IPVMU Certified | 02/06/13 08:33am
Hello, Michael: I'm in S. Central USA. Throughout 'the economic downturn' (or whichever vogue term applies), government and education were among the few verticals that had money to spend. As a result, competition for new construction projects were/are very stiff. Security integrators were often competing with IT service providers, Structured cabling/Network installers, and maybe even a Telco or AV company or two on the same scope of work. Unless the school 'wrote-in' security brands in the bid, you could find yourself competiting against really low-end, no-name stuff.
In my region, it was the strategy of one particular structured cabling company to bid video surveillance projects near actual cost, in order to 'sweeten' their (larger, with better margins) bid submission for network cabling.
Another factor to consider is the budget/funding process. It can take years to get a project approved, and then you might have mere weeks in the summer to get it installed. Lots of long-lead type of sales.
There is money in K-12, but margins are lean on bid work. Once you 'earn' your way into a school system, then you have opportunities for higher-margin maintenance or service work, but you must demonstrate value. The competition comes from surprising directions.
Thanks Brian. Are you seeing most of the ISD opportunities come through the bid process (IE: iSqft / BidSync type delivery mechanisms) or do you actually drive ISD business through cold calling type lead generation?
IPVMU Certified | 02/06/13 11:01am
Are you seeing most of the ISD opportunities come through the bid process (IE: iSqft / BidSync type delivery mechanisms) or do you actually drive ISD business through cold calling type lead generation?
This is a very good question, and is probably worth it's own discussion!
Here's my (very condensed) answer:
iSqft/BidSync/FedBizOps/FindRFP, etc will deliver you a high volume of opportunities with a low closing 'win' percentage.
Consultative sales, or 'feet on pavement' type efforts: yield a lower number of opportunties, but ones that have a higher win percentage, or at least are higher quality opportunities.
It was uncommon for any customer to hand me a PO for a new project simply because I was incumbent. Any project of any meaningful value (as small as $1000 or $2000) was bidded. It wasn't always awared on 'lowest price', but it absolutely was shopped.
As a midwest company and a structured cabling/networking contractor (I was hired to help start the security division) who does alot of K-12 work, we use two different approaches when it comes to video surveillance and Access control. We have a dedicated "on the ground" sales force as well as a very in depth estimating department (public bid). We have also found that pairing our security offering along with our other offerings (Structured, network, phone, outside plant, geothermal) has been very lucative. While I dont agree with Brian about the higher margin comment, it does help us with bidding to Electrical Contractors since they can deal with one subcontractor instead of multiple. I do however agree with him on the comment about having mere weeks to get the job completed. Thanks for reading and I hope this helps.
IPVMU Certified | 02/06/13 04:41pm
Hello, Cody: Thank for the feedback. Allow me to clarify my statement - Don't mistake my comment about 'higher margin' to be general to the market.
For the specific cabling company I mention, their respective buying strength was better on structure cabling equipment, and so it brought better margins vs. security equipment.
Just like you describe, the 'less throats to choke' buying approach makes sense for many GCs and Contruction Management companies.
Thanks for the responses. It sounds like product bundling is a good strategy…if you have that option and the control over the various margins. This is a good strategy with either new construction or complete retrofit opportunities. Currently I am focusing my efforts to older systems that might be in a replacement or upgrade situation as the major bonds in my region (Dallas / DFW) have ended. Not many new schools being built at the present.