Electronic Security -- A Natural diversification for the Electronics Technician (ET/D, June 1981)

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Your electronics distributor has a different perspective, an overview of the consumer electronics sales and service business that most shop owners don't have. Here is how one of them views the security business.

by George Kanelos* [*Wm. B. Allen Supply Co., New Orleans.]

Recent advances in electronic technology have resulted in consumer and commercial products that infrequently, if ever, require service or repair. Consequently, the market upon which many electronic technicians depend for professional survival is rapidly eroding while the costs of living and doing business continue to rise.

Increasing numbers of technicians are thus confronted with the classic problems of maintaining income and business growth in a depressed market.

The simplest solutions, however, are often overlooked - the opportunities available through diversification.

Diversification, of course, is not unknown to electronic technicians. Historically, it has been confined to three areas:

(1) Sales of consumer audio-video products (2) Installation of sound, intercom and communications systems (3) Installation of CCTV and MATV systems

Although all three remain potential vehicles for diversification, they generally require substantial capital investments in space, personnel and inventory. Their viability is therefore limited to those technicians with the necessary resources.

A fourth alternative, offering exceptional income opportunity yet requiring minimal investment, is the sale, installation and service of electronic burglar and fire alarm systems. With a more than sufficient technical foundation, an existing customer base and the invaluable experience gained from managing his own business, the electronic technician may find electronic security the most natural diversification.

To effectively evaluate the practicality of diversifying into electronic security, a fundamental understanding of the industry is necessary. Briefly, the electronic security industry serves three major market areas: residential, commercial and industrial/institutional.

Over 10,000 companies, ranging in size from one or two man proprietorships to giant national corporations, provide its many services to end users in every city and town in the nation. Its products are supplied by hundreds of manufacturers through a network of independent, regional and national distributors. The constantly increasing demand for its services has resulted in an industry wide growth rate exceeding 20% annually and a virtually limitless market. Additionally, public awareness, heightened by the media's emphasis on crime reporting and the first hand experiences shared by the majority of Americans, contributes significantly to the desire for electronic security protection.

Further analysis of the electronic security industry's profile reveals that all the criteria necessary to support successful diversification are present.

First, the industry's markets are multiple and dynamic. As the risk of loss and cost of replacement increase, electronic security protection becomes a more attractive investment. Indeed, in many commercial, industrial and institutional applications, the need for electronic security is reinforced by insurance carriers who demand its installation prior to underwriting coverage, legislatures which require its installation and penalize for lack of adequate protection, and law enforcement agencies which recommend its installation since they are no longer able to maintain an effective preventive role unaided. In the residential sector, both homeowners and apartment dwellers are encouraged to install electronic security systems by insurance carriers who provide premium discounts for even minimal protection. In many municipalities, building codes, governing all types of structures, are requiring installation of electronic fire protection systems before occupancy can be granted.

Second, along with multiple markets, the electronic security industry provides both short and long term income options. Systems may be sold outright for greater immediate return or leased over a period of years. Although immediate revenue is reduced, the lease provides significantly greater return over its term than the outright sale and with the excellent probability of renewal, may perpetuate itself indefinitely.

Another long term income option is the addition of leased or contracted services to either the sold or leased system. The two most commonly added services are maintenance and monitoring.

After the system warranty has expired, maintenance or service may be provided on an as needed basis with appropriate billing for time, parts and labor. The desired alternative is a service contract covering time, parts, labor and periodic inspections.

Conceptually similar to the initial system lease, the service contract provides long term recurring revenue and the probability of renewal.

Monitoring is the foundation upon which success in the electronic security industry is based. It is a round the clock service of overseeing a customer's security system from a remote location via a telephone line. Status signals from the customer's premises are continuously transmitted to the remote receiving station over either an existing or dedicated telephone line. It is the responsibility of the receiving station to immediately report any change in status requiring a response.

The police department would be notified in the event of a burglary or hold-up, the fire department in the event of a fire, paramedics in the event of a medical emergency and the installing company's service personnel in the event of a down system. Heating, air conditioning and refrigeration systems may be similarly monitored.

Monthly fees for monitoring services range from an average minimum of $20.00 for a residence to hundreds of dollars for a commercial or industrial installation.

Third, the electronic security industry offers an abundance of competitively priced, readily available, easily installed and reliable equipment. Most major manufacturers and distributors provide extensive support services including free application installation and troubleshooting guidance. Reference material such as the Wm. B. Allen Supply Company's Security Products Catalog can be an invaluable source of introductory information for the serious neophite as well as the experienced professional. National, state and local trade associations can also provide information and considerable assistance to the sincere beginner.

Finally and most importantly, the electronic security industry presents the opportunity for the electronic technician to utilize his knowledge and skills while building a rewarding and profitable business.

(source: Electronic Technician/Dealer)

Also see: Residential Security System Design, Part 1--Basic Principles

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