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 The
Mark Smith Column
SMITH PROTECTIVE SERVICES,
INC.
THE SECURITY BUSINESS IN TEXAS
The silver lining
If you are in the security business in the state of Texas during this recession, the first thing you should do is get on your knees and thank the Lord for it. We are in one of the best recession proof businesses in a state with one of the best economies on the planet.
With that being said, you still have to watch your receivables more closely. This means different strategies for different clients. For most of your current clients who pay regularly at 30-45 day intervals, the extra vigilance will take the form of simply reviewing your receivables for any unusual patterns that may appear. You will also have customers cutting back so they can save as much money as possible, but this is a good thing for you, as these are the ones who will pay you.
The clients that you really need to watch closely are those that want your services because they are not paying their previous security vendor(s).
One strategy to minimize your receivables risk with some of your questionable clients is to require first and last month’s billing up front. While some potential customers may balk at this arrangement, others, such as real estate management companies, will understand since they use the same strategy with their tenants.
And while we are talking about real estate management companies, I want to mention the apartment business in Texas as one sector that is doing very well. In fact, one large client of mine reports an occupancy rate of 98%. (It would be 100% except for the 2% that got evicted for non-payment.)
Remember, unemployment statistics in the news are an average of the entire
country. Much of the bad news on unemployment has not yet hit Texas and may not hit Texas as hard. Texas has had a slight increase in unemployment, but that is not necessarily bad news for the security industry. Some of the profit lost to customers cutting back on their service may be made up in lower overtime costs. Higher unemployment makes it somewhat easier to hire more qualified people. The national news has scared people into not changing jobs for the moment, reducing turnover and allowing you to save money on training and uniforms.
Granted, there will be a lot of belt-tightening yet to come. But I am optimistic. Three-fourths of the job creation is occurring in Texas. There are more Fortune 500 companies in Texas than in any other state. Competition is keen for the business that is out there, but in the security business we already know how to operate with thin margins and lean, mean organizations. Current wisdom holds that even if all the workers are laid off and the building is empty, they’ll most likely need someone to guard the empty building and be the last one there to turn out the lights.
So my advice to you is: watch your receivables, and God bless Texas.
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