6.25.24 – SSI – Rory Russell
Security companies should sell their monitoring arms to concentrate on their core business and avoid the pitfalls of wholesale monitoring.
Industry trends strongly suggest that security companies that run their own wholesale monitoring accounts should consider selling this part of their business.
We believe that security and monitoring are two completely different businesses. That’s why we advise our clients to sell the monitoring arm of their company to concentrate on their core business and avoid the pitfalls wholesale monitoring presents.
Wholesale Monitoring Companies Have an Edge
While it may seem profitable for security firms to hold onto monitoring accounts and maintain that revenue stream, many clients are looking for comprehensive monitoring services that large wholesale monitoring companies provide.
These companies have the experience and resources to offer high-tech security monitoring bundled with a wide range of related services such as risk assessment and rapid incident response.
For security companies, competing with wholesale monitoring firms is an uphill battle even when they are well-positioned in terms of staffing and technology. This industry sector is evolving so quickly that keeping up often becomes a severe drain on budgets, resources, and time.
Rapidly Developing Tech Requires Ongoing Investment
Operating a central monitoring station means heavy investment in information technology and staff who can maintain and run related systems. As technology continues improving by leaps and bounds, companies need to keep pace or risk falling behind the competition.
There’s also a long list of certifications, facility requirements, and third-party services that need to be in place for a central monitoring station to work efficiently.
When the factors that go into managing the technology aspect of a central station are piled on top of the responsibilities associated with successfully operating a security company, the numbers that create a healthy bottom line often don’t add up.
We recommend that owners closely examine whether a sale of the monitoring arm of their business makes fiscal sense.
24/7 Staffing Challenges
Finding reliable employees for security firms, like all trade-related occupations, is highly challenging. Staffing a central monitoring center takes recruiting and human resources-related issues to another level.
Hiring, training, and scheduling reliable staff who can cover a 24/7 year-round schedule in any industry is a huge job. Finding the right central monitoring employees who meet these criteria and can handle alarm signals and calls and deliver excellent customer service isn’t easy, and the process never ends.
These staffing and HR responsibilities make it difficult for security firms to grow. So much attention needs to be paid to this facet of the monitoring side of the business that there are not many resources left in the tank to invest in the core business.
Losing Focus on the Core Business
Security companies already have a lot on their plates ranging from managing inventory to vehicle fleets to B2B and B2B sales that need to be prioritized. That often means when companies also run a central monitoring station, it doesn’t get the proper investment of resources needed to maximize profitability.
This scenario creates a part of the business that’s not operating at a high level, becomes more of a burden than a profit center, and distracts from the core business.
Our experience demonstrates that by selling the central monitoring arm of a security business, owners can concentrate on what they do best – product sales, installation services, and customer care. By refocusing their businesses priorities firms can increase sales, RMR and overall profitability.
Rory Russell is the president and owner of Acquisition & Funding Services.