Measures for a Successful Security Business
There are a variety of factors to consider in maintaining a successful security business. Critical elements include recruiting and retaining talent, assessing employee and customer attrition, and growing sustainable recurring revenue and EBITDA. By far, the number one issue facing the security industry is a limited viable workforce. Consequently, dealers, integrators, and monitoring centers must rethink compensation packages, professional development, and employee retention programs for both new and existing employees. In addition, a good leadership team will strive to build the right culture, the right purpose, and the right vision that attracts the right people for all levels of the organization.
Building the Right Team
Gaining the right employees is the first step. Keeping them is equally as important. Leadership and management training will be vital in this process. In addition, employee attrition should be tracked and analyzed to understand its cause and effect, subsequently using the data to improve employee retention. Improving employee retention and engagement will also have a direct and positive impact on customer attrition.
Keeping Your Customer Base
That brings us to customer retention. Measuring customer attrition is critical to understanding the make-up of your company’s customer base and corresponding recurring revenue stream. For example, if your customer base is primarily focused on a market segment that can be hit hard by a recession or is highly concentrated in a particularly vulnerable segment, your attrition rate will likely trend much higher than normal. Understanding your customer attrition will also provide valuable insights into your product and service offerings and the delivery of the customer experience.
In addition, more than ever, recurring revenues must be assessed to determine how vulnerable the company may be during this uncertain economic climate. Consider the value of understanding your exposure to possible industries that may be acutely or permanently damaged in the coming months or years. This exercise will also help you focus more clearly on the market segments that remain sustainable and profitable and identify emerging sectors to add to your go-to-market strategy. You can also minimize your risk by diversifying your customer portfolio so that you are not too highly exposed to any one sector or customer type.
Assess your EBITDA
Credit markets are becoming more challenging for companies that are not financially disciplined enough to meet lending covenants, especially dealers and integrators focused mainly on the residential market. We all understand that recurring revenues are good, but a solid plan to refocus on growing your EBITDA is even better. Whether you’re thinking about selling your company next year or the next decade, you should run your company like you’re going to sell it tomorrow.
Security professionals who are interested in taking a deeper dive into the industry’s trends should register and attend ESX 2023 in Louisville, KY, June 5-8. Over the course of 3.5 days, attendees will experience industry-leading education programs, best practices, and more to take their business to the next level.