In order to accommodate growth in business, local security systems companies are broadening their spectrum of services and products to go beyond security systems and into areas of entertainment and technology-oriented products.
Diversity in product and service offerings has worked to the security industry’s advantage.
According to statistics from the National Burglar & Fire Alarm Association, a national trade association, in 2000, consumers spent an estimated $17.5 billion on professional electronic security products and services, up nearly $1 billion from 1999’s $16.2 billion total.
The San Diego Business Journal features 12 companies ranked by 2000 local sales revenue.
“Alarm companies are becoming more than just alarm companies,” said Daniel Dorgan, president of CLS Security Electronics, No. 11 on The List.
“People want to be safe, but they also want to enjoy their houses as well.”
Dorgan is referring to the rise in requests for installation of home theaters and home musical systems that CLS Security has received over the last couple of years.
CLS has increased services to include multi-music rooms installation, which enables music to be played through a system that runs throughout rooms in a house; video distribution, which allows a resident to answer the doorbell by viewing a visitor on their television screen; and surveillance camera installation.
Audio, Video Services Offered
With 2,000 installations under its belt since its establishment in 1993, Dorgan attributes CLS’ success to its expansion in services and the fact that as a systems provider, they are not just focusing on security.
“We’ve broadened our scope of work and we’ve been pretty successful at it,” Dorgan said.
Spending on electronic security products and services is growing at a rate of 8.7 percent per year, according to National Burglar & Fire Alarm Association statistics.
– Challenged By The Larger Firms
While this is good news to the industry, the increase in business hasn’t gone without its downsides.
One of the challenges Dorgan and other small-business security companies face is battling the low cost of security installation from larger companies which can offer competitive prices and services that smaller companies can’t.
“Smaller companies, if they lose too much on installation (they) could be in trouble,” Dorgan said, in comparison to larger companies such as ADT or Brink Security Systems that work at trying to get as many customers as they can, even if they lose money on installation.
Larger companies can afford to do this because they are paid up front and oftentimes sell installation contracts to other companies that will take over the monitoring of an alarm system for a low monthly fee, he said.
“Technology is becoming more cost-effective and more readily available to the consumer, rather than just to the man who lives in the big house in Rancho Santa Fe,” said, Sean McDermott, partner of Advanced Electronic Solutions 2, No. 3 on The List.
Unfortunately, McDermott added, a drop in price brings a decrease in the safety factor of using minimized-cost equipment.
“The equipment isn’t as good,” said Brett Bush, vice president of sales for Rancho Santa Fe Security Systems, Inc., No. 6 on The List, which can lead to false alarm problems.
– Small Firms Selling Out
McDermott also noted a trend in smaller security companies selling out to bigger companies to keep from going out of business “because it’s so doggone competitive out there!”
“Competition has spring-boarded over the last three years and forced smaller companies out of business, but I wasn’t going to sell out,” said McDermott, whose business goal was to remain an independent company.
Instead, earlier this year McDermott merged with All Secure Custom Home Electronics, a local security company.
“We’re reinvesting our profits into the local economy, so money generated won’t leave to go to bigger, national companies, but will stay here (in San Diego),” said Rich Apgar, partner with McDermott.
Rancho Santa Fe Security also merged with a smaller commercial company last year.
“The merge allows us to strengthen our resources and increase business and acquisition,” Bush said, whose company experienced a $1 million increase in sales revenue in 2000.
