Security Sales & Integration July 2023 - 16

Management
2023 Integrator
Exec Roundtable
say, " By Feb. 1, the prices are going to increase
by 30%. Either you purchase it or you're going
to pay a 30% increase when you're ready for it. "
As a small business, you have to look for lines
of credit then because if your switches are not
coming for 206 days, your other manufacturer
is increasing the price on cameras after 30 days,
how do you do that? How do you balance that?
How do you get the money to be able to purchase
everything and then where do you store
it? With the government, unless you deliver it
to their site and they sign off on it, they're not
going to pay you. You're buying inventory that
is sitting in your warehouse for six months.
You've invested in it, but the government hasn't
invested in it.
Your warranty period starts when you purchase
it, the government expects you to give
a one-year warranty after it finishes. How do
you beat the beast? How do you get ahead of
the game?
I don't want to
be following
manufacturers
anymore and
going where they
think the market
is going. I'm going
to go where I think
the market is
going, and I'm
going to look for
partners that can
go where I want
to go.
- Mike Bradley,
CEO, ECD Systems
Mach: This is a very good point about the cash
flow and credit lines. Add to it what's happening
with inflation and interest rates and that
just provides another negative externality, as
economists like to say, to this whole problem.
We have to secure lines of credit. I just read The
Wall Street Journal talking about the banks pulling
credit plus lines, reducing lending, another
wrinkle into this whole problem.
Bradley: I'll add to the cash thing. Most of us
participated in the government subsidies in the
form of the PPP money and the ERTC. That
solved a lot of balance sheet problems for a
while. We are still seeing the benefits of that
because we're sitting on a lot more cash than we
ever did. Now, how do you manage that cash? It
is one thing to manage a credit line, but another
when you're actually managing cash. I never
faced that problem before. I had to learn how
to balance and move and deal with cash.
Another point is how we raised prices, especially
in the healthcare environment eight times
last year. We are now evaluating our labor pricing
every three months and we'll raise it every
six months at least if not every three months. I
believe we'll be raising prices due to inflation
through the end of this decade. I think that everybody
needs to settle into a process for that.
We're getting our customers used to more consistent
increases. My advice to anybody in any
business is to come up with a new strategy for
16
Security Sales & Integration JULY 2023
how you raise prices, how you communicate
that, and how you show it and demonstrate it
to stay ahead of the curve.
We're not apologizing for pricing anymore. I
will walk away from customers. If they are not
willing to be a partner, then you're not going
to be a customer. That's the way we treat our
business. There are too many other customers
that are willing to work with us and be partners
to have to settle. I'm not in the government
space, but there are choices to be a little selective
about who we do business with and how
we do business with them.
Grover: As for inflation, as the price of materials
goes up the price for labor has to be increased.
But then, as a small business, how do
you fight the bigger companies that have lower
prices because of the volume of purchase getting
them a better price than we do? They've
got their GSA Schedules set at a labor rate that
is not competitive for a small business. We do
our best to get across that our quality of service
and dedicated team is better, but it is a tough
environment.
Ford: If your value proposition is price only,
that's delivering a different quality than I think
those around this table are trying to deliver.
Small businesses can be competitive with large
national integrators even if we don't get product
volume discounts. It's a matter of choosing
contracts that award on terms that you can bid
where you do bring value beyond price. I'm
never going to try to be the lowest price. If I
can't win a contract with what I need to have to
be profitable and well executed, then that's not
the right customer for me.
Mach: Our business is not the lowest-priced
company around, but we provide value and
build relationships. We do the more complicated
integration work that has more room for a
lot of customers.
Right now, there's a number of things piling
on top of each other, and we continuously
have to react. The supply chain is somewhere
behind, but we're in a new reality. We used to
be able to place an order on Monday and have
it in our warehouse on Thursday. Now, the new
normal is somewhere between 30 and 90 days
and so we have to have different conversations.
There's not an instant solution. We're talking
plastic, we're talking all sorts of components.
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Security Sales & Integration July 2023

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