Hello security and alarm professionals,
If you dream of one day selling your business—and even if you don’t—it’s important to take steps today that’ll pay off down the road. And that means understanding the many ways to boost your company’s valuation.
Below, I share a strategy that’s overlooked by many business owners.
In today’s issue:
Where’s Your Most Predictable Revenue?
The Alarm Company Sales Process
Want to start an alarm company? You need to know how to sell. It’s the difference between early success and early frustrations. That’s what this podcast episode is all about.
Where’s Your Most Predictable Revenue?
Last month, my business partner, Stephen Olmon, connected with Jack Carr to talk about revenue sources, buying vs. building, and a lot more.
While the entire conversation is packed full of tips and guidance, one theme stood out over the rest: your most predictable revenue is already in your customer list.
When Jack asks about organic versus acquisition growth, Stephen doesn’t hesitate. He says the largest driver of organic growth is “just mining our current customers,” and he emphasizes repeatedly: “Go see your customers.”
We book 15 to 20 appointments per week with existing accounts, and every visit converts to 20 to 30 percent net-new revenue. No complicated funnels. No fancy hacks. Just showing up.
For us, predictable growth starts with three truths:
You already have access
You already have trust
You already have momentum
And because of that, the next dollar is always closer than you think.
This is the lesson you must internalize as an operator: before you chase new customers, go deeper with the ones you already have.
A Secret Hiding in Plain Sight
The overview: Most owners underestimate how much a strong service department can increase the value of their business. Buyers do not only look at monitoring revenue or project volume. Private equity groups, family offices, and consolidators specifically evaluate recurring service revenue along with RMR. They want predictable and rateable income, and service is one of the most powerful levers for that. When you build a service department that produces recurring work, stabilizes cash flow, increases retention, and creates more predictable revenue, your business becomes significantly more attractive to people who buy companies.
The details: In this industry there is an overwhelming focus on RMR, but there should also be a strong focus on reoccurring service revenue. Service work, inspections, and repeat small projects are all valuable because they are recurring and predictable.
Buyers care about this because predictability in your revenue is the most attractive thing to a buyer.
Strong service departments also create situations where you can support more technicians than the size of your business might suggest. If a business has more technicians than expected for its revenue size and still maintains strong profitability, buyers see that as very positive because it shows scalability and operational strength.
The opposite is also true. If a four million dollar business only has two technicians, buyers see that as a major concern since additional headcount will be required.
Recurring service revenue also smooths out the troughs in your business. It makes the company more financially stable. The goal is for RMR and service revenue together to cover your entire overhead. When that happens, project work becomes margin additive and the entire financial foundation becomes stronger. Buyers place a higher value on businesses that can cover overhead with predictable revenue streams.
When buyers see recurring service revenue, stable technician capacity, high retention, predictable cash flow, and steady lead production from service, they value the business more highly.
How to start:
Identify how much of your revenue comes from recurring service work. Buyers look specifically at recurring service revenue as well as RMR.
Evaluate technician count relative to your revenue. Businesses that are understaffed are less attractive to buyers, while businesses with more technicians than expected for their size are seen as more valuable when they are profitable.
Track how many leads your service department generates.
Document your service process so revenue becomes predictable and rateable. Buyers value predictability.
Work toward a target where RMR and service revenue cover your entire overhead.
Review where service failures have created cancellations. Most cancellations fall into two buckets. The first is customers moving and the second is service issues. Since the second bucket is preventable, reducing it increases retention which improves valuation.
Prepare clean data around recurring service revenue, technician capacity, and predictable revenue streams. These are the areas that buyers focus on.
Why it matters: Strong service is not only about fixing systems. It is about creating a business that is predictable and stable. When your service department produces recurring revenue, supports a larger technician bench, drives high quality leads into sales, reduces cancellations, and helps cover overhead, buyers view the business as more secure and more valuable.
Your service department does more than keep your customers happy. It also increases your company’s valuation, meaning more money in your pocket when (if) you sell.
Disclosure: Some of the content and links in this newsletter are sponsored or affiliate links, which means we may receive payment or earn a commission if you click through or purchase. However, all opinions expressed are entirely my own.
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