AV Matters
The Stimson Group Newsletter
Nov 2008
Vol 2 Issue 11
In This Issue
Upcoming Events
Trends Survey
Sales Training
Best Practices Series
About The Stimson Group
Quick Links
Welcome Back,

At this writing I personally feel like taking a breather, but there is too much going on to sit on the sidelines.
My email has been lighting up with questions about forecasting and where to find market research. Everyone wants to know what to expect next year. In this month's Best Practices column, I will try to your prime budgeting and forecasting process with some approaches and even a few predictions.

To help you get started, the October Trends Survey was all about the economy. See what your colleagues are saying about their companies' outlook.

I also want to share some thoughts after visiting Moscow for a week for the Integrated Systems Russia show. What an eye-opening experience for a cold war American to visit there for the first time.

Thanks for reading,
 
Tom (TR) Stimson, CTS
My Direct Email
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Roadshow Header Let's Get Together
There's only one Rental & Staging Roadshow left this year and it's in Burbank, CA on December 3rd. The Roadshow is a day of training, seminars, and exhibits presented by the folks at Rental & Staging Systems Magazine - the definitive publication for AV Stagers. The Roadshow is a great opportunity to get some training for the team and for your CTS holders to earn Renewal Units from InfoComm. Learn more and reserve your FREE spot here.

Monthly Business Trends Survey

When the economy sours, it's never business as usual. As consumers we hedge our purchases even as we approach the holidays. The results? Circuit City files Chapter 11 and other retailers are biting their nails. How AV businesses change their capital purchasing habits this coming year? Take our short November Trends Survey and you can download the results at the end of the month.

Take the November Survey

It's been a roller coaster year of economic forecasts. In February we wondered if a recession was already occurring. By June, most AV companies were enjoying their best year in ages. In October, just before the election - it seems the tide has truly begun to turn and many of our readers are feeling the pinch. Read what they had to say in our October Trends Survey.

Download this report.

TR Teaching Increase Your Advantage with Sales Training
Are your ready for 2009? In a down economy it's true that only the strong survive. Give your sales team the edge they need to win business even against low price rivals.

I have taken all my best sales advice and put it into a one-day, kick in the pants sales seminar presented exclusively for your team. We have two programs available: one geared for Stagers and another for Integrators. We'll cover these topics:
  • Business Development 101: Networking, Image, and Relationships
  • Segmenting Customers versus Understanding People
  • Choosing the Right Proposal for Each Opportunity
  • Winning the Price War With A Tighter Scope of Work
  • Tools for Closing the Deal
  • Tips for Sales Managers that Sales Persons Need to Hear
Contact Tom about how to customize this program for your special needs.
Best Practices Series:
2009 Forecasting and Budgeting

If you could be 100% certain how your 2009 revenues would turn out, what would you do to maximize the available revenue? If business was going to be down, would you plan operational adjustments and institute cost controls now? If it was going to be up, would you invest in personnel and new tools now? This is exactly the kinds of questions you are supposed to be asking and answering - in advance - every year. The alternative is to react to the economy after it happens. Business is all about risk; you want to at least be working towards educated risk.

How to Forecast
If anyone could predict the future we'd all be rich. In the AV Industry there iare not many forecasting tools other than gathering data on your own. When I do predictions, I try and get a sense of what each revenue sector will do and adjust my projections by segment, customer, and even project. The best research is in your own networking efforts. Talk to your customers. They are looking to you for ideas about how to save costs - have a few ready.

Another good source for data are business magazines. Read Inc., Fortune, Business 2.0 (my favorite), and The Economist for stories about which strategies big and small corporations are taking. They all have online versions. The more you read, the more informed your opinion. You can also research InfoComm, MPI, IFMA, IAAM, PCMA, NSCA, and other trade groups for their market research reports. What you will find is opinions and past performance of their members. None of these reports can possibly take into account the recent economic changes. I believe that these reports are of limited help in a fast-changing economy, but they do teach you what the right questions are.

Next, look at your historical data. If your company existed in the last recession, what happened to your revenues then? Will this downturn be better or worse? Do this on a month by month and segment by segment basis. What is your historical average for each month? How did each segment react? What happened to lead times and close rates?

How to Budget
Forecasting is all about potential revenue. Budgeting is how you will operate with a given forecast. Don't budget without a forecast and don't forecast without research. When it's time to budget, be realistic. In dire economic times many companies hesitate coming to terms with their future and that will just make the problem worse. On the other hand, if you find that your 2009 doesn't look all that bad - wouldn't that be a great message to send to your employees and suppliers?

A really huge spreadsheet is your best tool for budgeting. Put as many budget assumptions as you can into editable master fields. This will let you run scenarios more easily. Don't neglect to simultaneously calculate cash flows. With bank financing tight in certain markets, you may not have the lines of credit you are used to.

I do recommend that you forecast and budget three scenarios: better, as planned, and worse. In a down year, "better" could be maintaining flat revenues over the previous year. "As planned" could be a 5-10% drop in revenue. "Worse" is well, worse. Armed with three scenarios, start the year with the one in the middle. Plan on a quarterly review and reassessment. If the year looks worse than planned, move to the third budget.

What I Expect in 2009
Rental & Staging
In my opinion, you can expect that 2009 trade shows will be flat on floor space, but down in overall spending as exhibitors cut back on their booths. This will be true for all of 2009 unless there is a huge upswing or downswing in the economy. Conventions will stay booked because canceling is expensive, but they will have lower attendance, lower sponsorship revenue, and will be looking for ways to maximize resources (has anyone compared the cost of printing to using more digital signage?). Corporate events are probably the hardest to estimate, but I anticipate a downturn of 10-15% in the first quarter compared to 2008. Assuming the economy gets some traction (ie: the Dow gets back to 9500-10,000), then the second quarter will see a quick rebound. Having said that, I am hearing that RFP's for Jan-Feb are way up over last year for national stagers. This could be a massive "put it out to bid" effort by buyers or it might be that corporations know they need to have meetings in spite of the economy. Either way, there will be a shake out.

Regional stagers could be the big winner in this mess - if they can prove they are a viable alternative to national stagers. Having the same gear isn't enough. You have to prove to the national buyer that you can react quickly and roll with the punches. Don't lock into logistical plans too early and never let them see you too worried about your profit. The right solutions are rarely easy and never as profitable as the one you had in mind.

Another segment that could prosper in a down economy is turnkey production and staging services. The tighter the budget, the more likely that a single source supplier can win the job. My kudos to all those stagers who have heard my call to add content and design production capabilities to their offering.

Systems Integration
Ongoing projects will save the first half of 2009 for integrators, but the proposal pipeline is already softening. Higher Education channels are in a holding pattern, but the new Presidential administration will likely bring a boost to those projects. Corporate construction projects will scale back or postpone, unless the construction is under way. The structured cabling portion may go on as planned, but the AV finish-out may have some gaps.

The good news is that there are many sound financial institutions that are begging their customers to borrow money. And Green initiatives could lead to more digital signage projects and LEED-driven refurbs. There may also be a new opportunity to renew service agreements - combined with minor upgrades - to squeeze a couple more years out of existing installations. A two to three year recession would be devastating to many integrators, but a six to twelve month downturn might only be a bump in the road.

'Git 'Er Done
My advice is to lock your management team in a room and decide what kind of 2009 you will plan for. Then, write the business plan that works with that forecast. Do this now and then go ahead and revisit your forecast every month if it makes you feel better. There are not many easy choices ahead, but you will make better management decisions if you agree on your business forecast first and get started now.

Share your thoughts, ideas, and successes with your peers. I look forward to your emails.

Comments? Email me.
PresenterAbout Thomas R. Stimson, MBA, CTS

Tom Stimson is celebrating over twenty-five years in the communications technology industry.  As a Consultant, Tom helps companies build smoother operations, focus sales, and increase profit through strategic planning, process improvement, and market research. For more information visit the website.

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