes, and at the end of the day, it affects their ability to ever grow, even if they can somehow manage a small client base without them.

    One major hurdle I see is that most integrators don’t actually know how much it costs them to service customers. They don’t have true burdened labor rates, so they have no clue how to cost and price backend support, remote monitoring services, drawings and formal documentation, etc.

    They have lived so long on high product margins, that they could be sloppy with labor costing and still make money.

    It’s hard to do that when average prices have dropped, and margins have dropped as well.

    a 10,000 flat panel with 40 points netted a dealer $4000. Now that same panel is $2000 with a 10 pt margin, netting $200. If you poorly estimated the labor in scenario 1, you would need to be around 80 hours off in your estimate to break even on this job. There was room for error AND profit.

    In scenario 2, a 4 hour mistake could have you at break even. There is room for error OR profit.

    I love your recommendations, and if integrators don’t learn how to run a business efficiently in the “new normal” they will find themselves quickly out of business.

Leave a Reply to Steve Faber Cancel reply

*