Is RMR enough to survive in alarm business July 18, 2024

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Is RMR enough to survive in alarm business
July 18,  2024

Is RMR enough to survive in alarm business

Ken:
The number of inquiries I’m receiving is to me ‘mindboggling’ – is it a sign of the times or what is really going on?
People come into my / our industry not realizing it is not the JUST RMR that just ‘rolls in’ but HARD WORK that keeps subscribers SATISFIED and willing to send that check each and every month is how that RMR model continues to feed the families I employ.  As such, you have to make payroll and pay your vendors – meaning you better be somehow making a PROFIT on what you install (either immediately or pretty darn quick if your RMR is enough to sustain the initial loss).
Then, they muck it up with their fancy finagling of the ‘books’ and all of a sudden – POOF, they have to flip the portfolio and get the hell out of Dodge!
You and I have seen this occur time and time again in the industry!  I just yesterday interviewed a young lady for customer service / sales position who had worked thinking it was ‘bad luck’ the companies she had worked for and went Chapter 11 or Chapter 7 – she did not realize the $99.00 model is not for the faint of heart as the deep pockets all of a sudden are NOT SO DEEP! As she was unfortunately of the thought process this is the way she would be able to feed her family and had the ‘curse of the low bidder’ mindset, I declined to invest my company’s hard earned resources into trying to break her out of that mindset ‘sales’ process.
I remember being at an ADA meeting in Rhode Island where a venture capitalist banker was speaking to the gang about how the entire capitalist banker industry was in a total melt down & panic as ADT was weeks from going (per her statement) Chapter 7 due to the bleeding!
There was nobody in the industry large enough to ‘pick up the pieces’ and it was going to be totally disastrous if this occurred! Funding for other M&S would totally disappear!
Scary statement coming from a venture capitalist banker!
            Just my 5-cents worth!
Your humble scrivener………..
   Respectfully,
Joseph (Joe) Pfefer, Founder & C.E.O.
Jade Alarm Co.

Response

            Your alarm business needs a balance between non RMR revenue and RMR revenue.  While non RMR revenue is great for cash in your pocket it, in most cases, will not create an equity in the business that is salable in the future.  RMR revenue takes time to build up, perhaps causing you to sacrifice higher compensation, but at the end of the day [or career or at least that business venture] you have RMR accounts that should be readily salable and leave you with a nice nest egg.  Of course if you’ve buried yourself in debt to build the RMR you may need every penny for a sale of the accounts to cover the debt; that shouldn’t be the plan.
            The answer is obviously strike a balance; make money on the installation, on the per call repairs and inspections, yet build the RMR constantly and continuously.  How to accomplish this balance is the hard part, but it shouldn’t be a mystery and it surely shouldn’t rely on luck, at least not entirely.
            Planning for success in the alarm business is not too much different than any other competitive business or profession.  You open an alarm company in a town with 20 potential businesses, you may have to adjust your expectations.  More likely you’re in an area with at least some competition; you’ve made an assessment of how saturated the market is for your services and products.  This of course assumes you have the luxury of being able to select where you set up your business, where you live, with the business primary consideration.  Often times that’s not the case so you do have to do the best you can and probably lower expectations or realize this isn’t the place to make your dreams come true.  But most businesses open in areas where there is competition, enough business and some flourish and others flounder or fail.  There can be external factors over which you have little control or effect.  But sometimes it’s how you decide to run your business.  There might be help available.
            `There are no shortage of “consultants” in the alarm industry offering their assistance.  Reputable ones are found on The Alarm Exchange, in several of the categories.
            Central stations can be a valuable resource for information and advice.  Develop the relationship and ask questions.  Some central stations have great support staff and all you need to do is ask.
            There are marketing experts, tax experts, accountants, legal [only one firm is actually there] and technical support on The Alarm Exchange. There are thousands of articles on the K&K website and a slew of other alarm industry information on The Alarm Exchange. Many local alarm associations are listed.
            Then there are the trade magazines, free if you’re in the industry.  All you need to do is sign up and then read.  The K&K daily emails are also free; all you need to do is devote 60 seconds a day to read the article.  You may realize how much you already know, or learn something you don’t.
            I am not going to tell you not to install free or $99 alarm systems; maybe that will work for you.  I am also not going to tell you to stick to your guns and do not drop prices; sometimes the most expensive is the “best” and gets the business [just ask my wife, Lois].
            As I started this article with, you need to strike a balance.  For those masters of the universe, congrats; for those just getting started, there is a path to success in this industry; keep on trucking but get the advice you need, and follow it.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com