The Secret to Growing a Security Company Fast!

Welcome to Entry & Exit — the Owned and Operated series for builders in security & life-safety. Hosts Stephen Olmon and Collin Trimble break down how to make your company sale-ready long before you sell: architecting a team that’s bigger than the owner, shifting from one-time installs to recurring revenue, and building a repeatable sales + service engine that PE buyers love. From SDR/AE/SE role design to skills-based routing and an estimation playbook, this is a practical blueprint for predictable growth and a stronger exit.

✨ What You’ll Learn

• Design for exit early: reduce key-man risk, diversify revenue, and make the business run without you.
• RMR as the growth engine: why we sell cloud/subscription solutions by default—and when to walk from non-subscription deals.
• Cash vs. contracts (hybrid): trading some upfront GP for higher enterprise value via contracted recurring revenue.
• Sales org that scales: split roles (SDR → AE → Solutions Engineer) so AEs spend time in front of customers.

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 Stephen Olmon
Collin Trimble


Owned and Operated

Owned and Operated

New Episodes Every Wednesday!

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Chapters

• 0:44 Introduction to Entry and Exit
• 2:44 The Journey into the Security and Fire Alarm Industry
• 23:04 Mastering Cross-Sell and Upsell Strategies
• 26:07 Operational Efficiency and Estimation Insights
• 32:00 Building a Scalable Sales Team and Financial Oversight

Transcript

E&E EP 3 Transcript

Stephen Olmon: [00:00:00] If you're wanting to start to build towards an exit, you have to start to architect a team that 

Collin Trimble: is bigger than yourself. We want our salespeople to do the thing that they do best. What they're excellent at is being in front of the customer. And the other thing that we did is we got extremely serious about recurring revenue.

I like to joke of recurring revenues to eighth Wonder of the world if you're not. Selling technology today with recurring revenue, I would say get serious about that as quick as possible. So if for some reason a customer's telling me they're not okay with subscriptions or whatever, maybe they're not the fit for us, 

Stephen Olmon: and the trade is cash.

The most expensive customer is the next new one, and the least expensive is retainment.

Collin Trimble: Welcome to Entry and Exit. Uh, my name's Colin. This is my co-host Steven. Uh, we are here to unpack the security and fire alarm industry piece by piece. We wish we had a resource like this when we were getting into the industry and trying to [00:01:00] figure out how to scale a security and fire alarm business. Uh, so we said, Hey, let's do it ourself.

Let's talk through the industry, how to get in, what to look for, how to scale and build your business, and then what do people look like, look for when they're trying to buy your business. 

Stephen Olmon: Yeah, that's right. And so we, we called it entry and exit. It's kind of a, a double meaning, obviously from a security perspective, securing a building and entering and exiting that, but also us entering the market and someday in some way, shape or form, I think we'll exit.

And we've been acquiring people who are exiting. And so all of that led to entry and exit. 

Collin Trimble: That's right. We have had the opportunity to purchase several different companies of various different sizes, but also, uh, have gotten to walk along a lot of friends that have sold their businesses and seen the different types of buyers that have been interested in their business and what they look for, um, which has [00:02:00] really informed, uh, our kind of thought process on what is it that we should be doing today.

To prepare ourselves for some type of exit in the future. Yeah. What are those things? I think a big mistake a lot of operators make is they wait till 12 months before they're ready to sell, before they get their business ready to sell. And I think we should be starting on that today and build those operational efficiencies from day one.

So we're gonna talk about that. We're gonna jump in and talk more about how to scale and how to grow. We've obviously not done an exit. Uh, we'll tell you what we do know. We'll tell you what we've seen with our friends. Um, but we've done a whole bunch of entry. We've purchased a lot of businesses. Yeah.

And we've, uh, been able to grow pretty successfully. 

Stephen Olmon: I think. Let's, let's scoot back and talk about our start. And, you know, you obviously had some background in the industry and I did not, and, you know, you got on a whiteboard and went after it explaining why I should. [00:03:00] Really respect and value this industry and be interested in acquiring.

And so I think almost go back to that whiteboard and for people that aren't familiar, like why is this industry so attractive? Why are you so fired up about it? No pun intended. Uh, 'cause we do fire alarms. Uh, dad joke and 'cause you's got 

Collin Trimble: a and 'cause you've got a fire going on behind your head or you did.

I 

Stephen Olmon: do. Every, every six or seven little rotations. You get a little fireplace back there. It's fun. Yeah, it's great. For those of you that are just listening. I've got a little screen in the background with, uh, a little fireplace. So, um, so yeah, take it away. I mean, just kind of unpack what you did for me all those years ago.

Um, and maybe some background, you know, at Bvo on the manufacturing side too. 

Collin Trimble: Yeah, absolutely. I, I had an interesting kind of, uh, entry if you will, into the industry. Um, I worked for a manufacturer, actually one of our manufacturers at Alarm Masters today. It's a software company. They were really the first cloud software company in the physical security space.[00:04:00] 

And I was a channel sales rep. I started as a rep, moved up into management, um, and my whole job was to meet with. Independent security operators to enable them and help them sell more of my product. Uh, what ended up happening is I ended up building a really tight relationship with a lot of these owners, um, and getting to know a lot about their business and, and some of them.

Some of them were really cool and like, would let me understand the, the intimacy of their business, like their books and their employee struggles and mm-hmm. Uh, you know, how they are thinking about exiting their business. And so that was a really great perspective and what I found when I was doing this as it, and this was in my mid to late twenties mm-hmm.

I found a lot of guys that were not doing the traditional things that I had seen from other businesses in terms of digital marketing and outbound sales. High end technology and they were extremely successful. Um, these were not [00:05:00] sophisticated operators. Many of them were from the field that were just working in the industry and providing a great service at a fair price.

They were incredibly successful. So, um, I ended up doing some of the things in my career and then I ended up becoming an entrepreneur and. There are many days that Steven could tell you about where I get in front of a whiteboard and I just, if you get me on a whiteboard, I'm gonna be there for a minute.

And we were together talking about one of our other businesses actually, and I said, man, I got this. I got this crazy idea. We gotta talk about this. Uh, and the idea was, I really think we need to buy a business in the physical security space. And uh, I think Steven, at the time, and you can tell me if I'm wrong, like I think you thought door to door sales, a DT vivid, that was sort of your.

Perception. 

Stephen Olmon: Yeah. Of the alarm industry. Yeah. I did not have a depth of understanding on the commercial side, which our business today is roughly 80% commercial and, [00:06:00] you know, love our residential customers, but we definitely are, are focused on the commercial side. But I didn't really have a lot of understanding, just super basics, right?

I mean, I've, everyone's seen some sort of keypad to access a door, an alarm system. I get the idea of a fire alarm. Sure. But I didn't really understand the commercial side of the business. And you're right. Like when you were so fired up, I'm like, isn't this industry already completely swallowed up by Mega Corp, you know, ADTs and, you know, that sort of thing.

Yeah. So, um, you, you did, you started to kind of educate me and, you know, explain to me why I should be, you know, at least 50% as excited as you were. 

Collin Trimble: Yeah. Well, I think we, we got there, we got there to the 50% this, we got there. I mean, I think maybe a little more, um, I'll say this though, when, uh, when I was early in my entrepreneur career, I had a lot of friends that were buying businesses.

This was whatever, six, seven years ago. And they were buying businesses and I, and I thought, oh man, that's so [00:07:00] interesting. I'd never thought about buying a business. Uh, my dad was an entrepreneur. He started a business. Mm-hmm. I saw how hard that was. Never really thought about buying a mature business and, um.

I saw some, some friends pur purchasing businesses and I remember them saying, man, uh, 10% of the business has recurring revenue every month, 10%. And they're, you know, some of our other buddies would react like, oh my gosh, you have 10% recurring revenue of your total. That's insane. Mm-hmm. And I remember thinking, well, the security industry is like 50 to 60% of their revenue is re, is recurring.

And the other whatever, 30 or 40% is reoccurring in the form of. Service and maintenance work, right? And so the light bulb kind of went off in my head and we sat in front of a whiteboard and I painted this picture for Steven about why I think the physical security industry is so strong. And, and a lot of it had to do with the three different types of revenue, which would be recurring RMR recurring monthly revenue.

That would be the [00:08:00] subscriptions, the monitoring, the fire alarm monitoring that comes in the reoccurring. Revenue, which would be service inspections. These are the smaller ticket kind of day-to-day run rate revenue. And then the larger stuff, which would be project revenue. The other thing that I was really aware in this industry is the switching cost is pretty high, right?

So if you, if you have a plumber that comes out to your business, um, to, to service something in your business, yeah, you know, you may have a good experience, but there's no real reason you couldn't switch to another plumber the next time you have an issue. Uh, there's noth there's no real switching costs.

To do that. Uh, so that was really appetizing to us because there is such a high switching cost in the security and particularly in the fire alarm industry. Uh, and then, and then another thing that we really liked was just the barrier to entry. Um, you have to have the right type of licensing and experience.

To get into the industry, uh, that's becoming harder even now, uh, which, you know, good for us. [00:09:00] Um, right. And, um, so the barriers to entry also kind of played a, played a part in it. Um, but I was really psyched up about this idea that you purchase customers on a valuation of their recurring monthly revenue.

Um, and most of these customers will say 90% of them stay with you. 'cause of the switching cost is so high. And so the typical multiples in this industry are between the low thirties and the upper thirties. So that's really like three years. So effectively, if you keep that customer for three years and you don't have them spend another dime with you in any type of other revenue, you're gonna make that revenue back, uh, on the valuation within three years.

Uh, and so that was. That was really intriguing to me. That kind of opened my eyes a lot to how you could scale this industry. Um, and then the last thing that I really got excited about was, man, there's more than one scope of work. If you're an electrician, you're selling electrician services. Um, in this industry, we've really got five different [00:10:00] scopes of work that we can sell to our customers.

And this is technology. So this, this technology is evolving as quickly as. Your iPhone or your laptop and, and think about how many iPhones you've had in the last 10 years. Three or four iPhones potentially for those super users, you know, one new one every single year. And so, uh, I, that kind of intrigued me too.

'cause I was thinking, okay, well if we're gonna upgrade, we're our technology every few years and there's five scopes of work, surely they're doing something every couple years. And, and I was right. The, the stat is every 1.5 years. There's a security life safety technology purchase. So that was the stuff we talked about on the whiteboard that I got.

Yeah. Hyped about. 

Stephen Olmon: Yeah. I think the, it's like the, the profile of this industry hits on a lot of things that just the general searcher community, um, is after. Right? So there's moat on the license [00:11:00] side. Um. That was exciting to me, and, and I didn't fully appreciate that until after we had acquired the first business.

Like, I, I didn't fully understand how advantageous that is. And then, and, and you hear that with in HVAC and, you know, some other, uh, industries, home service especially, you know, the, the, the licensure side kind of insulates you to a degree. You know, in roofing you can just go, like spin up a new roofing company and there's not.

Much to prevent a thousand competitors in your market, right? So that was exciting. We both came from software sales backgrounds. We both understood the value of recurring revenue. And, um, you know, I, I like to joke of recurring revenues. The eighth wonder of the world makes me sleep well at night. Um. Then you're right.

Constant upgrade and upsell opportunities. And so all these different [00:12:00] things, it's almost like, have you seen like where they'll put together like the best football player in the NFL and they take like the, the legs of Lamar Jackson and like the arm of Josh Allen, you know, from my football fans. You can geek out with me, the 

Collin Trimble: elusiveness of Johnny Manzel, if you will.

Stephen Olmon: Of course. Absolutely. Yeah. Uh, we're not a and m Homers at all. No, no, no, no. And so. It was like these different traits of different businesses where just one of those things was kind of the desirable trait of the business. But this industry had several of those, so I, I did get pretty excited pretty quickly.

Collin Trimble: Yeah, it's pretty, it's pretty interesting too because one of the thing that we, I, I think we talked about is, uh, when we looked around at, at the time. The businesses that were already in the industry now are peers. There was not a large emphasis on organic sales in terms of digital marketing. Mm-hmm. Uh, robust sales process, [00:13:00] um, you know, high impact technology.

Those things were just not really there. In fact, many of the operators that I had spent time with, if they had a salesperson, it was a singular salesperson, and there was no sales process. There was no real marketing. That salesperson was, uh, sort of a unicorn in terms of they had to be able to prospect, they had to be able to go out and find their own leads, do their own estimates.

And so there was sort of this immature, um, organic growth strategy in the industry. Yeah. And I thought, man, any amount of digital marketing or sales process that we implement is gonna reap benefit even if we don't go, you know, all the way up to what some of these other industries are doing. Anything that we do is, is really gonna be a net ad.

So I think that was also attractive to us. Yeah, Steven and I both have kind of a, a, a digital marketing and sales background. Uh, so that's the thing that we get really excited about is how do we pull those levers [00:14:00] to grow businesses. And I think we've seen a lot of that fruit since buying ALARM Masters.

Stephen Olmon: Yeah. I mean, what we walked into was. My sales strategy is I pick up the phone, my marketing strategy is I have none except maybe I sponsor, what was it? Um, something at like the city level. Like, 

Collin Trimble: oh yeah. 

Stephen Olmon: Um, I can't remember. Well, we did the, 

Collin Trimble: they did the, like the uh, local Texas Gulf Coast Alarm Association thing.

That's 

Stephen Olmon: right. Okay. That's what it was. And then, and then from a technology perspective, it was like using this brutal legacy software platform. That caused more pain than it helped. Hmm. So our specific initial acquisition, I mean, all of those things across the board were painful realities that we walked into, but all opportunistic over the last few years.

Collin Trimble: Well, and I mean, to the credit of the owner that we purchased Alarm Master, he had some extremely loyal customers. 

Stephen Olmon: [00:15:00] He did. So 

Collin Trimble: despite the fact. That he was, you know, had no technology, no sales strategy. I, I remember, I remember the first week we bought the business and he said, yeah, I don't, I don't have a pipeline or CRM, obviously I don't even have a spreadsheet.

My rule of thumb is when I send a proposal to a customer, I never follow up with them because I don't wanna be desperate. If they want to do work with us, they'll call me. I never follow up with opportunities. And that was. Staggering to me, uh, as a, as a sales guy, I was so desperate all the time for deals I couldn't imagine not following up on deals.

So, and, and honestly to his credit, he, he was growing modestly. Modestly, yeah. Year over year. And he had customers that loved working with him and his and his wife and 

Stephen Olmon: Yeah. 

Collin Trimble: Um, that, you know, some employees that have been around for decades. So it's not like all was lost, but, uh, we certainly had a different perspective.

Stephen Olmon: Yeah. Yeah, that's right. So, so then really over the [00:16:00] last, you know, two and a half years we've really gone down this journey of scaling up the business and, you know, in that, in that first six to 12 months, I think the thing that was. Uh, the most evident was the RMR growth, like the recurring revenue side, which really came organically.

We, it took a little while on the technology side. It took a while to get the right people in seat on the sales side, but the initial kind of bump, I mean, and actually, you know, you were really involved in that, um, early on. Was the kind of organic sales side in, in growing the RMR by nearly 50% in, in the first 12 months.

So, you know, I think we should share some of that. 

Collin Trimble: Yeah. I, you know, it's funny, like we didn't come in and, and do a whole, I mean, in the first six months we really didn't come in and do a whole bunch of. F impactful changes. We didn't, [00:17:00] I don't, did we even do the website in the first six months? I'm not even sure if we even redid the website.

We certainly weren't running ads or any type of digital marketing strategy. The sales person was me. Uh, I was also the project manager and the president and the, and the bookkeeper and all the things. 

Stephen Olmon: Yeah. 

Collin Trimble: Janitor. Um, the janitor. Yeah, exactly. Um, so there, it wasn't like in day one we were. Um, rolling out a tremendous number of transformational changes in the business.

Uh, what we were doing was just the small stuff that I think mattered a whole lot. Um, so that was calling existing customers that had a, a, a large spend with us to just meet with them. So I remember in my first six months, I made it a goal to go visit our kind of top 25 customers in terms of volume and just put a face to a name.

And over half of those, um, visits resulted in pipeline, which. Was the seed that has now flourished into an orchard in our business in terms of [00:18:00] our sales strategy. Yeah. Um, but we really, I mean, we really weren't doing anything. I mean, we didn't do a lot on the technology side. We were in the first six months, uh, really just trying to focus on closing every single thing that came in the door.

And the other thing that we did is we got extremely serious about recurring revenue and, um, the way that looked for us. Was, we would sell technology in this industry. Obviously you could sell technology, uh, that has no recurring revenue attached to it, right? And that's what the, the prior owner was selling a lot of.

Um, and so we, we started to only sell technology that had recurring revenue attached to it. Um, and, and that, that really, that saw some pretty significant growth for us because every sale now. Had a little bit of recurring revenue that was accompanied by it, and we got so serious about it that I basically put my foot down and said, Hey, I'm not even really interested in selling a product that [00:19:00] doesn't have RMR attached to it.

Yeah. So if for some reason a customer's telling me they're not okay with subscriptions or whatever, maybe they're not the fit for us, and that's how serious we were. And I'll say this, like I think that was an advantage to us. I think there's a lot of operators out there. That have owned their business for 20 years and they really wanna scale and get serious about recurring revenue.

But, but the thought of trying to put the effort behind doing something new and just selling and going a hundred percent all in on recurring revenue technology is daunting. Uh, how do you quote it? How do you bill for it? How do you, whatever. I mean, Steven, how many times have we met with owners that said, man, two or three years ago, we got serious about recurring revenue and only started selling product with recurring revenue attached to it.

And we have seen. Two x growth year over year. So, so if, if you're not selling technology today with recurring revenue, man, I would, I would say get serious about that as quick as possible. Reach out to us. We'd love to help [00:20:00] with that. 

Stephen Olmon: Yeah. And the trade is cash. That's right. Right. Because people.

Historically not selling, you know, like recurring cloud solutions or things like that are selling much larger upfront one-time jobs. Mm-hmm. And they're getting a pretty healthy gross profit on that. And they're taking that cash to the bank and that feels good. Mm-hmm. But that is not as valuable from an enterprise value if you're thinking about selling in the future.

Both looking back at historical financials and just in real time, like that's just not as valuable as building up that recurring revenue. It's almost like the, the software industry, you know, went away from these big massive implementations. Um, these big massive implementation fees over the last couple decades and even from an enterprise software perspective heavily shifted to recurring revenue.

That's what's happened here. That's right. And it's far more valuable to. Build a business [00:21:00] predicated on recurring revenue versus cash from install. Um, and so that's, you know, and, and we do both, and I think that's an important point to make is we do take somewhat of a hybrid approach at this point to kind of balance that out.

Collin Trimble: Yeah. And there, and there is options for that, right? So there is ways to take a hybrid approach. Um, but you're right, if, if I could sell a $10,000 camera system with no recurring revenue, that that may look like a. $7,000 camera system with a hundred bucks of re of recurring revenue every month. And so, you know, over 10 years I'm gonna be super happy about the trade that I made.

But there is some short term pain that's associated with that. You also have to get really comfortable, um, educating your customers on the value of cloud subscriptions. There is for sure some subscription fatigue in this world. Yeah. Um, I feel it. I mean, we feel it in our own business, right? Um, and so you [00:22:00] have to help educate the customer on why they should choose a cloud-based product.

And honestly, it's not just lip service. It really does mutually align you with the customer. It is a better product. It is more secure. It, it is better from a total cost of ownership perspective to the customer, right? So you gotta get some reps in there to really, uh, not fold the first time your customer says, well, I don't really wanna pay a subscription.

It's like, okay, talk to me about that. You know? Yeah. Explain to me why, why is that, uh, you know, what do you think the alternative is and kind of shape that narrative for them. So you gonna have to get a little comfortable with that. You gotta get some at bats. It's not like day one. I would say I definitely had a leg up because I was coming from a business that was the first cloud business or cloud manufacturing security industry.

And so that was the number one objection I got every single day was I don't wanna pay subscription. So I got super comfortable, right. With that, uh, objection handling. Um, but it, I think it just [00:23:00] takes at bats, I think it just takes reps getting better at it. 

Stephen Olmon: Yeah. And then one of the other things that we focused on, both in that first six to 12 months and holistically is cross sell, upsell.

And that was a major thesis for us because when we looked and, and it's still true to this day, we're improving and, you know, we like preach. Go see your customers. Yeah. You know, your, your existing customers paying you every single month or quarter a year is the, the easiest next revenue. And so we saw a book of accounts that often only had one, you know, one line of service and mm-hmm You know, when we have four or five different things that are core, especially on the commercial side that we can sell.

We found a lot of low hanging fruit. 

Collin Trimble: Yeah. It was like every time I'd go visit a customer, [00:24:00] uh, one of three things would come up. They would either want to buy something, Hey, while you're here, can you look at my cameras? They had just bought something. Oh yeah, some. Do y'all do cameras? Yeah. Yeah. We just bought Wish, wish I would've known, just spent $20,000 on a new camera system or number three.

And I think people get discouraged about this, but they shouldn't. Uh, we'd get a frustrated customer. Oh man, our billing hasn't been right for six months. It's really annoying and um, that is equally as valuable because if you can turn a frustration into resolution, you get win, you get goodwill, you establish some kind of connection point with your customer that then you can follow up on.

Every customer interaction is gonna get you closer to some type of sales. So if, if the more times you are interacting with that customer. You're getting closer to a sale. But here's the reality, it's actually more impactful when it's proactive reach out versus reactive. If the only time your customer is calling you is to update their billing information or to [00:25:00] call in a service call or whatever to get your certificate of insurance, uh, you're not, you're not really differentiating yourself.

You're not really driving a lot of value. So we are trying to, one of the mottos in our business is we don't want. Uh, the only time that a customer hears from us is when we send them their invoice, right? That's, that's a mistake. We want our customers to hear from us when we're calling on them to introduce ourself, and so that's a huge part of our strategy, is go talk to your existing customers, even if it has been, I mean, literally we reached out to some customers that said, I got my alarm system 25 years ago and have not talked to a soul.

From Alarm Masters in 25 years. Great to see ya. And we got to know these customers and they ended up, you know, either wanting to buy something then, or, you know, giving us some really valuable information. So I would just man, double down on that. I would say, yeah, go all in and we could probably spend a whole episode and we probably will on strategies, uh, [00:26:00] to go generate, you know, pipeline and, and, and projects from your existing account base.

Stephen Olmon: So, you know, these are. Um, these are all kind of positives, growth oriented, but at the same time, one of the things that we've done is we have found waste where maybe we had waste or as we started running the business, things that kind of got away from us. You know, like overtime is like great example where.

We just weren't really managing it necessarily proactively or holding people accountable as much as we should. You know, we, again, we came from a heavy sales background, and so some of those more operational items slipped a bit at times, and so there's a few a few things that we found, you know, estimation, you know, just places where you can lose margin quickly if you don't kinda have your eye on the ball.

Collin Trimble: Yeah, I, let me get out my, uh, my book, my tome of all operational mistakes that we made and have, have continued to try to fix. [00:27:00] Um, you know, overtime's a big one, keeping track of your overtime and it's, it, it cuts both ways. By the way, by saying, and we learned this lesson early, is, is by eliminating a hundred percent of overtime you actually pull guys off of jobs that if they would just wrap that job up in 30 or 45 more minutes, it would be better than them having to come back out.

So yes, you have to kinda hold that with a little bit of an open hand. Um, and you gotta create a process for escalation and make sure that whoever is approving that is actually taking a hard look at that request to understand what it is. Uh, man, I'll tell you another one is we live our life on service.

We love service work here at Alarm Masters. It is, uh, the lifeblood of our business. It's how we win a lot of new customers. Um, and so what that means is we've got guys on in trucks on the road, a lot, all over Houston and. We have not historically, and we're actually still working on this today, have not had a great strategy on what I would call route and scheduling optimization, finding, not just how do we put the guys, [00:28:00] uh, in the right geographic areas to limit time and mileage between appointments.

Uh, also how do we increase center of appointments and also how do we do skills based routing? So, man, in this industry, it's, you know, there's. Thousands, quite literally, maybe tens of thousands of different manufacturers. We work with a subset of hundreds of different systems, and not every guy is going to be great at every system.

So what we have found is do the exercise to identify what guys are good at what systems. Yeah. And try to route them to those individual appointments so that they can be more efficient. Uh, if, if I can finish an appointment. An hour and a half versus three hours 'cause I've got the right guy. Um, that enables me to fit in another appointment on the schedule.

And it also makes my customer happy because then I'm not there for three hours. Um, and that's a win for [00:29:00] everybody. Customers are generally not super psyched when you're there for eight hours and then the next time the issue pops up, you got another guy, he's there for two hours and it's like, wait a second.

Why was Bill able to do it in two and it took you eight? That's an uncomfortable conversation to have. Um, and so there's a lot of operational efficiency that you have to take a lot, a hard look at. Um, and Steven's right? We are not the operations guys. We are the sales and marketing and growth guys. Um, and so we've learned a lot and I'll, I'll say this, uh, credit to the industry man.

Shout out to the industry. The operators in this industry. They're great. Like we have met obviously hundreds. Of different operators across the United States and we e everyone is collaborative and has been great to share. Like, Hey, here's how we handle things operationally. Uh, yeah, here's what we do.

Here's some kind of the battle scars. Here's the pitfalls, avoid this and that. So we've learned a lot just by [00:30:00] staying curious. Um, but yeah, there's a lot of operational, operational things to keep an eye on. And then, and then even, how about this? Even I wouldn't, maybe this isn't operational, but estimation.

Man, you can, you can win and lose. You can win and lose big time on a job if you don't estimate that. Right. And I don't even mean, uh, you could win the job and still lose. Right? Like, uh, I think anybody here would rather have, uh, would rather not have an, uh, an unprofitable project. It'd probably better for them to just not have had that project to begin with.

So dialing in your estimation. I would say that's one of the areas we've gotten really tight on that I did not have experience in at all prior to walking in the industry. And I spent a significant amount of time, um, doing the estimates and then looking at them after the job was closed to see how profitable were we and where were the pitfalls and who needs to look at what.

Um, and, and you know, we can talk more about it on another time, but we actually, um. Fully built kind of a center of [00:31:00] excellence in our business, uh, where we have a few employees that all they do is estimates and they follow what we call the estimation playbook that has a whole bunch of rules and um, kind of heuristics about how to do estimates.

And anytime they want to go outside those bounds, they have to get approval. Uh, 

Stephen Olmon: yeah. 

Collin Trimble: And so that's really protected us pretty significantly. 

Stephen Olmon: That's extremely important. This industry, it's also. Transferable to, you know, any type of contractor, many industries, you know, you're, um, doing estimates that may have some subjectivity to them and building in some margin.

And, uh, yeah, there's just a, a level of prudence in doing that, in a way that doesn't end up. You know, kind of kicking in the pants later. And so we, yeah, and we, we had a few of those. 

Collin Trimble: Good guy kicked a lot in the pants. I'll say this, this is [00:32:00] industry agnostic. This is something that I've seen in what I'm gonna call service based industries in general, uh, particularly in B2B i, I see this more business to business commercial sales.

Um, businesses and operators expect their sales person that they hire. To be a unicorn and to be able to do all of the things, right? Mm-hmm. So they expect them to be able to prospect, to find leads, to convert and nurture those leads to to start a sales cycle, to be able to solution and design the system, to be able to sell that system, to be able to do the estimate, to be able to do the demo for the software, to be able to present that pricing in a way that's effective.

To hand that off to project management, to ensure that there's. Collections and the project is staying at a gross profit. Man, the whole industry, pretty much except for us, uh, bases their sales comp on gross profit dollars. And I would say that's a mistake. You want [00:33:00] your salesperson focused on top line and you want your operations department focused on, um.

Their gross profit. And I think there's some guardrails you have to put into place to protect, to make sure your salesperson's not doing something otherwise. But what we have really found, and, and this is really something that Steven and I, I mean, correct me if I'm wrong, found from our enterprise selling days is.

When you get into some of these larger enterprise selling motions, they've got a different sales person for every stage or segment of the sales process. So they have, yeah, inside sales in the form of a, a sales development rep or A BDR doing the prospecting and lead generation. Then you've got account executives that are kind of running it mid cycle.

You've got solution engineers that are doing a lot of the design and solutioning. And the demoing. And then you've got, you know, first level sales managers who are helping present the pricing or making sure things are getting competitive. They're aligning with the executives and the customer. Um, so we've really tried to implement that in our own business.

And what we say is we want our salespeople to do the thing that they [00:34:00] do best. Yeah. So we hire salespeople that are not great. At Solution design, they're maybe okay at cold calling. Uh, but what they're excellent at is being in front of the customer. When they're in front of the customer, they make the customer feel comfortable.

They ask great questions. They're consultative, they're caring, they're empathetic, they're organized. And then we find SDR sales development reps. That are aggressive and direct and numbers driven and competitive and really wanna set a lot of appointments, then we find solution engineers that are, you know, we've got profiles for all of these individual roles to enable our sales team to be able to scale.

Because ultimately, if you can scale that sales team, um, you know, you kind of get the dollar in $4 out thing. And I think universally in the service industry, you, you just don't see that a lot. It's very. You know, sit, we would call full cycle sales person. Right. And I think that's tough. I think you're gonna get capped out.

Stephen Olmon: Yeah. And that's [00:35:00] really part of the issue with becoming a business that is valuable when you build a team. Where, you know, we see a lot of owners in this industry that are doing three jobs. Mm. And they're working crazy hours. And they do sometimes. So a lot of times one of those three jobs is they are the salesperson, right.

They are the estimation department and they are overseeing That's right. You know, uh, all projects. And so if you're wanting to start to build towards an exit, there's several in, in this industry. Specifically, there are several different markers that are going to translate value. One of those is building a team that can continue to function without you.

You know, especially for people that are going to sell and walk away. Many, uh, many sellers in this industry stay on at least for a period of time, 1, 2, 3 [00:36:00] years. But you have to start to architect a team that is bigger than yourself and. Along with that, you know, we, we talked about it earlier, but this shift in mindset from cash to RMR is massive.

That's another significant driver. Um. Then, you know, also kind of diving back into just the reoccurring revenue element, because it's more than just contracted recurring revenue. It is the full load of reoccurring revenue coming from your customer base, especially when you go up market that a lot of these private equity groups, um, or national strategics are looking at more than just your RMR.

Collin Trimble: Yeah, I think, I think that. Getting a strategy for developing service revenue also is really important. That's another one where folks in the industry say, yeah, just. Service. What do you mean? I don't advertise service. I mean, [00:37:00] just people call me and I pick up the phone and the best operators in the market, they just answer and they're able to get out on site within two to three days.

I would, I would argue that we need to have a growth strategy for service, just like we do for organic installation or project work, right? So, uh, how do you do that? And, and we can spend a lot of time on that, but one, one way that we do that is we do proactive reach out to our customers. So. Monitoring stations send you trouble signals.

A lot of people don't do anything with those unless it's a failure to communicate. Um, and we will, we will reach out to our customers even if they have had a false alarm. So something like, I think the stats like 78% of LAR alarms that go off or false alarms. And so a lot of people ignore those. A lot of alarm companies ignore those.

Um, don't do anything with them 'cause they assume they're a false alarm. We send a personalized note every single time. Uh, it does a couple things. One, if it is a true burglar alarm, like we wanna check in with the customer, make sure everything's okay. Uh, but if it's a false [00:38:00] alarm, uh, it shows that we care.

But also what happens is we start to establish a pattern and say, Hey, this is your third or fourth false alarm. Like, is there, can we, do we do something? Do you need to get a different system? Do we need to change process or technology to try to, to try to fix that problem? Um, and so that develops.

Proactive service calls. We also get, especially if they're on cloud-based technology, you get health reports, this many cameras are offline or whatever. Um, and so then you can go back to the customer and, and try to help them, Hey, your camera's been down twice in the last month. Like, can we help with that?

So I think developing a, um, scalable channel for service is just as important. Um, and, and I think that you're right. Buyers, particularly private equity buyers care a lot about that. There's a great sales book out there called Predictable Revenue. It's basically our Bible here at Alarm Masters. And, um, that's, that is all, uh, private equity companies really want.

That's [00:39:00] really what all buyers of security businesses want, is they wanna say, Hey, if you did $5 million last year, how do we know you're gonna do $5 million this year? A big red flag would be you have a single customer that's 50% of your revenue. Well, that's really scary. So that would be revenue concentration.

So we would wanna break that up. Uh, another big, uh, uh, you know, kind of yellow flag would be, oh, you have one sales guy that drives all of the revenue for your business. What happens when that sales guy or gal leaves the business? Yeah, you know, we have some type of key man risk that, again, key man risk is not just owner risk.

A lot of times it is, but it can also be key employees and, and they'll look operationally. Oh, you've got one operations person that the whole business runs through and that guy or gal is working 55 hours a week. You know, so key man risk I think is, can permeate all through the organization. And so whenever we are looking, but also [00:40:00] whenever private equity companies are looking.

They're looking at those things. They're looking at revenue concentration, they're looking at key man risk. They're looking at repeatable revenue. How do we find, uh, ways to generate more repeatable revenue and predictable, rev predictable revenue? And, and I think that that's gonna drive a lot of value.

Stephen Olmon: Yeah. Also looking at attrition. You know, try and trying to find, you know, companies that are single digit, you know, annualized attrition and you know, that are retaining because the. The most expensive customer is the next new one. Yeah. You know, and, and the least expensive is retainment. So, um, that's, yeah, that's a good summation of some of the things that are really driving value in the market right now.

Um, so I think, you know, to kind of wrap things up, let's talk maybe a couple points each on entering this market. Like we talk about growing and then exiting and so on, on the entry side. I think you have to know what you [00:41:00] want. Mm-hmm. Are you, are you wanting if, if you're interested in participating in this market, you know, whether you're a family office that's has some thesis or you were like us and your younger searcher type, like do you want to go traditional alarm?

Are you interested in that residential path? Are you more interested? Maybe you have a background in gc, the GC world and you wanna go ahead to construction. RFP land? Mm-hmm. You have to really know what you're after because there's actually quite a bit of variability in this space. 

Collin Trimble: Yeah. I would say they're almost like different businesses, right?

I mean, like, I would say that the way that they go to market, the way they staff, the way they think about finance financing is all very different. Mm-hmm. We've actually just. Being in the industry and trying to find good businesses to buy, have had an opportunity to. Meet with owners that kind of have all three of those types.

We've met with folks that are really residential heavy. We've looked at folks that are [00:42:00] really construction heavy or what we'd say ground up heavy. Uh, and, and there are, truthfully, there are pros and cons to all of those different types or flavors of security or, you know, what we'd say, life safety businesses.

Mm-hmm. Um, I think, you know, the, the hokey phrase, the, you know, the, the niches and the riches. Like you, you can find. A lot of money when you can figure out your niche. I think figuring that out upon entry is gonna be the most important thing. Um, yep. And if you, if you don't have a clear path for that and how you think you're gonna scale, like one of the things that Steven and I did is we mapped it out 10 years forward.

So we said, Hey, this is the type of business we wanna buy and here's how we wanna evolve and grow that business. It wasn't magical. It was a business plan is ultimately, but we just spent time mapping it forward out 10 years. And so I would, I would agree with Steven that you gotta kind of find what you're.

Niche is gonna be and really double down on that and, and not waiver. It's easy to waiver and say, man, I can't find a deal [00:43:00] right now. Maybe I'll just uh, be willing to settle on this other type of business. Don't do that. 'cause if you're, if you're, if you don't know what you're doing, if you think you're buying an alarm business and you go in and you try to buy a, a ground up security business, those are truly to two totally different business.

Like it, it would be even challenging for me to go buy a business that's just ground up right now, even with having the experience I have. 'cause it's just so different from what we do and what we're we're used to. So yeah, I think Steven's right, it's just finding, finding that entry point and making sure you know what you want.

Stephen Olmon: Yeah. And then kind of in the middle on the growth side, we've already kind of talked about it, but to, to kinda restate. A heavier focus on recurring revenue. Um, a repeatable sales process. Um, o oversight on ops and estimation, um, that you can measure because you, you can't improve something if you can't measure, measure it, preach.

Um, [00:44:00] yeah. And then, um, I think, you know, also. Engaging your existing customers and mining them for opportunities and, and really going after the cross sell, upsell, using that repeatable sales process, you know, is gonna drive a ton of growth. 

Collin Trimble: Yeah, I would, I would just double down on what you're saying about you can't improve what you can't measure, and that starts with technology.

Um. I think what happens is these, these, a lot of these operators think, man, I'm gonna continue to grow year over year, but I don't really want to change anything, so I'm just gonna throw more salespeople at the problem and hope I'm gonna grow. And it's just, you've gotta take a holistic approach. Like if your business, if, if you're committed to scale, which you have to decide, there are operators out there that are not committed to scale, right?

Yeah. So if you're committed to scale, you've gotta be equally as committed to change and failure. Because you're going to implement technology and hire salespeople and hire [00:45:00] operational people, and they're not gonna work out. Yeah. And you're gonna roll out processes that you think are brilliant and they're not brilliant and nobody cares about them, and they, they're not good.

And they, so you've gotta get comfortable and you've gotta set a culture internally of being willing to adapt to change. And that's such a, I don't know, like corporate thing. Like, whoa, we love change. It's like, no, it's just true. It's just true. Like if, if mm-hmm. If you've been doing something for 20 years.

You want to scale hiring that sales. There's no magic bullet. It's not, there's not like a secret solution. It's all the things all the time. It's operational changes, it's technology improvements, it's uh, sales and marketing spend increase. And as you pull all the different levers and you start to figure out what's important and what's working, um, then you can really start to direct those dollars and those investment dollars into the places that are gonna drive the most amount of growth.

Stephen Olmon: I agree. And, and a lot of those things are gonna equate to a really strong exit. One last thing that we really haven't touched on, which may sound obvious, but [00:46:00] we've seen on many occasions not be dialed is financial oversight. Having really clean books and if you are going to go try to march towards some significant exit, you have to have really strong financials, uh, that are clear, that are organized.

That you, you yourselves can, um, learn from and act on. And so if you're driving blind, that probably is going to equate to. Exit as well, that's not as significant as you might hope. And so that's another element I think that's important. You know, as, as someone in this industry looks towards the future is, you know, you're, you're gonna get grilled in due diligence.

Yeah. You know, and, and so that's just a, a part of the reality. And so, um, yeah, I think that, that, that's a good, um, kind of good recap on, on all the different elements. 

Collin Trimble: I would say on the financial piece, don't leave money on the [00:47:00] table because your books aren't clean. Yeah. If, if you are getting, you should not be surprised about the valuation of your business.

When you get your first LOI, by, by the way, you, you actually don't have to have an understanding you that you don't have to wait for an L loi, your first LOI, or first offer to know what your business is worth. There's a tremendous amount of resources out there. Get educated, but it starts with just getting your financial house in order.

Uh, and spending money on that, unfortunately. Mm-hmm. You, you cannot do it all yourself. Um, so throwing more of your own self at that problem is probably not the answer. Um, and, and having to spend, you know, cost center dollars, you're probably not gonna see that back in a, in a short period of time. So, yeah, I agree.

Very important. Yeah. 

Stephen Olmon: Awesome. Well, um, I'm looking forward to, you know, keeping this running and we have some upcoming episodes that are gonna be fun. We're gonna dive more into specifics on, uh, sales and marketing, um, some of those strategies. I know that you will get geeked out on that. Um, heck yeah. We You're ready.

We'll, we'll talk more, [00:48:00] you know, I think. Entire episodes on pipeline gen and what we've done from our international team. Like, there's just several different things that I think that will be, uh, really exciting to unpack. And so, um, thanks for listening and, uh, if you've enjoyed it, like and subscribe.