Watching the Store

Charles Molineaux

September 24, 2008

I n today's unsteady economy, security may be a rare commodity, but actually providing security is a field that still has potential, even if the marketplace has become less than secure.

That's how John Adams, president of Atlanta-based security company SecurAmerica, sees it. "The economic picture really has caused us to be more focused and targeted with our growth," he says. "I don't want to say we're throttling back on it, but we want to be more selective about where we get our growth."

In its short life, the privately held SecurAmerica has stood out for its rapid growth since the company was founded in 2004. Providing security guards and concierge services, it has garnered enthusiasm among its some 2,000 employees, and respect from such clients as ChoicePoint, The Hartford, Computer Associates and FedEx.

But lean times in the business world have created unusual cross currents. "We had a number of clients who've said, 'Hey, look, I need to cut a position here and there. I need to pull back a little bit,'" says Adams. On the one hand, he observes, clients are streamlining to save costs, a scenario that can push tight margins to levels that may be too tight.    

"Let's say an account, a customer, has 10 security officers on staff," he says. "There is a fair amount of overhead costs associated with running that account. If all of a sudden, they pull two security officers and say 'We can't afford to keep these two positions anymore,' well, then, it forces us to really spread the costs. Now we've planned on having 10 positions to spread our overhead across, but now we have eight."

Opportunity Knocks
Conversely, Adams admits an unfortunate reality of hard times is that they can increase the need for spending on precisely the kind of service he offers. "Really, overall," he says, "this type of economy can create opportunities for us because employee theft and workplace violence are up. These things can at least keep the picture neutral for us."

Crime trends have certainly brought potential clients knocking. Idle, mostly vacant, businesses largely ignored by burglars in the past have newly become targets of keen interest. "The cost of metals is going up," Adams says. "You have commercial properties that are being stripped of copper and things like that.  So, at the end of the day, it's more cost effective for them to come to us and protect that asset than it is for them to have to repair and replace so they can sell."

Elsewhere, a fully functional company that never required much security before may discover the need if it reduces operations. A facility that runs three shifts, 24-hours a day, and cuts back to only two shifts, can suddenly be vulnerable. "The challenge is that you can't leave that facility totally unattended," warns Adams. "So, they've pulled back production and cut it to two shifts, but now they have to have a security presence on that third shift to make sure the asset is still protected."

SecurAmerica's approach to exploring new opportunities remains cautious. Adams sees ample potential in communities like Buckhead and Midtown as well as along the perimeter for the simple reason that those areas enjoy mass transit service. Much like gasoline prices, it's part of an equation that's risen in importance. 

Securing Margins
Providing security guards is also about getting your employees where they are needed. Straying too far from reliable transit can stretch prices and margins. "As you move up into the other areas that don't have it - the Alpharetta corridor for example - you're a little more selective about the assignments you take on. You have to be able to support wage rates that dictate your employees having their own transportation, fuel costs and everything else. You have to make sure that you have the right assignment that will warrant the right price. Otherwise, you may get that business but you won't be able to staff it. You're going to have service problems as well."
 
Adams believes that success - even prosperity - in lean times has become a matter of careful discipline and organization, but can be achieved. "We have to be very careful with our overhead," he says. "We've had to be extremely careful with pricing strategies to give ourselves room in the event that the customer does cut back. And I've seen situations where we've had to recalibrate in order to be sure that we were still profitable.  You can't price yourself out of the market relative to your competition. So it really requires a much more financially-oriented selling approach that we've ever had in the past."

Still, Adams reports SecurAmerica's growth rate and margins are both holding up so far this year, adding. "It's a balancing act. It really is."

© Mike Laszko | Dreamstime.com

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