What Is the Importance of Revenue vs Profitability for Integrators? Statistics
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The most reputable integrators I've seen put customers first. Growth organically comes from that via referrals and repeat business. Profit organically comes from that via outstanding reputation. I see it all the time, as soon as someone prioritizes profit over customer experience (hiring inexperienced labor for cheap, using a low-quality low-cost product, etc), they win battles for a while but end up losing the war.
"For a well-funded company, short terms loss can be absorbed in the anticipation of future growth in revenue and profits, but for a company without such access, such losses can mean shutting down the entire company"..............so true
also if anyone else says otherwise let me know.... but as an integrator net profit margins are tight to begin with.......that is why profitability and cash flow are king for me.............
the CEO of UTC once said 'the integration business is not a high margin business"......as an integrator I'm trying to figure out how to change that........
Having owned an integration company for 10+ years I would disagree that integration is a low margin business. I have an overall profit margin of over 40% on any product or labor I sell. I work on big projects for large commercial customer and have no trouble getting the dollars I need to make money. Otherwise, what's the point? I sell high quality cameras and access control and find that customers are willing to pay for the competence and experience. Trying to compete on price is foolhardy and I realized that if I didn't have customers with deep pockets than it didn't make sense to service them.
If you noticed I was refering to net profit........for example on 5mil in annual sales I have yet to break 10% net profit on revenue in an given year...........the gross profit margins before overhead and operating expenses are similar to yours
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