No matter how time changes or which organizational fads come and go, one thing remains true: companies continuously strive to turn a profit. To increase your profit margin, you have two choices: increase revenue or decrease costs. Here we discuss what effective security companies are doing to lower costs, streamline processes, and increase their profit margins.
Do You Use Disparate Systems to Run Your Business?
The alarm industry has unique challenges. Many small- to medium-sized security businesses operate as authorized dealers for larger companies, and this requires software solutions that meet varying business needs while allowing for the exchange of data between organizations. Companies that operate independently also manage business processes that can end up in multiple system solutions that function separately from one another. It is common for organizations to have separate systems for:
- Management and Billing Software
- Job Scheduling for Techs
- Invoicing and Accounts Payable
- Customer Relationship Management Tools
- Alarm Monitoring
- Workflow Management
You can’t focus on growing revenue if you have operational bottlenecks, time-intensive functions, and systems and processes that aren’t scalable. Streamlining procedures and running a business efficiently creates more bandwidth for your team and leads to time efficiency and cost improvements. Those things translate into greater profits. Integrating disparate systems into one software solution as a single source of information is a no-brainer in terms of an easy win that accomplishes this goal.
Look at the Numbers
Think about it while you consider the following example. If you cut costs by 5%, your profit margin increases by the same amount, your $100,000 profit becomes $125,000, which is a 25% improvement overall. Without doing anything other than implementing a software solution that increases efficiency and cuts cost by five percent, you see immediate, tangible results.
Company A
| Annual Revenue | Profit Margin | Net Profit |
| $500,000 | 20% | $100,000 |
| $500,000 | 25% | $125,000 |
In many ways, it’s easier to improve your profit margin by cutting costs as opposed to increasing revenue. To increase revenue, you must raise your prices and add new customers. Most times, there is an additional cost for customer acquisition, and the return on that investment is critical to the success of the effort. While increased customer acquisition is necessary, cost-cutting is largely beneficial and sometimes easier to execute. To further illustrate this point, compare the table above, displaying the result of a five percent cost savings, to the table below illustrating a $100,000 increase in revenue.
Company B
| Annual Revenue | Profit Margin | Net Profit |
| $500,000 | 20% | $100,000 |
| $600,000 | 20% | $120,000 |
Operating costs and the cost of customer acquisition can limit the impact on your net profit despite realizing a significant increase in revenue.
How Can Business Management Software Reduce Costs?
In a recent survey of alarm businesses supporting hundreds-to-thousands of customers were asked to estimate their time savings using an industry-specific software solution. In one month’s time, the businesses averaged a time savings of over 50 hours per month. Here’s how:
1. Reduce Average Cost Per Invoice
An autopay solution is an immediate benefit to your company, both in terms of cost per invoice and your company valuation. Creating, monitoring, and pursuing customer invoice payments is time-consuming and labor-intensive. Money can slip through the cracks, and Accounts Receivable staff spend excessive time pursuing balances owed. Alarm billing software with AutoPay functionality streamlines this entire process.
If you move from a manual process to AutoPay, you could save an average of $80 per customer, per year. Further, the value of your customer portfolio multiple increases if the process is automated and consists of mostly AutoPay clients because your monthly recurring revenue (RMR) strengthens.
2. Reduce Payment Processing Fees
Payment processing has become a booming business in and of itself, and this is further complicated by national and global regulations requiring compliance and privacy adherence. A three percent cost to process and collect customer payments eats into your profit margin. An alarm company-specific billing tool can incorporate AutoPay using ACH payment processing, manage card declines, provide 24/7 payment options, and significantly reduce your payment decline rates. It also integrates with your website so that customers can access their accounts from your website, manage, and make payments on their accounts.
3. Increase and Improve Tech Visits
A typical technician call produces an industry-average of $125 in profit. If the efficiency gained from implementing a software solution that results in two additional technician appointments per week, you add a quick $13,000 to your bottom line. How does this functionally work? Using a software solution that includes scheduling, customer lookup, customer contract work orders and more, can reduce tech calls to the office.
Move to a Growth Mindset
Less time spent in operational tasks and systems means more time to strategize and grow. Work ON your business instead of IN your business. Bold Group can show you how we’ve allowed others to do this through our financial and operational management solutions such as AlarmBiller® and SedonaOffice®. Find the right solution to help you today.