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Commercial Electronics, Inc. was originally a television service firm that over the last several years has moved to become primarily a security sales and installation operation. Here are some details on the why and how.
By Walter H. Schwartz
John Wisely began Commercial Electronics the way many of us began similar businesses, with little capital, after several years of working for somebody else. He had lined up several hotel television service contracts as a cushion before he quit his former job and in January 1974 opened a storefront operation on Metairie Road. Here he serviced television and other consumer electronics and fulfilled his hotel service contracts. John did not wish to limit his business activities, hence the name Commercial Electronics, and did antenna and intercom work also.
He was approached after Commercial Electronics had been established for some time, to install and service closed circuit television equipment. This got to be a significant part of his business and eventually he decided to sell CCTV himself.
After a time, still in the consumer electronics service business except for his CCTV work, a couple of years ago John allowed himself to be talked into attending one of Wm. B. Allen Supply Co.'s seminars on the security business for consumer electronics technicians. He found himself convinced and went whole-heartedly into the security business. At present his business is about 20% television, 40% residential security, and 40% commercial security (including CCTV). He now hires two installers and one technician and spends most of his time handling the security business, selling, and planning and designing systems and only takes care of a few select television customers personally.
A typical residential security system installed by Commercial Electronics is sold for from $1500 to $1800 including installation labor. This would involve about $600 (cost) worth of materials and a labor cost of about $150 (two men for 1 1/2 days at about $6.00 per hour each). John feels to properly cover costs (overhead) he must charge three times an installer's hourly 'ate for labor; the labor charge for 1 1/2 days is about $450. A markup of about 45% of the selling price is added to the materials cost, on this typical installation $500, and if a salesman sells the job for him he pays a 10% commission (or $150-$180). A breakdown in tabular form is given in Figure 2. This is a basic system with no extras. Note the gross profit of $800 which is much better then the average television job.
TO: Commercial Electronics, Inc.
2620 MARIETTA AVENUE • KENNER, LOUISIANA 70062 (504) 469-5404
PROPOSAL DATE: , 19 Commercial Electronics, Inc. proposes to perform/install the following:
1. Commercial Electronics, Inc. will install the above equipment and/or perform the above services in and on the premises located at for the price stated above. •
2. Commercial Electronics, Inc. will .supply all parts and labor to maintain the above equipment for one (1) year after date of installation, except for any damage, mis-function, or malfunction caused by intentional or malicious damage.
3. Purchaser(s) warrants he owns the above premises or, if he does not, he has the permission of the owner of the premises to have the above equipment installed and services performed.
4. Commercial Electronics, Inc. will maintain the above equipment (excluding batteries, torn tape, or equipment intentionally or maliciously damaged) under the same conditions stated herein for an additional twelve month period for the sum of payable in full at the beginning of said period. Commercial Electronics, Inc. will make service contracts available for subsequent years at a price to be quoted when each such contract is requested.
5. If Purchaser(s) does not renew the maintenance agreement after the first twelve month period, all services will be performed for a charge to include parts and labor, which charge will be paid at the time such services are performed.
6. Purchaser(s) agrees that in the event of failure, non-function, misfunction, or malfunction of the equipment and services mentioned above, liability, if any, of Commercial Electronics, Inc. for loss or damage to person or property thereby sustained shall not exceed the lesser of $250.00 or the insurance deductible which Purchaser(s) may be required to pay, and this limitation of Commercial Electronics, Inc.'s liability shall apply if any loss or damage to person or property, irrespective of its cause or origin, results directly or indirectly from performance or non-performance of any obligation arising from this document or from any active or passive fault or negligence of Commercial Electronics, Inc., its employees, agents, or anyone acting or purporting to act in its behalf. This paragraph shall apply and be binding on Purchaser(s) even if Purchaser(s) does not have insurance in effect at the time of any loss or damage as described herein, and in the absence of insurance Commercial Electronics, Inc.'s liability, if any, shall not exceed $250.00.
7. Purchaser(s) acknowledges furnishing the above equipment and/or services may result in holes and other minor alterations in or to the premises.
8. Should Purchaser(s) move his home or business establishment from the premises to another location within a radius of fifty (50) miles from Commercial Electronics, Inc.'s business establishment, Commercial Electronics, Inc. will relocate any equipment which can be removed without substantial damage to the above premises for a reasonable charge to be agreed upon by the parties.
9. This document represents the entire proposed agreement between Commercial Electronics, Inc. and Purchaser(s), and it may be changed only by written document signed by all parties.
10. Purchaser(s) agrees that the signature of Purchaser(s) hereon shall constitute an offer to purchase only, which shall not be binding upon Commercial Electronics, Inc. until accepted in writing by its President or Vice President.
Accepted this day of 19 Purchaser COMMERCIAL ELECTRONICS, INC. Purchaser by (President) (Vice President)
(above) Fig. 3. Commercial Electronics proposal/contract form includes a carefully written liability clause.
Commercial Electronics uses its own proposal/contract forms for all security installations (Figure 2.). Note particularly section 6 which protects Commercial Electronics from equipment failure liabilities. This sort of protection is most important to the installer. Have your own forms made up; get competent legal advice.
Closed circuit television has always been a significant part of Commercial Electronics security business. It has a wide range of commercial applications. Fast food outlets and supermarkets are typical of these. The supermarket needs to watch both its customers and employees. Some features of a typical supermarket system are illustrated in Figures 4,5, and 6. The dark housing hanging from the ceiling (Fig. 4) contains a camera with a zoom lens and a scanner (pan and tilt) mechanism, both controllable from the monitor position. The monitors can watch any cash register and most of the aisle space from this one camera which can be moved the width of the store silently and effectively concealed in the dark plexiglass housing. The camera position is never apparent to customers or cashiers. The monitors can also be switched to cameras at the meat counter (Fig. 6) and the loading dock area, electronics has made several other changes in John Wisely's business and personal life. He feels that it is a profitable business and he is doing much better financially. There is little or no weekend or after hours work and few telephone calls, etc. to his home. He has moved his business location into an office and warehouse in an industrial park where he can maintain a low profile which will not attract burglaries of break-ins; (of course, he does have an alarm system). He has been able to reduce his shop facilities to those necessary to maintain CCTV and service his reduced television business. He finds his technician/installer productivity to be much higher than that of a technician in television servicing, making planning much easier.
Another point, something that may not be a factor to everyone is the personal satisfaction John says he gets from the work he does. "I feel like a businessman, I find I can make much more money at my desk designing and proposing systems than I can doing the installation work. After all these years as a technician I often feel I should be working on installations, but every time I do so I find I lose money. My job now is to manage. It is hard to both work as a technician and do an effective job as a manager. I spend my mornings in the office and my afternoons out seeing people, selling. And I'm doing better than I could have imagined ever doing in the television only business."
(source: Electronic Technician/Dealer)