What's going on?

Something doesn't make sense. Here we are in a market that's growing 30-50% a year (depending on who you believe), experiencing explosive technological improvements and adoption rates, and averaging over $7 billion (all ProAV Integration included), but only a select few are making any major money.

What's going on?

I've thought about going across the street to the Kenan-Flagler Business School here at the University of North Carolina and asking a business professor if this is normal in the course or development of an industry, but I haven't had the time. However, I have had a chance to talk to a couple of major VP of Sales in our industry - all with companies making money. All three of them asked to remain anonymous, but to put this in perspective, one's with a projector manufacturer and two are with ProAV dealers doing over $50 million a year. All three work for companies enjoying 12% or higher net profit - one is even enjoying a net profit of over 19%.

Well, what did they say? Each one gave his words of wisdom and here they are (for the benefit of everyone):

1. Don't grow to grow: Sure, everyone's growing fast and furious, but do you really need to tell everyone how fast and how much? Also, if you've got an office in Dallas, do you really need one in Ontario, Canada? What plays in Peoria may not play everywhere. Just because the formula for profit and growth works at home doesn't mean it will work everywhere.

2. Keep a handle on the true costs: Some of the dealers that are struggling financially don't have a good handle on their real costs. They may think they do, but many don't track time for the design or engineering department's input and for change orders. These time costs can kill the margin on a good system installation as they are paid out regardless of the profitability of the job - just because the system was sold for a 25-point margin doesn't mean that the net will be 25-points. People-time tracking is the key here. Who (meaning everyone) is touching that "job?" Track every second and cost and charge for it.

3. Walk away: The hardest thing for a ProAV sales person to do is walk away from a sale. This is something, however, that's got to be practiced to maintain a minimum margin on a job. If the margin falls below the corporate limits (assuming you've set them already - if you haven't, do), walk away. Sure, you may lose the job, but there are plenty of others that you will win if you're patient. The competition will either figure this out or die anyway.

4. Sell service not gear: The real sale is selling the service, not the gear. Anyone can sell hardware (that's the problem), but not everyone can sell service and support. That means you have to be able to sell your client on the value of you as a person and your company as job security for the client. If the client's system doesn't work, not only do you look bad, but also he/she may lose his/her job. So, ultimately, you ARE selling job security.

So, that's it. That's the secret to success - based on their formula. Maybe you agree with it, and maybe you don't. But, I thought you might want to at least compare that to your own formula for success.