Smaller security alarm companies looking to broaden their offerings in today’s slow economy may consider selling commercial fire alarm systems. It is true that commercial fire alarm sales can add profit today, as well as add future value to your company in the recurring monthly revenue (RMR) category. Many don’t realize that by offering required fire alarm protection, your sales rep opens the door so you can propose other ‘nice-to-have’ services the customer wants. But be wise and take a close look at your sales staff before you begin. You’re looking for larger profit, not big trouble.
The last thing you want to do is hire a fire alarm salesperson and find yourself suddenly in the fire alarm business. “Suddenly” usually isn’t a term company owners want to hear. It might be better to invest in your existing salespeople. You can probably transition a commercial security salesperson into a commercial fire salesperson easier and faster than a salesperson who has been selling strictly to the residential market. You will have to closely monitor the newbie’s progress, whatever their experience and review any proposals before the customer sees them. There are many things the new fire alarm sales people need to be wary of.
The salesperson new to commercial fire may underestimate the back-end costs of installing a commercial fire alarm system. This includes the cost of paying someone to prepare plans and submittal documents required for these jobs. The fire alarm plans will always need to be submitted for the additional fire alarm permit even though the fire alarm system was marked on the plans when the architect/owner submitted for the building permit. If you have to hire someone to prepare the submittal documents, their fee will be based on the size and complexity of the alarm system. Installing larger systems also means there will be more time spent on various calculations and the incorporation of fire safety functions into the system design, as well as a lot of time devoted to figuring out the detailed operational features and any required programming. On top of that, there may be additional fees for the person performing the plan review, especially if the municipality outsources this function. The cost of this review may be based on square footage of the building, instead of the more equitable method of pricing the permit/review fee “per device.” Not knowing how to estimate these permit costs ahead of time will usually cut into your profit.
Aside from learning how to apply all of the relevant codes and standards, commercial/industrial salespeople must be able to work within the business hierarchy before the job is awarded and understand the duties of the architect and general contractor after. If the overall project is large enough, there will be weekly construction meetings you will have to send a representative to. The job will need to have an Acceptance Test performed in the end and will require time by at least two trained technicians for this. The salesperson should also be present to handle the customer training. Fire alarm system installations require lots of paperwork and documentation and therefore, time must be included to properly produce it all. This time spent on paperwork, at meetings and attending inspections must be included in your labor costs.
Maybe your salesperson already works for another contractor. Sometimes the best way to get into the commercial fire alarm business is to work through another, more experienced company. If you decide to begin by submitting a bid through an electrical contractor, you must understand what your obligations are going to be and how these extra contractual obligations affect the cost of doing business. These sub-contracts may still require someone to attend frequent construction meetings. You may have to drop other projects to suddenly get caught up when parts of the building become ready for your work. Delaying the opening of a structure will be billed back to you at a per diem rate of what could amount to several thousands of dollars, if you don’t schedule your installers properly; in addition to losing any good-will you were trying to build. Some jobs may require a bond and licensing, meaning more costs. Public-works jobs have more extensive accounting and bookkeeping requirements that have been known to overwhelm an unsuspecting alarm company.
While this may be the big job you’ve dreamed about doing someday, your alarm company may not be able to afford the extended payout and longer timeframe schedule typical of these bigger projects. Make sure all installers are well-versed on OSHA safety requirements since the project manager most likely will be keeping a close eye on your technicians. OSHA isn’t the only one that can throw your installers off the job– so, again, read your contract.
Have your residential salespeople take their winning personalities to the small business owner to help you get your feet wet in this scaled down market. Since the residential fire alarm requirements are fairly easy to learn, your home security salespeople should already be selling smoke and heat detection. Most homeowners already realize that a burglar may take their valuables, but a fire could take everything. Sales to small business owners is not as an emotional purchase since most small business owners believe their insurance will replace everything a fire takes. Still, it’s one-on-one selling, direct to the person that makes the decisions. In this market, subtle ‘learning mistakes’ and delays are less critical since there’s no looming deadline for an occupancy permit. However, the permit, paperwork, meeting, inspection and training duties still apply to these smaller fire alarm installations.
Once your salespeople begin to learn the issues that may make the job unprofitable, the better experience your company will have. There is a learning curve, but the commercial fire alarm market remains profitable, even in today’s sluggish economy. The “value add” will be your ability to use your new fire alarm market expertise to leverage sales for your other services as well.
Greg Kessinger is SD&I’s long-time resident fire expert and regular contributor to the magazine. Reach him at email@example.com.