Dealer of the Month: Taking the Electric Avenue

Some businesses that have been operating in one field for more than half a century might have trouble adapting to new technology. This is not the case, however, for S&S Electric Co. in Oldsmar, Fla., at the north end of Tampa Bay. In 1998, after 51 years in the high-voltage electrical business, the company added low-voltage integration to its mix. Five years later, the $22.7-million company earned $1.5 million from structured wiring and audio in more than 4,700 new homes.

Vice president Shawn Smith was the instigator of the bold move. After just a year in the family business, Smith couldn't understand why builders would hire two or three different trade contractors to install cable in a single home. At every job site he visited, Smith saw a mess: There was one contractor for power and lighting, another for audio, video, voice, and data networking, and another for security.

While most electrical contractors had been told for years that they weren't capable of pulling the sensitive low-voltage cables, Smith was new to the industry. He knew of no such limitations, so S&S soon started installing structured cabling.

"There are several reasons why we got into the structured cabling market," he says. "First, it was the late 1990s and there was a large focus on structured cabling. Second, we saw structured cabling as a way to recognize additional revenue in the homes where we were already installing electrical and HVAC systems."

Finally, Smith saw it as a way to respond to builders who wanted fewer trade contractors on the job, wanted to meet tighter production schedules, and wanted to partner with a company that possessed a long-standing record of stability and longevity.

"The reaction we got was very mixed," he recalls. "Some builders threw us out the door, saying, 'You are an electrician and you are not allowed to touch low-voltage.' Other builders were looking to consolidate with one contractor to handle low-voltage and high-voltage. They were very receptive. The fact that we have been around so long is a big advantage for us. Several builders told us they were just waiting for us to start doing low-voltage work; some had been burned by other contractors going out of business."

Smith's vision was recently rewarded at the Spring EHX in Orlando, when the company received the 2003 Dealer of the Year award from the Consumer Electronics Association's Tech Home Division. Today, S&S handles specialty lighting, lighting control, surge protection, backup power, energy management, whole-house audio and video, voice and data networks, satellite TV, closed-circuit and IP cameras, HVAC, and indoor air-quality systems from four office locations on the west coast of Florida.

Honing Builder Relations

Over the years S&S Electric has been involved in various aspects of residential contracting from high-end residential to service to high-volume production, which is its current niche. Its installations last year were typically in new homes ranging from $250,000 to $400,000 in price. S&S reports an average low-voltage sale of about $4,000 per home, which typically includes 10 built-in speakers, volume controls and structured cable, as well as high-voltage wiring and lighting. (See sidebar below.)

The production-home environment maintains tight margins, so S&S maintains profitability with high-volume work and careful cash-flow management. "We carefully choose the builders we work with, seeking out those that effectively manage their projects and pay their bills on time. Teaming with these builders, we are able to get in, get out, and get paid, all within a matter of days," says Smith. Among S&S builder/clients are large builders such as Centex, Lennar, David Weekly, KB Home, Ryland and Taylor Woodrow.

But production homes do not necessarily mean sparse technology. Even in houses with lower price points, Smith says S&S is still finding tremendous opportunity to present and install home-technology products and upgrades.

"Many of today's technology-savvy homebuyers are more concerned about and willing to pay extra for their 'tech toys' than they are for countertops and flooring," says Smith. "The other nice thing about the production environment is, you can reproduce the same system design over and over. You do not have to reinvent the wheel, and invest extensive design time into each and every project. We often find that there is a keeping-up-with-the-Joneses mentality among buyers in many developments; they want to have at least as much as their neighbors."

The interaction between S&S and its builders is constantly changing. Prior to 2000, the company sales staff did not meet with individual homebuyers. "Our relationship was strictly with the builder," says Smith. "Whenever we had a new product, we had to meet with the builder's salespeople and educate them so they could sell it to the homebuyers. That system failed miserably."