Home integrator to market retail, installation concept

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Sunday, December 1, 2002

HOUSTON - A holding company here with a structured cabling division has launched a home security monitoring service and is looking at bundling its home installation and other residential product manufacturing divisions into a national retail and installation model over the next five years.
SpectraSource Inc., through its Connect Source Communications division, is now offering a branded residential monitoring service called Watchdog Surveillance by partnering with local and regional builders in Texas. At press time, Connect Source, which became licensed to install security systems earlier this fall, had about 50 homeowners signed up for the service, a number that company officials expected to bring on only by the end of the year. The company contracts with a central station in the Houston area for its monitoring.

William Casey, division general manager of Connect Source, said both the monitoring and the security installations were a natural add on to the divisions structured cabling operations, which garner about $1.5 million annually.

"Nine times out of 10 we are allowed to get with the homeowner right at closing, which opens up a big door of revenue to pick up that monitoring right up front," Casey said. "We've definitely got a unique opportunity."

With about 12 technicians and six sales people, Connect Source is an integral part of the SpectraSource concept, including the company's four divisions: ceilings fans, which include Gulf Coast Fan & Light and Jacksonville Ceiling Fan Company, Light Source and Hardware Source and structured cabling with Connect Source. 

Together, SpectraSource steps foot into about 20,000 homes per year, said Charles Sheffield, president and chief executive officer of SpectraSource.

"We took several companies and put them together and now we are starting to cross market different products so we can utilize the same builder base across the board," Sheffield said.

Using the various divisions and a new showroom/warehousing concept the company has developed in its 25,000 square foot location, SpectraSource hopes to expand to 25 cities in about a five-year period. The company's plans have been delayed somewhat by the state of the stock market, Sheffield said.

"If the market doesn't turn by next year, we'll probably move into one city at a time…on a cash flow basis," he said.

Rather than expand organically, SpectraSource will be looking for lighting and other retail showrooms to acquire and convert to the SpectraSource concept. Likely first markets include Atlanta and Phoenix.

"With the showroom being a walk-in situation, homeowners will come in the showroom to work on their selections…and a lot of times will go well beyond their builder's allowance," Sheffield said. The upselling opportunities also extend into the company's monitoring services, which Sheffield said could double or triple SpectraSource's net profit that it gets per home compared with other products that are installed.

"Even at five sales a day, which we think we'll be easily able to eclipse within a year or so, the potential returns are tremendous," he said. The company expects to reach anywhere between 500 and 1,000 accounts over the next year.