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Baumeister Goes Out of Business After 19 Years

Cash flow for well-known Chicago area integrator, which averaged $94,613 per installation in 2007, was halted by on-hold projects.


Baumeister Electronic Architects Goes Out of Business

Baumeister Electronic Architects, a high-end Chicago area integrator that perennially cracks the CE Pro 100 list, has gone out of business after 19 years

Baumeister Electronic Architects, a high-end Chicago area integrator that perennially cracks the CE Pro 100 list, has gone out of business after 19 years, former marketing director Paul Baumeister has confirmed.

"Long story short, John had to put the company into a receivership," he says.

John, Paul's brother, was president of the Niles, Ill.-based company that had 35 employees. John declined comment when contacted by CE Pro.

The main reasons for the downfall were "cash flow and most significantly the economy," according to Paul. "It really was a horrendous last quarter and lots of projects were put on hold."

Baumeister was well-known for its ultra-high-end installations, garnering a lot of coverage in luxury magazines such as CE Pro sister publication Electronic House and even Chicago TV news.

The fact that a company that caters to the top of the market fell victim to the suffering economy is telling, Paul says. "You think that being in the upper niche, you're recession proof, but that doesn't mean that your $20,000 projects aren't going to be put on hold. And that starts adding up."

Paul walked away from the company in late December after John told him things weren't going well. "I decided to move on sooner as opposed to later," Paul says.

Baumeister went out of business about a month later. As a result, Paul says he's not able to comment on a lot of what happened in the final days.

Paul says there is "some possibility that the company will be reinvented in some ways, but I don't have the inside track on that."

Baumeister reported custom revenues of $6,149,841 on 65 installations. That's $94,613 per installation, the 16th most on the CE Pro 100 list.




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About the Author

Tom LeBlanc, Senior Writer/Technology Editor, CE Pro
Tom has been covering consumer electronics for six years. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Now, as senior writer/technology editor of CE Pro magazine since 2003, he dabbles in all departments and offers expertise in marketing. Follow him on Twitter @leblanctom.

21 Comments (displayed in order by date/time)

Posted by Ranger Home  on  02/12  at  08:17 AM

There is much more to this story. You dont just up and out, know that I mean? Some serious unknown issues must lay beneath. Typically its family and greed.

Posted by TexasRadio  on  02/12  at  08:32 AM

Yeah, it all started when The Burgermeister banned all the toys in Sombertown. All the kids had to hide them from him in their stockings. That is why we still hang them over the fireplace today.

I think we have all seen the show and what happens in the end.

Posted by Jennifer Leidig  on  02/12  at  09:51 AM

This is a sad story for not only the company but all of their employees.  Whatever happens we wish them the best and a speedy recovery!

Posted by Julie Jacobson  on  02/12  at  05:18 PM

I would be curious to learn if Baumeister customers were somehow insulated from the demise. Can some other authorized dealer come in and take over their installed systems? Thanks and best wishes.

Posted by Scott  on  02/12  at  10:12 PM

I’m a former customer and the information flow has been awful.  I haven’t been able to get my code as of yet and I have no idea if they will ever give it.  Without it I’ve been told that another dealer would have to reprogram the entire system.

They really gave the big f* u to customers here.

Posted by Flip  on  02/13  at  09:13 AM

I think that RANGER HOME, the very first poster in this topic hit the nail right on the head!!

Posted by Common Sense  on  02/13  at  10:05 AM

Seems like a singular focus on high end custom projects with an incredibly high cost of development and incredibly long lead time, may have been a contributor. The I only do High End Custom business model takes another integrator down.

Hopefully a more agile dealer that understands diversity and cash flow will fill the void.

Posted by Joeav  on  02/13  at  10:08 AM

SO MUCH MORE to this story. To have been posting that kind of sales and should have been posting strong profits if run with any intelligence only to have this happen is a big F’U to the clients and employees. Owning and running a business brings on a large responsibility and to have this happen makes it look like there must have been some real GREED going on. To have over $6M in sales to just shut down is either GREED or POOR MANAGEMENT. You pick it. But hey don’t worry this industry loves failed business managers. The leaders who ran this will be hired by the manufacturers in no time…...how sad and especially for the employee’s.

Posted by Julie Jacobson  on  02/13  at  10:20 AM

There have been several success stories in the high-end-only business, but as they say ... you’re only one job away from bankrupcy. Risky business these days.

Posted by RC  on  02/17  at  06:13 AM

I agree with Julie, but the point that is missing in this whole discussion is: In order to be successful in the high end you have to completely, over the top, satisfy all your clients. I know you have to be profitable, and many other factors, but everything stems from client satisfaction. If clients are not satisfied they don’t pay their bills, and if the clients don’t pay the company folds. If clients are not satisfied you don’t get referrals and on and on. My speculation is this all came about because of a lack of client satisfaction.

Posted by Dave Stevens  on  02/17  at  08:16 AM

RIGHT ON RC!

I personally own a high end custom installation business and we just celebrated our 20th anniversary. Not only have our sales increased every single year, we do not advertise in any medium nor do we have a website. We are REFERRAL ONLY-

If you don’t take care of your clients, they will go elsewhere. I love watching the egotistical idiots boast about their sales figures in every dealer magazine and internet forum for years and one day “POOF” they’re gone.

A real company is one that stays under the radar waiting to take the spoils of the so-called “warriors.”

Posted by Michael A Pope  on  02/17  at  08:10 PM

There are a lot of lessons to be learned from this and every failed business. Being one dimensional in anything in this industry is like playing Russian Roulette.

If you only do High-end custom or only do entry-mid level installs and the well runs dry….

Running a company with only large installations is twice as difficult because of the uneven demands on installation labor and cash flow.  You need a highly trained staff to support these types of jobs but keeping these highly paid employees billable is tough when the work is tied to large jobs is frequently delayed.

Doing only new construction fails when housing stops.

Focusing all of your marketing on one tactic is dangerous even if it is referrals. I don’t criticize companies that do quality work and then make the effort to get recognized because PR is just one tool in marketing.  It also creates a sense of pride in your employees and helps you attract talent.

I feel sorry for the dedicated employees who worked the long hours, went to training, and took pride in their work enabling their company to win awards and recognition…only to lose their jobs. I feel sorry for their customers who undoubtedly lost some of their investment when as we know, 95% of us are paid in excess of what we have actually earned. I feel sorry for the companies who still do business in Chicago who may be treated with suspicion caused by someone else’s mistakes.

Posted by Dave Stevens  on  02/18  at  09:15 AM

Michaelapope,
I completely agree with 90% of your well written and intelligent commentary.

However, businesses in Chicago are not the only ones who are treated with suspicion caused by someone else’s mistakes. This problem is nationwide due to the numerous “trunk slammers” and uninformed salespeople, (typically big box store order takers), who consistantly rip off trusting consumers.

Yet, the consumer should also be held accountable for seeking out these people just to get a better deal. We must also put some blame on magazines such as Consumer Reports, (who should stick to evaluating food processors), and some high end magazine writers that will give any company/product a great review providing they are allowed to keep the review sample.

Unfortunately, it also becomes more difficult to educate consumers when they are also bombarded with clever and extremely effective marketing tactics from companies such as Bose & B&O;. We in the business all know that it’s over priced crap, but when Paul Harvey, (is he still alive?), says his “Wave Radio” gives him concert sound, what is a consumer to believe?

Lastly, (maybe it’s my circle of friends in the business), I truly believe that we are NOT paid in excess from what we’ve actually earned. My staff and my distributors work many long hours to satisfy very demanding customers 7 days a week. Hopefully, we all fall into your 5% range of grace.

Posted by Michael A Pope  on  02/18  at  09:32 AM

Dave,
Just to clarify my comment on paid in excess of what we have earned, I meant the fact that we collect customer deposits in advance of earning the revenue.  I certainly agree that my company earns every dollar and then some on our projects. The problem in collecting these deposits is the fact that it is too easy to spend one customer’s deposit money on the completion of another customer’s system. This will work until you stop making sales and are no longer collecting deposits….

As far as the manufacturer/distributor issues, we are having some discussions on LinkedIn on the CEDIA Group that you are welcome to contribute to. Follow this link: http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&gid=36745&discussionID=1404230&goback;=.anh_36745

Posted by Dave Stevens  on  02/18  at  04:06 PM

michaelapope,
Peronally, every one of my clients’ deposits literally goes into an escrow account specifically for them. I know that most dealers will use or wait for other people’s money to cover their expenses including using collected sales tax. What you have described is nothing more than a Ponzie Scheme. Having personally turned down Bernie Madoff 9 years ago because I wouldn’t agree to his terms, it is a dealers fault for not setting the stage from day one.

I have no empathy for any dealer that lets a client control the sale or that does not ask for enough money up front to cover all expenses for that specific job within the inital deposit. My terms are 80, 10, and 10. It is also our policy to pay all vendors within 48 hours of invoice so we don’t fall victim to what you have described. I have absolutely no sympathy for owners who bleed their companies dry with unecessary spending and complete and stupid mismanagement.

In my opinion, let all of these people go bankrupt to teach them that they must live within their means and keep their egos in check. I seriously doubt the new Messiah Obama will ever bail out our businesses when the phone stops ringing…

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