Commercial Integrator May 2023 - 12

AV AS A BUSINESS
Are You Empowering Your Financial Leadership?
One of NSCA's top six priorities for 2023 is to encourage members to empower their fi nancial
leadership to put standards in place to protect profi tability. Here's why. By Laurie MacKeigan
NOW MORE THAN ever, we need to
remain focused on our fi nancial leadership
to make the right decisions to guide our
companies through the next year.
Infl ation, interest rates, a possible
recession, supply-chain challenges,
COVID-19, a shortage of talented workers
and numerous other factors (e.g., war,
climate change) are taking their toll on the
integration industry and our capacity to
manage uncertainty.
On the bright side, demand is coming
back, and adoption of our technologies is
at an all-time high. But in order not just to
survive but to prosper over the next 12 to
24 months, we need to keep a very close
eye on our fi nances. As the old adage
goes: Revenues are for vanity and profi ts
are for sanity. However, cash is queen!
You can't have revenue or profi ts without
strong cashfl ow.
Constant Cashfl ow Thoughts
When I fi rst got into the integration business
in 2014, my cashfl ow situation took
up about all my thoughts - both day and
night! We took many steps to right the ship
back then, which involved moving into
As the old adage goes: Revenues are for vanity and profi ts are for sanity. It might
be said, however, that cash is queen. Integrators simply can't have revenue or
profi ts without strong cashfl ow.
which to build other contracts. Very slowly,
we have been building managed-services
contracts and licensing contracts.
We have purposely kept our team very
lean and carefully watched employee utilization.
We closely look at every closed project
and compare it to the budget to learn what
went well and what didn't go well.
Even when times are challenging, it
is important to remain focused on what
In order not just to survive but to prosper over the next
12 to 24 months, we need to keep a very close eye on
our fi nances.
a smaller space, " right sizing " the team,
cutting expenses, and increasing the focus
on sales and marketing eff orts. Slowly
but surely, those eff orts paid off , and we
were able to fi x a lot of the cashfl ow and
profi tability issues.
For the few years before COVID-19 hit in
2020, times were great. But the past couple
of years have been more challenging,
and they could get even more diffi cult over
the next couple of years.
Our success in navigating the past few
years has been in long-term contracts with
some key clients. They provide stable,
recurring revenue, which is a nice base on
12
Commercial Integrator MAY 2023
brings you success. The 80/20 rule is a
real thing. We tend to the 20% of clients
who bring us 80% of our revenue. We try
to stay away from the clients (and potential
clients) who demand a lot of time and
attention for not a lot of pay off .
Even in this environment, some business
is just not worth it.
Six Steps to Improve Your Finances
With that, I share six key steps to improve
your business' fi nancial situation:
› Keep talking to your banker, even if
things are tough. They know your track
record and generally want to talk.
› Watch employee utilization and budget
over/under. Make sure actual time on
projects translates into future quotes.
› Look at every expense line and see if
there are ways to gain savings. I recently
switched mobile-phone providers and
now have free cell service for a year!
› Ask clients to take delivery of equipment
and pay for it now.
› Set minimum project sizes and minimum
margins you are willing to accept - and
then stick to them.
› Get outside and get some fresh air!
Strong mental health is important for
leaders.
Laurie MacKeigan is president
of Backman Vidcom and
an NSCA Board of Directors
member. To learn more about
NSCA and how to become an NSCA
member, visit NSCA.org.
NSCA's updated " Financial
Analysis of the Industry Report "
is coming soon. Make sure you're
an NSCA member to receive your
copy. Apply at NSCA.org.
commercialintegrator.com
MAXSAFANIUK/STOCK.ADOBE.COM

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Commercial Integrator May 2023

Table of Contents for the Digital Edition of Commercial Integrator May 2023