By: Kelly Bond, Mergers & Acquisitions
Featuring: Roy Brachfield, N.A.S. Security Systems, Inc.
Running a business can be incredibly rewarding, but it also comes with its share of challenges and stressors, often leading to sleepless nights. This is especially true for security business owners, who operate 24/7 to keep others safe. From managing finances to ensuring customer satisfaction, business owners juggle multiple responsibilities, and the weight of these duties can create significant anxiety. This series highlights different business owners who share what keeps them up at night and how they are navigating these challenges.
This month I spoke with Roy Brachfeld, Owner and Founder of N.A.S. Security Systems, Inc. Founded in 1988, the company serves New York, New Jersey and Pennsylvania and prides themselves on using the highest quality and state-of-art products offering the best solutions for their growing residential and commercial customers.
Roy- what do you find keeps you up at night?
The one thing that keeps me up at night is the cost of doing business. Staying on top of what the cost of doing business in our day-to-day operations has become a much more prevalent concern for me than it was in the past. We’ve always kept a pulse on our ongoing operational income and expenses, but I do not believe we ever really figured out what our day-to-day operation truly costs.
As the price of everything has gone up from parts, labor, trucks and insurance it is more important now than ever to really know what it takes to keep our doors open. We are also dealing with our vendors: software, phones, IT, website(s) and remote services, now being subscription based with a monthly fee. Since the pandemic, the cost of doing business has literally skyrocketed.
The big question is how to keep our companies profitable and remain in business. The easy answer is to just raise prices, cut costs or both, but the true solution is much deeper than that. We all have experienced those sleepless nights worrying if we will make payroll for the week or not.
On top of payroll, we worried about the ability to pay vendors and taxes, too. You get through it hoping that one day, as your organization grows, that this problem, real or perceived, will go away by running the businesses profitably. This returns us to the question of knowing the cost of doing business.
How have you worked to overcome it?
We invested in software that has the ability to give us the metrics we need to make informed financial decisions. While setting up the software to be efficient in these reports we received what I considered to be a “Harvard education”. When it came to labor rates, we were using what we actually paid our technicians per hour with a little extra to cover general benefits. When taking a much deeper dive the number we used was nowhere near what it should have been. What a revelation. Correcting just this one piece made a huge difference in our profitability.
What we learned from this starting point was that we needed to look at every expense and account for covering it in our installation, service and material rates. This sounds very basic but there is so much that goes into figuring this equation out. As we grew, we did have a cushion by using our Recurring Monthly Revenue (RMR) profits to cover expenses, which sometimes dilutes the true cost of doing business. This also led to the question of how much we should be charging for all reoccurring services. We had to look at all sources of income and figure out if what we were charging was correct.
This is where having software that was created specifically for our industry makes a huge impact. To be fair, I do not want to imply that the software is the only answer, but it was a great starting point in giving us the financial knowledge to assist in making decisions which greatly impacts our daily operation.
The other critical piece to knowing the cost of doing business is to have the right people administrating the software who not only have the aptitude to enter information correctly, but also the ability to interpret the information which is being generated. I am really lucky and thankful that I have the right team in place that is proficient in our software and the reports it is capable of generating. This allows them to tell me what we need to be doing differently to stay on our profitability course.
As business owners, we should constantly review all business expenses and eliminate any that are not necessary in day-to-day operation. Another big consideration to make routine audits to ensure the company is getting the best bang for their buck on all goods and services. We should also consider eliminating anything that does not benefit the company whether it has to do with employees or clients of our businesses. Some of the decisions of what to eliminate or trim may not be easy but should show an immediate upside when done.
Improving the bottom line often involves being shrewd in negotiations with your manufacturer and/or distributor partners. Have you been successful negotiating better rates with manufacturers on your frequently purchased equipment?
We were able to successfully negotiate better rates with our distributors because we have multiple branches which gives us more advantageous buying power. We always want our distributors to make a profit so they can remain in business and take care of our product needs. That being said, I see no harm in asking for volume pricing discounts.
Referring again to having a great team to work alongside, they do a fantastic job in reviewing purchase history of products and asking for a discount when they feel we should qualify for it. We also work with great distributors who see the value in our relationship. We always want our relationships to be beneficial to both parties and I do believe those we have are. This is more simplified with direct buying from the manufacturers we do business with. They have set pricing levels based on the dollar amount purchased. The more you buy, the better the pricing. No negotiations are necessary.
How did you approach it with them?
This goes back to relationships. We have been dealing with the same distributors for many years. As we grew as an organization it was easier for us to simply ask for discounted pricing due to the volume we were purchasing. They always were and continue to be open to pricing adjustments based on that volume. The lesson I have learned over the years in which I have been in business is building on the vendor/buyer relationship is crucial. It is the key to staying ahead in this industry.
What advice do you offer other business owners?
We as company owners need to take time out of our busy days and stay updated on our true cost of doing business. This number regularly fluctuates and requires constant adjustments. Although it can be time-consuming to gather this information, the payoff on making sound business decisions to achieve sustainable profitability is invaluable.
Thank you for sharing with us Roy! We appreciate your insight and I’m sure that many other business owners ask themselves the same question. Stay tuned for next month’s article.
About Kelly:
Kelly Bond brings over twenty-five years of industry experience to her clients. Recently inducted into the Security Sales and Integration Hall of Fame in 2024 at ISC West, she currently serves as Partner with Davis Mergers and Acquisitions Group, representing buyers and sellers of Alarm and Integration companies.
About Roy / N.A.S. Security Systems:
Roy is the founder and owner of N.A.S. Security Systems, based in Middletown, NY. Since 1988, N.A.S. Security Systems has been offering innovative security solutions, offering superior service to both their residential and commercial clients. N.A.S. prides themselves on using the highest quality and state-of-art products, allowing them to offer their clients the best systems to meet their needs.