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How Electronic Environments Operates $10M Custom Business in NYC with No Vehicles

Manhattan-based custom installation firm Electronic Environments works with top brands that have NYC showrooms, uses remote diagnostics, and owns zero company trucks, vans or sedans.

How Electronic Environments Operates $10M Custom Business in NYC with No Vehicles
Using remote managed service, Kim Michels of Electronic Environments in NYC says the fastest way to fix a system is to guide the client to fix it on their own. “It is empowering for them to say, ‘I fixed it.’”
Credit: Matt Greenslade

Jason Knott · March 2, 2016

The iconic song “New York, New York” says, “If I can make it here, I’ll make it anywhere.”

Kim Michels, president of Electronic Environments (EE) in Manhattan, has definitely “made it.” He has led his company to more than $10 million in annual revenues by nurturing his team’s passion for technology, maintaining high internal standards, constant education, and dependable customer service. On average, Electronic Environments’ project size ranges between $800,000 and $1.2 million.

At the same time, Michels has instituted some ingenious internal policies that not only breed efficiency, but save money. Serious money.

For example, the integration firm is aligned with several top brands in the industry that each has New York City area showrooms. So instead of spending money on Manhattan real estate for an over-the-top showroom to suit his high-end clientele, Electronic Environments can use as those vendor-run, integrator-welcoming spaces as its own to showcase technology and demo equipment (usually between 30 and 60 minutes) for impressing prospective customers.

The company does have a “black box” demo space configured for demonstrations in its own offices, where sales staff can show specific products or features. Also, the company conference room is well suited for certain demos, including speaker types.

Then there is the company’s fleet policy … it doesn’t have any. That’s right: this company of 68 employees does not own any company trucks, vans or sedans.

Michels admits that Electronic Environments has “flown under the radar” for 20 years relying on word of mouth referrals only. The company’s typical project size, as seen in these images, ranges between $800,000 and $1.2 million.

“We don’t own any vehicles,” says Michels flatly. “One of the unique aspects of this company is that we own no vehicles. If I want to own vehicles I would be Avis or Hertz, not Electronic Environments.”

Michels explains: “I never want my technicians to worry about parking, tickets and driving; I want them to concentrate on technology. So we get around the difficulties of working in the city by having all of our equipment delivered beforehand. We engage a number of well-trained messenger companies that know how we work and they deliver the products for us. We also use a moving company to move our equipment racks, which are quite large and cumbersome and need to be handled very carefully. So that is one of the ways we completely eliminate one of the difficulties encountered by other companies working in New York City.”

The policy is apparent when you walk through the Electronic Environments shop, where at any given time you can see five or six cocoon-like structures waiting to be delivered. When completed, those racks are wrapped tightly in plastic and loaded in crates for shipping. An EE staff member is almost always on the job site to receive and inventory the delivery.

“When we need vehicles, we will rent a car. Some of my employees own their own cars so we will pay them to take their own car around the city. The fastest way around the city is actually on the subway. Some of the technicians will grab a tool bag and hop on the subway or take a taxi. The other fortunate thing is that our work is fairly concentrated. It is not unusual for us to receive a service call on 77th Street and we have a technician on a job on 85th Street who can get there in less than 30 minutes,” adds Michels.

Technicians often go straight to a job if it’s a multiday project. They come into the office on milestone dates in a project, like the first day of final prep, first day of trim, etc.

Having No Vehicles = $400,000 in Savings?

Besides eliminating the hassles and headaches of managing a fleet, how much cold hard cash is Electronic Environments really saving by not having its own vehicles? It’s hard to determine but using some known industry metrics, there are two ways to examine the situation, both of which result in a potential $400,000 savings for the company.

First, according to the most recent CEDIA Benchmarking Study, the typical custom installation company with six employees spends 3.2 percent of its operating budget on vehicles, and another 1 percent on vehicle insurance for a total of 4.2 percent. For the typical custom integration company that earns just under $902,000 and has an operating income of about $873,000, that equals approximately $37,000 per year spent on vehicle expenses. Since Electronic Environments (with 68 employees) is 11 times the size of the typical CEDIA survey respondent, you can multiply that $37,000 figure by 11 to get $407,000.

In the second method using CE Pro’s Fleet Survey data, the savings comes out remarkably similar at about $400,000. According to the study, the typical ratio for employees-to-vehicles in a custom installation company is 2:1 — two employees for every one vehicle. That means with 68 employees, Electronic Environments would require 34 vehicles.

Since the average lifespan of a custom integration company vehicle is five years, it means Electronic Environments has eliminated the cost for purchasing 34 vehicles on a rotating basis every five years, or about seven vehicles per year. At a minimum price tag of $26,000 for a new van or truck plus another $2,000 to install necessary racks and shelves, it’s a savings of $196,000 per year.

Next, there is vehicle insurance. The typical custom integration company pays $1,200 per year per vehicle for liability, collision, comprehensive and property damage insurance. With potentially 34 vehicles not on the streets of Manhattan, that is a savings of $40,800 per year in insurance costs.

Then there are gasoline costs. The typical custom A/V vehicle uses 1,070 gallons of gas annually. At $4 per gallon prices that’s $4,280 per year per truck. Again, multiplied by 34 vehicles, it’s an annual savings of $149,600.


  About the Author

Jason Knott is Chief Content Officer for Emerald Expositions Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at jason.knott@emeraldexpo.com

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Comments

Posted by Julie Jacobson on March 3, 2016

Paul, that is an awesome idea.

Posted by paul vitalmgmt on March 3, 2016

Jason, imagine if Ken can get the UBER drivers to add the magnetic signs to their cars during deliveries.
Just like driving the vans around.
This takes who would own a car in NYC to a new level.

Posted by paul vitalmgmt on March 3, 2016

Jason, imagine if Ken can get the UBER drivers to add the magnetic signs to their cars during deliveries.
Just like driving the vans around.
This takes who would own a car in NYC to a new level.

Posted by Julie Jacobson on March 3, 2016

Paul, that is an awesome idea.