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High-End Installers Report 2008 Revenues Up as Much as 25%
Baumeister Electronic Architects, which performed this high-end install, recently went out of business. (Photo courtesy Baumeister Electronic Architects)
Well, the recession, coupled with high-end Chicago area integrator Baumeister Electronic Architects going out of business, has challenged traditional thinking.
To get a better read of the high-end market, CE Pro surveyed eight integrators on the 2008 CE Pro 100, each of which had higher average revenues per installation than Baumeister reported.
- None of the eight high-end integrators saw 2008 revenues fall.
- Four say they were flat or experienced slight growth.
- The others report growth that ranges from 12 to 25 percent.
Long-time marketing director Paul Baumeister said cash flow was among the major reasons Baumeister went out of business after 19 years.
"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," he said.
Baumeister had a lot more than $20,000 on the line with most of its installations. It reported $94,613 in revenues per installation in the 2008 CE Pro 100. But just because some canceled projects crippled Baumeister, that doesn't mean all high revenue-per-installation integrators are in precarious positions.
Most surveyed companies cited close cash flow management as a key to success. "Cash flow is king. If [integrators] don't know that, they'll find out really quickly," says Scott Fuelling, owner of Memphis, Tenn.-based Phoenix Unequaled Home Entertainment.
"We do a good job a good job of cash management. The big thing is to make sure your numbers are realistic and I think that a lot of dealers are falling into a trap. When the economy tanked and they weren’t getting those huge deposits, it really had a negative impact."
High-end Integrators’ Expected 2008 Revenues
| Company | Based | Revenue/Install (2007) | 2008 Total Revenues |
| Audio Command Systems | Westbury, N.Y. | $148,571 | "Up a little" |
| Audio Video Systems | Plainview, N.Y. | $173,810 | "Flat" |
| Custom Systems Integration | Phoenix, Ariz. | $200,000 | "Up 25%" |
| Etc Inc. | West Palm Beach, Fla. | $108,498 | "About the same" |
| Grand Home Automation | Hudsonville, Mich. | $130,138 | "Up 16%" |
| HomeTronics | Dallas | $112,500 | "Up about 12%" |
| Phoenix Unequaled Home Entertainment | Memphis, Tenn. | $110,526 | "Almost dead even" |
| Signals Audio/Video | El Segundo, Calif. | $101,438 | "Up 20%" |
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4 Comments (displayed in order by date/time)
Kevin—Yes, these guys talked about their pipelines.
A few of them said they feel fortunate that their phones continue to ring and they have several projects on the horizon.
One owner talked about how he has five job proposals out and he feels that a profitable 2009 hinges on him winning a couple of those bids.
All companies talked about how they have increased their emphasis on customer relationship management (CRM). For their high-budget existing clients, an “update” might be a new home theater, so that’s one way they’re keeping the pipe lines filled.
These guys owe a lot of their continued success to aggressive CRM.
The April issue of CE Pro is likely to contain an article that includes more input from all eight companies.
Thanks - That is great information.
Our SI company clients echo these same sentiments. Citing good opportunities abound, while recognizing the importance of securing projects and not losing them to others.
Many we work with are focusing on controlling (reducing) high fixed costs by outsourcing services like engineering and programming where there is not a full time fixed need.
Everyone on the payroll that is in the COGS coulmn of a project needs to be generating revenue at all times.
There is no longer any room for costs to be ‘absorbed’ by gross profit
Excellent point about the deal pipeline, Kevin and Tom. A Vancouver integrator I just interviewed for a similar story up here reported that things are good but he cautioned me to ask him again two to three years from now, which is his current horizon.
Good job teams!
Did this writer inquire as to what the pipelines for these 8 look like today?
Most SI companies doing projects of this scale are working on projects that are 18-36 months in overall lifecycle, so it is likely that close to half their revenue was from projects coming through the pipe in 2006-2007.