This is not a story about a shrewd businessman getting rich quick, but about a regular guy in the locksmithing industry who discovered a solid niche in the electronic access control industry through study and hard work. Here he shares trade secrets in the hope that it will encourage other locksmiths as they explore their role in the Electronic Access Control market.
Lock Problem Launches New Business
San Diego Certified Master Locksmith Bryan Nicholas was called out to fix a lockset damaged during an integrator’s electric strike installation. The immediate problem was solved with a profitable repair, but Nicholas wondered if the integrator could have saved the client time, money, and embarrassment by having door hardware work done right the first time?
Professional locksmiths frequently see themselves in competition with systems integrators for the electronic access control (EAC) dollar. Nicholas however, sensed the potential for a more productive partnership. Taking time off from current work, the entrepreneur travelled 100 miles to talk with the integrator. They discussed the special expertise each had, and considered whether EAC was destined to be a zero-sum game, or if they could pool their expertise and cooperate for a more efficient solution.
Systems integrators often come from cabling, software, CCTV or burglar alarm backgrounds. They focus on electronic systems technology, but seldom have in-house door hardware or lock installation expertise. Too often, the result is a single solution for every opening – creating unintended building code violations or reliability problems. Integrators seldom understand the mechanics of the hinge, closer and door seal interactions. Discussions of back-check, swing, and latching speeds elicit a blank stare.
The experienced locksmith, on the other hand, has developed in-depth expertise in door hardware, fire codes and door and frame construction. He has the tools and expertise to do this part of the project very well.
Nicholas grew up in the Seattle area, working in his dad’s locksmithing and door hardware businesses where he learned the trade. His father was active in the Northwest Locksmith’s Association and frequent training participant. Son Bryan also had an inquisitive mind and explored emerging technologies, products and applications. In 1979, Bryan moved his family to San Diego area where he worked in the industry. Nicholas launched his own business in1986, specializing in electromechanical hardware installation for EAC systems integrators. The company would eventually be known as Door Systems, Inc. http://thedoorsystems.com
The electronic access control industry was in its infancy at that time, with electric strikes and magnetic locks as the primary electronic door control methods. Although electrified exit devices were commonly specified by hardware professionals in new construction, they were not well understood by systems integrators.
Building The Brand
After meeting with the EAC integrator, Nicholas began subcontracting electromechanical hardware installation. He soon began to explore serving other integrators as well. When existing locksmithing clients purchased EAC systems, Bryan would contact the integrator and offer to handle the door hardware installation problems for them.
It didn’t take long for integrators in the area to realize that Nicholas and DSI could furnish and install electromechanical hardware faster, cheaper, and better than they could. Other benefits accrued. Customers were happier with more sophisticated and reliable hardware solutions. DSI also provided the integrator a smooth project, hardware installations met code, and they were relieved of pesky callbacks.
Hazard egress, fire, and ADA codes were all foreign languages to most integrators. Now, Nicholas is a frequent member of the end-user’s project planning meetings, where he is the resident expert on doors, hardware, seals, gaskets, closers, electromechanical systems and associated building codes.
As Nicholas began calling on other integrators, he gradually built relationships with many of the players in the San Diego area market. “It was important to give consistent pricing to all, so they knew we weren’t favoring one over another,” Nicholas related. Equitable treatment and taking ownership of the door helped Door Systems, Inc. become a trusted partner to both integrators and end users. Today, DSI handles about 1,000 doors per year.
An important key to maintaining the integrator’s trust was maintaining ownership of the door – even after DSI was paid. Clients learned that Bryan and his well-trained staff stood behind their work.
Another critical piece of the puzzle was keeping up with door and hardware developments. One example has been the use of the Inductive Coupling Power Transfer. This wireless power transfer technology from Securitron® allows the installer to power electrified door hardware with no moving power transfer wires. Keeping current with innovations in electrified hardware, closers, power transfer, continuous hinges, specialized seals, and power door operators helps DSI add value for the integrator and his client. Nichols learned that added value is necessary for improved margins.
Programmed-Logic Control
DSI has developed another related area of expertise – programmed-logic control. Clean rooms, research labs, and high-security applications often require sophisticated interlock controls. This process essentially makes two functions inter-dependent. In EAC applications, it might release an electric strike or lock before a power door opener can activate. In the case of an airlock or a mantrap, it would require one door to be secured before the next can open.
Clean rooms, for instance, pose especially challenging requirements. Since building codes prohibit locking people into a room (except in certain rare cases), unimpeded “hazard egress” is required. The doors must also open and close in proper sequence, and do so quickly so the internal pressure is not defeated. Holding a door open too long can lead to considerable economic loss.
In new construction, the contract hardware house, electrical contractor, security system integrator, and the building control system supplier are all competing to specify, sell and install the locking, and access control hardware. They can often work at cross-purposes. HVAC control providers for instance, like to include clean room access and egress management in their central building-control system. Unfortunately, the first software revision, or circuit board change tends to defeat or “crash” the carefully programmed door control process.
DSI’s local programmed-logic controllers effectively manage interlocks, and warn employees and management that a critical door is not yet secure. “We can’t lock people in,” Nicholas explained, “but we can torture them with a loud horn and flashing strobe,” he chuckled.
Clients have found the DSI programmed-logic controllers to be extremely reliable with zero down-time. “This is stand-alone, and self-running. “We manage the doors, power operators, card access, and system violations, with outputs to building controls and alarm systems,” Nicholas related.
“Staying on top of the market is important,” Nicholas states. “We constantly look for applications and products we don’t currently use,” he asserted. “Your client may ask for a special application and you need to be ready with a solution.”
Growing Pains
Until the organization reached a critical mass, Bryan found that he was working for the employees. Entrepreneurs who have grown their businesses, know that these are the hardest years. In addition to his expertise in the lock and door hardware trades, there were new challenges and skills to learn each year. Finance and cash flow, hiring, employee relations, insurance, federal and state employee laws, legal termination procedures, project planning and management, contract law, taxes, mountains of regulations, and how to plan, delegate, and follow-up, all became necessary skills.
Bryan found it impossible to be expert in each of these fields, but learned to be good enough to keep moving on. One key he found was to surround himself with capable people he could trust. Treating the staff fairly and with respect has helped DSI keep turnover low and morale high.
Finance
One of the biggest challenges for DSI was moving from a largely cash-on-delivery basis where they were paid daily or at the end of a job, to a contract basis where payment could be considerably delayed. Although contracts might call for progress payments, this often depended on events DSI did not control. Project delays and owner payment delays were always possible. The lead general contractor or even the integrator could have technical, regulatory or cash flow problems. Large upfront materials purchases and labor needed to be financed. Projects could go on for some time, with holdbacks and payments stretching weeks or even many months.
And of course, there is the ever-present specter of a financial failure of an end-user, leaving the company desperately short of cash. Every business owner soon learns that not having the cash to pay suppliers, employees, or taxes will lead to certain failure. He “bets the farm” every day, and works long hours to save it. Nicholas found that major corporations, public schools or colleges, and government agencies tended to be more stable and attractive markets, when available.
Many small business owners handle cash-flow issues by slowing-up payments to suppliers until they get cut off, then milking the next supplier until cut off there, and so on. At first, this may seem like a shrewd or clever strategy. As many have learned the hard way, the consequences are loss of trust among suppliers, and clients, and severely limited growth.
Nicholas took a longer view of the business, knowing he would need good banking relationships and solid supplier lines of credit to carry the costs of labor and materials for weeks or possibly even months. “We found that larger projects had many hidden unknowns.” Nicholas noted. “After a year of project negotiations, an old quote with thin margins just wouldn’t be adequate,” he confided.
Longer project cycle times can create cash flow problems that destroy thin margins. “Pricing must be adequate to cover hidden costs, and carry the costs of engineering, labor and materials during the long process,” Nichols explained.
From his father’s door hardware business experience, Nicholas also knew the construction industry routinely protects itself (to some extent) with the “mechanic’s lien.” The lien encumbers title to the project until waived upon final payment. Liens however, are often not filed among trusted parties with whom a supplier or contractor has had long experience (and who pays his bills). This was another benefit of being reliable, Nicholas knew.
Funding Growth
As they grew, one of the biggest challenges DSI faced was moving from external to internally -financed growth. Building a business requires an investment in people, tools and equipment, trucks, materials, office and storage space, advertising, data and communications equipment, and a host of other costs. It can easily run up a cost of $80,000 to $100,000 to add a truck and service man before his productivity begins to pay the investment back. A bank line-of-credit or slowing supplier payments tend to be the standard ways to finance growth. Of course, any finance cost eats into revenue and delays the return on investment.
Realizing that the best route to organic growth was low debt, Nicholas was determined, to fund expansion with improved pre-tax margins whenever possible. By building adequate margins into goods and services, DSI was generally able to grow without borrowing, even when clients stretched-out payments. As with most small businesses, Bryan‘s wife Kim has been instrumental in cash flow management. “We only required bank credit briefly during the 2009 crash, when we took on a major V. A. Hospital project,” Nicholas related. “Good supplier relationships and communication were very important during that time,” he asserted.
“A major key to improving profitability,” Nicholas observed, “was to develop a reputation for knowledgeable solutions and consistent quality work,” he said. Integrators learned that DSI installations seldom required callbacks. When a problem did occur, DSI owned the job and made it right. Integrators also found that a lower bid from someone else usually was more costly in the long run, since they had to hire DSI to correct the problems.
Building blocks to growth were: doing it right the first time, making it right if something was amiss, paying suppliers on time, constantly learning about new materials and methods, focusing on the integrator’s needs and helping him do his job efficiently.
Every Job is Custom
Nothing in the EAC business is routine. Every project ‑ and nearly every door ‑ has unique conditions and problems. Planning and executing quality solutions for each opening required attention to detail. “These details are critical to a quality job, but are just not part of a systems integrator’s background,” Nicholas declared.
When a Securitron ICPT PowerJump® was installed in a removable mullion, housings needed to be fabricated for the frame and the mullion. A 3-D printer was used to make housings for both sides. The end result gave an extremely professional appearance and allowed accurate fit in a durable assembly.
Since a great many of the projects involve retrofitting existing hardware, the locksmith and door hardware experience really shines. “During the course of a given project, we may be called upon to provide electrified locks, electric strikes, exit devices, closers, continuous hinges, seals and a host of other details,” Nicholas related.
In one application, a number of aluminum framed glass doors required electrified locks. Installing PowerJump® Inductive Current Power Transfer at the top of each door allowed easy wiring drops through the aluminum frames to the lockset.
Often, an end-user has what seems as an impossible problem. An all-glass wall-and-door assembly at a fitness facility presented one such problem. A wireless keypad on a glass door gives clients prompt access to the gym.
Fast Response
Another key to success has been the ability to respond quickly to an integrator’s or end-user’s needs. “Since the end user often requires same or next-day service on any repairs, having the equipment in stock is critical,” Nicholas explained. “Standardized hardware and voltage helps us manage inventory.”
Over the course of several years, DSI has been able to build a solid inventory of electrified locks, strikes, exit devices, power supplies, removable mullions, closers, hinges, and associated hardware. “Having commonly used materials on the shelf has become a real asset,” Nicholas states. “It has greatly reduced the uncertainty of long lead times, and really helps us keep projects on schedule,” he asserted.
Conclusion
Little did Bryan Nicholas know that the customer’s damaged lockset would lead to the discovery of a major hidden market for the experienced CML. Rather than competing with the integrator on larger projects, DSI has gained remarkable success as a valued partner. It has allowed him to effectively mine the narrow, but deep rich vein of this growing market.
Author’s note: When discussing this story with a major integrator who does national and international projects, he advised that they constantly look for local locksmiths like DSI, who are skilled at installing electromechanical door hardware.
Cameron Sharpe, CPP worked in marketing for Caterpillar and Honeywell before serving 25-years with Best Lock Corporation in New Jersey and Arizona. Contact him at [email protected]
