Back in the ’90s and early 2000s, a big corporate mantra was “Focus On The Core.” No, that did not mean to do more crunches every morning! That meant to do what you do best and jettison the rest. Get better at what you are best and most profitable doing and grow your business organically in that way. Some of the top businesses minds espoused this strategy, including Bain & Co, a top-tier management consulting firm.
I thought of this, because a friend of mine who owns an integration firm in NYC just called me to ask if I would be interested in having them refer all of their AV business to us. They are exiting the AV business altogether to focus exclusively on home automation — lighting, shading, HVAC, networking, and surveillance predominantly. I could not believe it, because they do great work. But he told me that they did a deep dive analysis of their business and the AV work was generating less profit and more service calls, so the profit per hour for AV work was significantly lower than the rest, and they would rather focus on the more profitable part of the business. Also, they found that most of their leads came from the automation market and the AV tended to be the add-on business, so they do not foresee losing much in the way of leads.
I immediately asked my office manager to go through our records and see what the metrics looked like for us. Turns out that shading is by far the most troublesome category for us. Clients end up unhappy with fabric choices, or the fact that the hembar is not square to the sill by 1/8 inch because we have to keep the roller within tolerance of level to prevent telescoping, or someone left a tilt window open and the shade got caught and damaged (we now spec in window sensors so the system will not lower the shade if the window is open). Or something doesn’t fit quite right. Shading is not my forte and does not come as naturally to me as AV does, and it ends up being where we have issues. I also anecdotally see a lot of problems with lighting control. LED fixtures are a mess to deal with, we don’t have a licensed electrician on staff so there can be finger-pointing when things do not go right. We even had a client call us recently to complain that a dimmer was broken and we needed to get out there immediately to replace it, when it turns out the bulb had burned out and needed to be replaced.
With all of that, I could see the argument to abandon home automation and focus again on only home theaters and AV. I will not do that, however, for several reasons.
- I love home automation and improving clients’ lives
- Being able to tie in the keypads, touchpanels, apps, and remote controls to create a truly automated lifestyle between the AV, lighting, shading, HVAC, and other subsystems is a huge selling advantage, and something our clients rave about to their friends
- Home automation is very profitable
- Our leads are starting to come from the home automation side
Everyone needs to understand their business, how revenue is generated, what are the most profitable categories of your business, and how to focus on what will ultimately be the best business model and product/services mix for your market and your skill set. After doing the analysis and weighing the pros and cons, I have decided that The Source Home Theater will continue to be an AV and home automation business.
Have you done the analysis? What does it say to you?