SD&I’s 2016 Fast50: Embracing Change

Security services providers tend to be like the proverbial lumberjack balancing on a floating log. As the environment changes and evolves, and footing becomes even slicker and more unforgiving, those companies that embrace changing trends and technologies and overcome the challenges that stand in their way are the ones that will not fall — eventually rising to the upper echelon.

The 2016 SD&I Fast50 companies embody this philosophy, starting at the top. With the proliferation of smart home technologies, devices and services, it was only a matter of time until a residential-focused, savvy security services provider could leverage the trend enough to become the fastest-growing. That time is now for NorthStar Home, which has been named the top-ranked Fast50 company; however, embracing technology is only the first step in achieving record growth.

“Innovation and technology is key today – more so than ever before,” says NorthStar CEO Jason Christensen. “I expect that to continue, and for it to be the way that companies can differentiate. Growing is great; however, I have watched a lot of companies in our industry come and go by trying to grow too fast and at all costs.”

Be sure to read our cover story on NorthStar, along with profiles of the rest of the top five Fast50 companies — all of whom are no stranger to this list: No. 2 A3 Communications; No. 3 Star Asset Security; No. 4 Securadyne Systems; and No. 5 Netronix Integration.

The rest of the Fast50 companies and entrants graciously participated in market research and shared many of their best practices. Before we get to their advice, let’s dig deeper into the trends, technologies and numbers that are driving growth among security dealers and integrators.

DOWNLOAD THE FULL FAST50 RANKINGS HERE: www.securityinfowatch.com/12194429.

Emerging Technologies and Services

Interestingly, the top five technology and service trends that concerned Fast50 companies most are:

• Wireless solutions for both video and access control;
• Hosted services, such as VSaaS and managed access control;
• IT, network vulnerabilities and hacking;
• The analog to IP transition; and
• 4K and other HD surveillance methods.

“Wireless data transmission saves huge costs and provides a point of differentiation among providers,” says Steven E. Paley, President & CEO of No. 36-ranked Rapid Security Solutions. Wireless cameras aand access control locks were also cited by a variety of Fast50 company executives.

Of course, managed services is continuing to gain momentum in the security space, as dealers and integrators see a steady path to RMR and company growth. “The biggest trend within technology (not only security) is the advancement of cloud computing and SaaS technology,” explains Matthew Zucker, President of Sales for No. 7-ranked Beacon Protection. “The advancement of these technologies is allowing for uncomplicated installations and infrequent maintenance efforts because information does not reside on the client’s server or local machine. Both technologies allow for reduced inventory costs, with less equipment needed for installation. SaaS and cloud computing generates monumental dividends, as these services demand subscriptions, ultimately leading to another stream of revenue.”

Perhaps the most revealing look at the technology landscape, however, was the high importance of IT and security from hackers. While this was recently a back-burner topic for many security service providers, it seems that high-profile security breaches such as Target, and the simple fact that security dealers and integrators are very often finding themselves face-to-face with IT administrators at the buying table, has pushed this trend to the forefront. “Hiring and training existing technical staff to understand the cloud and IT in general will separate the major players from those that do not adapt,” says Michael Kennedy, President of No. 30 Advanced Cabling Systems.

“Maintaining a very high level of expertise by employing software and systems engineers that can converse fluently with IT staff’s and network managers about system architecture and high-level troubleshooting is hard to do,” admits David Edmunds, CEO, of Stone Security, No. 20 in the Fast50.

Al Saxon, Senior VP of Sales and Marketing for Vision Technologies Inc. (No. 23) agrees: “From a technology perspective, integrating cybersecurity into our business unit has been a challenge,” he says. “Since the inception of our security business practice, our focus has been on physical security; now, we must identify and evaluate candidates with this unique skill set and integrate them into our existing framework.”

“Our most effective marketing tool is the news and public information about cyber breaches and its impact on profits, reputation and public/life safety,” says Darnell Washington, President and CEO of No. 12-ranked SecureXperts Inc. “Fortunately or unfortunately, our greatest marketing tool is fear — everyone is concerned with cybersecurity today, whether it is a company or in personal life.”

Meanwhile, analog cameras continue to become a solution of the past among cutting-edge security dealers and integrators. “The conversion from analog to IP continues to create more opportunity for service and solution providers,” says Jeremy White, CEO of Pro-Vigil Inc. (No. 11).

“I have watched news programs my entire life and looked at the quality of the analog video from security cameras, which was substandard at best,” says Joe Allen, COO of No. 45-ranked Sonitrol Security of Delaware Valley. “Megapixel is giving CSI quality for great forensic capabilities.”

A closer look at the hottest technologies among Fast50 entrants solidifies the top trends. Hosted and/or cloud-based video and access control solutions were cited as the No. 1 technology that these business owners and managers are most interested in adding (or have already added) to their portfolios of offerings. After the cloud, the hottest technologies are:

• Video analytics;
• Video and audio alarm verification;
• HD, megapixel and 4K cameras and displays;
• Wireless access control and video solutions; and
• Mobile access control credentials.

“Recurring revenue for security systems will continue to grow with automated tools for alarm verification and remote video monitoring,” says Michael McWilliams, President & CEO, Red Hawk Fire & Security (No. 43).

Hot Markets

Corporate/enterprise, healthcare and education are the top three markets served among Fast50 companies surveyed. Many of these companies are keying on one or two of these hot verticals in the hopes of becoming a trusted advisor specific to that industry. No. 31-ranked Firstline Security Systems, for example, “is strengthening our new customer base by strategically targeting the verticals that we are able to provide the highest level of expertise and value to the end-user,” says CEO Steve Morefield.

“The ability to strategically run two separate vertical markets to grow RMR while obtaining large projects to cover the profitability margins is key,” says Angela White, Executive VP of Central1Security (No. 32).

Of course, some of these verticals are more challenging than others. One of the most important considerations for markets such as government, utilities, critical infrastructure, healthcare and education is compliance with a variety of market-specific regulations. “A large percentage of our business is directly related to critical infrastructure and government compliance requirements,” reports Bill Cariota, Director of Client Services for is3 Tech Services LLC (No. 15).

“I believe ‘smart cities’ — encompassing a host of urban technologies enabled by enhanced and secure IT systems — have the power to change the way we will live, do business and protect ourselves,” says John F. Carter, CEO of No. 40-ranked CarterBrothers Security Services. “The security industry will be forced to adapt and change based on the technologies designed for these cities/developments.”

External Threats

While clear technology and market trends rose to the top among Fast50 companies, when it comes to the top threats and challenges to the health of their businesses, the owners and managers were much less definitive. Indeed, there are many threats that have caught the attention of growing security service providers.

Do-it-Yourself solutions: “The rise in popularity of DIY home security is something we are intently watching,” says Amy Kothari, CEO of No. 6-ranked My Alarm Center. “We recently launched LivSecure, a self-install home security option, in order to capture this growing market segment.”

Vendor consolidation: “One of the biggest challenges from a technology perspective would be security equipment manufacturer consolidation limiting the channel options for available products,” says Gary Osterhout, President of Go Security Solutions (No. 9).

Increased competition: “The entry of additional large players into the industry space has intensified supply and demand, requiring more creativity on our part to be top-of-mind and first in consideration by the prospect,” reports Joe Colosimo, President and COO of Guardian Protection Services (No. 33).

Training: “The rapid pace of innovation means that the technology we are installing today looks vastly different from the product we sold when I first entered the industry, or even five years ago,” says Steve Firestone, President of No. 21-ranked Select Security. “Making sure everyone in our organization is up to date with the education and training they need to ensure a smooth customer experience (from sales and installation to repair and customer care) is an increasingly important area of focus for us.”

The Internet of Things: “We have to stay on top of the IoT — eventually almost everything in our industry will reside on the Internet,” says Marshall Marinace, president of Marshall Alarm Systems.

The pace of product innovation: “New products come on the market so fast and then get updated even faster — both sales and installation have a difficult time keeping up,” says Joseph Gallagher, Vice President of B-Safe Security (No. 29). “This results in longer installation times, customer frustrations and increased customer training times.”

Recruiting

Over the years, a constant challenge for a growing security services provider is the ability to staff itself with the most qualified individuals at all positions within the company. “Our biggest challenge is recruitment and retention of high-quality employees at all levels of the business,” says Eric Yunag, President and CEO of No. 44-ranked Dakota Security Systems, which was acquired by Convergint Technologies in January 2016.

Since this is a recurring annual theme in the Fast50, we asked the owners and managers to cite the best way they accomplish the task of recruiting. Beyond the tried-and-true methods, including recruiting agencies, military recruiting, employee referrals and social media marketing, here are some of the more cutting-edge techniques:

“Some of the best ways we have found to attract new talent have included marketing/branding efforts, involvement with community colleges, STEM programs in high schools and participating with our local JATC in educating about the benefits of a trade apprenticeship vs. traditional college,” explains Robbie Danko, Marketing Manager for Low Voltage Contractors Inc. (No. 24). “Our approach involves some very simple principles — attract the younger generation, add value in communities you want to attract talent and find ways to show an outsider what it is like to work for your company.”

Donald Gantt Jr., President of No. 39 IET Systems tailors his recruiting efforts to mobile users: “This is an on-the-go era of tech, and businesses need to recruit where they are most likely to reach their potential talent pool — through mobile devices. Job seekers are searching on and applying through their smartphones and tablets, and by being mobile-optimized with our website, job ads and application forms, we have seen a rise in both the volume and quality of candidates.”

“Internship programs with both high schools and technical schools are a great way to find fresh minded individuals — with good values and character being at the forefront of the selection process,” says Chris Gilbert, President of Security Pros LLC (No. 18).

“We have started a ‘Convergint Leadership Program’ — where we are recruiting from universities all over the U.S. and Canada,” says Convergint (No. 16) VP Tony Varco. “This has been a very successful program in terms of bringing in sales and operations talent.”

Sage Advice

Finally, as is SD&I’s tradition with the Fast50, we asked the owners and managers: What one piece of advice would you give to other companies who hope to achieve the type of growth that your company has? As you might expect, we received a wide range of answers to this question, but here are some of the most helpful:

• My Alarm Center’s Amy Kothari: “In our evolution as a company, we have transitioned from acquisition-based growth to organic sales growth. Regardless of which growth method you choose, you need to devise a strategic business plan and manage your growth — and business — according to the objectives outlined in that plan.”
• Beacon Protection’s Matthew Zucker: “Knowing your capabilities and aligning them to your strategic goals should be evaluated on a weekly, monthly and quarterly basis. Do not make the common mistake of reaching outside your comfort zone by offering products and/or services you are not able to competently perform.”
• John Vidalis, Vice President and General Manager of Integrated Security & Communications (No. 10): “Make an investment in technical salespeople.”
• Pro-Vigil’s Jeremy White: “Overestimate the amount of capital required to achieve your goals.”
• is3 Tech Services’ Bill Cariota: “Stick with your initial business plan and stay the course. You will have many opportunities to evaluate other ways to grow your business, but always refer back to your basic business plan and objectives.”
• Security Pros’ Chris Gilbert: You have hired smart people, now turn them loose and let them do great things. You must have the courage to let them do their job and trust that they will do what you hired them to do.”
• Matt Hunter, President, Hunter Surveillance Systems LLC (No. 19): “Believe in what you sell. Make sure you can work with that manufacturer on a personal level, and your distributor also needs to have a great business relationship with your employees.”
• Stone Security’s David Edmunds: “Don’t be everything to everybody. You cannot be an expert on all systems. It is a bit counterintuitive, but for us the old saying of ‘less is more’ has really been our secret.”
• Marshall Alarm Systems’ Marshall Marinace: “Always be ready for acquisitions — it is the fastest way to grow.”
• Low Voltage Contractors’ Robbie Danko: “Hire great people, invest in their continued growth and make sure all in your organization know, embrace and live by your core values.”
• Joseph Lynch, CEO, Minuteman Security Technologies (No. 25): “Install a fully integrated, scalable ERP (Enterprise Resource Planning) system before you get too big.”
• Jim Fairbanks, President, SiteSecure (No. 27): Stay focused on your core competencies and maintain a very high level of customer service.”
• Deren Michael, President, Official Security Systems (No. 28): “Be aggressive, keep pushing and work hard towards a single or group of specific objectives while tracking performance and KPIs.”
• Advanced Cabling Systems’ Michael Kennedy: “Trust but verify. Micromanagement is not always a bad quality as long as you are micromanaging the process and not the people. Keep your eye on the important things like cash flow, expenses and aging receivables.”
• Daniel Peterson, President, Hindsight CCTV & Security Inc. (No. 37): “No matter how much you grow, always be available to your customers, and make everything as easy as possible for them.”
• Nathan Leaphart, CFO, Electric Guard Dog (No. 38): “Do not assume that growth will fix everything. You must build the infrastructure to support the growth.”
• Tom Hruby, Executive Vice President, Security Equipment Inc. (SEi) (No. 41): “Don’t sit back and think it is just going to happen. If you plan for it you can manage it.”
• Justin Sherbon, President and CEO, Sentinel Security Solutions (No. 46): “Happy customers are the most effective marketing tool. If you provide a quality product and superior customer service than customers will want to share referrals with friends and neighbors.”
• David R. Fuller, President/CEO, SafeCom Security Solutions Inc. (No. 49): “Your employees are the most important part of your business. Take care of your employees and they’ll take care of your customers.”
• Greg Brewer, Vice President Business Development, Associated Time & Parking Controls (No. 50): “Be flexible, (which means) being open to new ideas and trends sometimes as early adopters.”

How the Fast50 is calculated

The companies ranked in the SD&I Fast50 are recognized and ranked based on percentage growth and revenue growth — with their overall ranking balancing those two considerations using a simple but effective algorithm. If we ranked companies purely on revenue growth, it would tend to favor larger companies — this way, the playing field is level for all entrants. We also balance the equation by studying three years of financial change to ensure that high-growth companies aren’t just “flash in the pan” types of businesses, but are able to sustain themselves. It also balances ups and downs. For example, a company on our list could have had negative growth in its first year but then achieved such strong growth in year two that the average was powerfully in the positive. To enter, companies confidentially report to us their most recent fiscal years worth of gross revenues. Using those numbers, we compute the revenue growth and percentage growth for each of their three most recent fiscal years. We average the growth numbers to generate an average revenue growth for the company, and we do the same for the company to create an average percentage growth.Ties result simply because of the formula average of the revenue and percentage ranks — it is a product of one being higher for dollar increase and one being higher in percentage increase. Companies may enter as long as one of their key business efforts is the installation of security solutions (e.g., video, intrusion, access control, perimeter detection, biometrics, etc.). It doesn’t have to be your sole business effort, but it does need to be a definitive part of your firm. 

Paul Rothman is Editor in Chief of Security Dealer & Integrator (SD&I) magazine (www.secdealer.com). SD&I’s Fast50 is an annual ranking and market research program honoring the fastest-growing security dealers and integrators in North America. To learn more about the program, access archived results, and to enter next year (survey opens in December), please visit www.securityinfowatch.com/sdifast50.