SDM: How did your company’s 2023 recurring monthly revenue (RMR) change compared with 2022? And how do you expect 2024 RMR will change compared with 2023?

Stearns: We had 100 percent increase in RMR this year. We are only 6 years old, and we made a huge expansion in 2021, and we’re starting to realize the fruits of that labor. So that is where a lot of this came from. And that’s really associated with cloud services. More than anything, monitoring accounts grew by like 1,000 percent, which is a lot.

Someone at Watchman Security said, “If it’s not reoccurring, it’s not occurring.” I really like that saying he coined. But everything we do has some sort of RMR associated with it. So if we have 50 percent growth in revenue, we should have at least 50 percent growth on RMR as well.

Bates: We’re having a good year. The larger we get, though, the harder it is to move that needle. As we reported on the SDM 100, we hit the $1 million mark in RMR last year. So that was a banner time for us. We typically will not even sell anything unless it does have RMR attached to it. But we’re probably trending 5 to 6 percent growth before it’s all said done this year.

Botten: Being a bit more of a mature, traditional alarm integrator, we are really investing in our managed services and focus on recurring revenue. For many years recurring revenue to us was either a service contract on the fire alarm side of the equation, or traditional monitoring. We were a little late to the game based on our diversity. So this year has been an investment and a focus on getting our agreement process set up for people that we’re doing manage services for. So as far as a percentage growth, I don’t have that available for you. But it has been a huge focus for us as an investment, not only in paper, but people and in processes so that we can survive. Because if we don’t, we won’t survive in this current change in the market. So to us, it’s an investment in 2023, so that we can grow again in 2024 on this side.

We are focusing on three fronts. Obviously cloud native for access control or cloud access control and hosted access control would be one portion. Health monitoring either through VMS or access control partners, or third party, that’s item two. And probably most importantly, is lumping it all together into an agreement that is actually enforceable — like a monitoring contract. Up to that point, we really didn’t have it. It was more organic.

As far as the process, it’s been quite painful. We went through a whole managed services educational class through PSA. We’re retooling our salesforce. But I think we’re keenly aware that if we don’t do this we won’t be in business for 43 years or 44 more years. So that’s how critical it is to the future of LVC Companies.

Simpson: We saw pretty steady growth in RMR. It’s an initiative and a focus we’ve had over the last five or so years. Still, there are some challenges in getting people to move over to some of those more SaaS-based products and solutions. But again, it has been steady growth. You know, as time goes on and bigger pipes are available out there for our customers to get videos straight up to the cloud, that will certainly help in that in that aspect. But, moving into 2024, we have a lot of really good momentum there, a lot of really exciting things. I actually expect to see significant growth on our end.

We also see most new startups are expecting more of a cloud and SaaS-type experience from their solutions. So they’re not coming in looking for on-prem like people have done historically, So it does seem like a lot of the newer customers we are bringing on are hitting in that area.

SDM: What is one factor you feel will most significantly affect sales of security systems by your company this year?

Simpson: Certainly I think what’s going on in Washington and the upcoming elections will impact our customers and their appetite for spend. Interest rates, as the government continues to make changes there, money gets more expensive and that impacts our customers and their ability to get money. Their ability to have access to cheap money is certainly going to be a major impact.the same direction at the same time and we will all end up where we want to be.”

Stearns: I think our biggest concern right now is competition from MSPs, and then manufacturers selling direct to businesses. Self-install is a really big deal, so that’s another thing we’re trying to get behind right now. MSPs are selling direct to schools and for a lot of municipalities and places that have their own IT department, it’s plug and play. We’re noticing MSPs selling access control more and more. So that’s an interesting trend that we’re trying to stay ahead of and beat the curve on. We’re just competing more and more with MSPs and less and less with just integrators these days. So for us, that’s our biggest concern. But there are a lot of lot of fish in the sea. New York is a big state, and we cover all of it.

I don’t think finding customers necessarily is our biggest concern. It’s really just that hidden competition and just more and more people doing self-installs. So how do we realign our go-to-market strategy, our installation strategy, or our selling strategy to align with customers’ expectations.

Bates: Listening to the team talking here, one thing with us is we have for the last 6 or 7 years grown from one office to five offices. The focus all those years for us has been just grow, grow, grow. So our theme this next year is focus on the basics, and we are working to make sure that we have the best operation in place. We’ve ironed out a lot of the kinks. So now we are doing a lot of things to really prepare for stronger growth going forward. Included in that would be increasing our installations, providing best service and monitoring services and managed services to our customers. We are investing more in our sales team. So even if it is a slow economic year, or there’s a downturn next year, it’s up to us to be successful.

Botten: We’re really looking to align our internal platforms with our manufacturing partners, with the intent that we’re going to meet what we expect the customers’ needs to be, and their new appetites for cloud. We are going to utilize our expertise, and make it a simple process and work on that relationship to mitigate our worries about the economy.

As much as the customers think they know, we still need to steer them in the right direction. And it’s never been more important than it is now to be the voice of reason and the trusted expert as we navigate away from traditional security offerings and go to cloud, cloud native and manage services. So for us, it’s an internal alignment to get the basics handled and take care of our customer. That’s the biggest impact we see in sales for 2024.

SDM: What are the biggest growth opportunities you see for your company in 2024?

Botten: For us, it’s going to be that managed service, traditional service and cloud offerings that are in alignment with our initiatives right for a recurring revenue, which leads to the long term sustainability and viability of our organization.

Simpson: Data centers; certainly we see a ton of demand there. Also mobile solutions like trailers, and really anything on the mobile side, mobile security solutions that are out there. With our managed services as well, I think we will continue to see more and more demand for the kind of system as a service where they would like to get in with just an opex-type expenditure. So we continue to look for solutions around that because we see the demand continues to grow there, and I think there’s a huge opportunity on that front.

Bates: Video is the future of the industry. And then, obviously, we’ve been strong on managed access for a very long time and I expect that to continue. But our focus is on video now.

Stearns: I see a lot of synergy with what the other guys are saying here. But I think what’s interesting is we’re trying to chop away at hardware as a service, going back to that kind of OpEx expenditure instead of the CapEx. So how do we do that in a palatable way. I think, our differentiator as integrators, what we do best is that single pane of glass, hardware as a service, and really offering just proactive surveillance systems with really intelligent access control systems that communicate together.

And that just make everybody’s lives easier. I think globally, everybody’s having staff issues, or at least in North America. So when we think about managed services our pitch on that, if you will, is staff augmentation. So now, both from the IT departments and the facility departments between our door hardware division, integration division, and our cyber division, we can really augment these places that just don’t have the budgets to have full staffs to properly manage and implement an access control system and a surveillance system to the level where they start seeing a significant ROI.

SDM: What do you view as your company’s greatest competition in 2024?

Stearns: It’s easy today to get involved in international sales from our homes. The same is true in the software markets. Upstate New York is usually 5 to 10 years behind the rest of the world, at least 5 years behind the rest of the country, especially the metropolitan areas. But now a lot of these companies are popping up, and we have all these hidden competitors that we didn’t know about just stepping into our neighborhoods and taking and cherry picking these large projects. Not to mention you’ve got the big cats that are usually not that hard to compete with, but they still try to go after staff or customers, so they are still a concern. But there’s just more competition coming from every direction. I think it’s not one specific competitor. It’s the fact that anybody can sell all of these hosted systems from anywhere in the world, and then just find somebody local to throw in the wire and the controller and program it remotely. So, whereas maybe 20 years ago you open up a phone book and see you’ve got five or 10 or 15 competitors. Now, you don’t know how many you have or where they’re going to come from.

Botten: I would say it’s not a traditional competitor, but competition with the economy. What is the economy going to do, I think, is the hidden competitor for us is as we refocus and retool. How do we offset if the economy doesn’t perform as we would like it to. And then that limits our ability to add new opportunities. That is what we identified as a competitor for 2024.

Simpson: I’d have to agree a little bit. I don’t think I would have ever talked this way before going through the last few years of having such a dramatic impact that was imposed by situations as well as the government. But if government can stay out of the way and just let us run our businesses the way we want to, and make those decisions and stop toying with interest rates that would certainly help.

Referencing just some of the other companies out there, we’re getting to the size where we’ll drive this spec, or we’ll be the one in the front in the driver’s seat on an opportunity. But then have other people jump in that are willing to drop their price to bare bones, pricing out into margins that aren’t sustainable just to win the business. So we do see that. I see them as the ankle biters that are out there that just want to come in and win because they want to get in that position. I’m not overly concerned on any of those, but those are where I hit.

Bates: I view ourselves as our biggest competition. And I think everything that’s been mentioned so far on this question that we’ve talked about does matter and can impact us. But it is incumbent upon us not to get distracted by things that don’t really matter, that don’t further the ball in providing the best customer service, providing the best installations, staying on top of technology, and keeping my team trained as best possible.

So I think if I don’t do a good job staying on top of those things, that’s where I’m going to start falling victim to my competition. In my almost 29 years now running this business, I’ve seen different things come through that when I was much younger, used to scare the living daylights out of me, like I don’t know how we’re going get past XYZ with these competitors or different changes in the economy or in the market. But we kept our heads down, worked hard and you know what? We have grown every single year, including during the great recession, during the shutdown, and what have you. So as far as competitors out there, I don’t want to be cavalier, but we have a very big piece of the pie, and as much as I would love to own the entire pie, I need to be happy with carving out our piece of the pie and making sure that I’m running our business well.

SDM: How has the whole workforce conundrum impacted your business? And what are you to attract and retain employees?

Simpson: You know, we’ve really weathered it quite well. We really haven’t lost many people. And we’ve actually had a few instances where we’ve lost a few people for a dollar or two to here and there who end up coming back when they realize what the alternatives are. So I think some of the things that we’ve done to keep and maintain really good talent is we’ve always really gone overboard on our benefits. We’ve tried to create an environment where people can really stay and create a career. They can have retirement plans, exceptional healthcare, everything they may need. And then there are a lot of other perks that go along with that, which is being at Stone certainly include company culture. Our employees have a lot of ownership over what they do and enjoy where they come to work day to day. So I think, due to that, we’ve just really weathered it. So we’re feeling good about the talent pool right now.

Bates: We’re in five different locations right now and three have done really well, but two have had bigger hits with employees that we lost early on during the great resignation. But I feel like it’s been getting better lately. We’re almost fully staffed. I have, I think, three open technical positions, and another support position. So I feel like we’re doing pretty good by getting our seats filled.

We have learned to be much more intentional. And how we go about this is to be much more assertive and aggressive in in our approach — not like closing tactics aggressive, but just aggressive in in our overall recruitment. We do referrals, and some of our best seem to be people that are recommended by other employees. They know the type of company we are, and they wouldn’t recommend their friends and family if they didn’t like working here. But I think also having a good culture, having good benefits and then also having advancement opportunities are important. And it sounds like all of us are growing so I think we all just have opportunities of fast growing company.

Botten: There’s been pretty high level of competition with our competitors trying to attract our existing workforce. And there’s some desperation, I think, across the industry. Because we’re union, they’re trying to put packages together to incentivize people to leave our friendly shores and go to a new island. And some of it has worked out, and some of it hasn’t. We have lost some employees. There is a sense of desperation for qualified technical talent.

We have a really strong track record of longevity within the organization. Obviously, we’re a union contractor so our wages and benefit packages are strong. And we try to really connect with the operations team, project management, sales and the technical field staff about what our vision is going forward to try to retain talent.

Stearns: One thing that is really big for us is hiring our core values. What I always say is we hire on eulogy values, not resume values. That’s really important to me, in fact, because resumes are typically marketing anyway. A good conversation is going to tell me what I need to know. Obviously, if you are trying to find a trained technician that’s a very technical set of questions.

I actually like hiring outside of the industry and just thinking about the alchemy of how to turn their skills into useful skills for Chimera and what we do. I wouldn’t have a good resume if you asked for it. I didn’t go to college. I barely graduated high school. But I bought about six businesses and I’m doing all right.

So really having a family environment is one of our core values. You are family. If you are here, you are not going to suffer, as much as we can alleviate that suffering, and we’re all in it together. So row the same boat in the same direction at the same time, and we’ll all end up where we want to be. And then, most importantly, we work to live. We don’t live to work, and that’s a really, really important part of our culture. We just want everybody to live their best lives. And then part of that is, you have got to work to do it. So let’s figure out a way to make that palatable and fun and profitable.