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B.C. integrator finds its niche

In 2000, Scott Knutsen and Brian Sylvester quit their jobs with a national security integrator and bought a small mom-and-pop alarm company located in the Vancouver suburb of Richmond. Knutsen and Sylvester thought big. Their plan was to take the business, which had gone nowhere under four previous owners, and turn it into a successful independent security integrator that served B.C.'s Lower Mainland.


August 15, 2008
By Peter Caulfield

Topics

Eight years later, Knutsen and Sylvester have largely realized their
dream. Cobra Integrated Systems (CIS) has become one of the largest
independent security integrators not only in the Lower Mainland but in
Western Canada. How Knutsen and Sylvester transformed the small company
should be of interest to anyone who thinks they have a better idea and
is willing to go out on their own and see if it works.

Knutsen’s and Sylvester’s brainwave was that the local market for
medium to large commercial integrated security solutions was not being
served.

“The national companies had tried but failed because they were too big
and couldn’t react quickly enough,” says Knutsen, who is co-CEO and
director of sales and engineering (Sylvester is co-CEO and director of
operations).
One of their first moves was to reduce the company’s customer base by 10 to 15 per cent.

“We kept clients that were profitable and got rid of the ones that were
taking up too much of our time and costing us money,” he says. “Eight
years ago there wasn’t the technology to do remote customer
maintenance. Back then it was labor-intensive and very expensive.”

They also re-located from Richmond to Burnaby, which lies just east of
Vancouver. The new location is closer to the main regional traffic
arteries and gives CIS’s technicians better access to customers
scattered across the sprawling region.

The owners’ strategy paid off immediately. In CIS’s first year of
operation, the company’s revenues fell, but its profits increased.  Two
years later, business really took off.

“By 2002, we began to reap the business from all the little seeds we
had planted at the start,” Knutsen says. “All of our business came from
referrals. We didn’t have to knock on any more doors.”

Soon the client base grew to almost 400. The downside was that the
company was becoming too big for the two founding partners to handle by
themselves. So, in 2003, they hired sales representatives and
administration staff, which enabled CIS to handle its referral base
easily.

Soon Knutsen and Sylvester realized that, if they were to grow beyond
that base, they needed a bigger organization. In 2004, they doubled
their office space to 2500 square feet and hired five more staff,
including a full-time IT person, dispatchers and sales reps to develop
new markets.

In 2006, they decided to replace subcontractors with their own technicians.

“In this business you need the consistency that comes with uniform
rules and practices,” Knutsen says. “It’s hard to do that using
independent subcontractors.”

Today CIS has 1500 clients in Canada and the US. Ninety percent are
BC-based companies, some of which have branches in other parts of North
America. Customers include developers, property managers, retailers,
manufacturers and airports.

CIS is one of only a few independent security integrators in the Lower
Mainland. Knutsen says there are 375 alarm companies, of which only 12
are integrators. Half are local independents like them and the other
half are national majors. The nationals focus on large projects of more
than $500,000, whereas an average CIS installation is $100,000-$500,000.

By any measure, CIS is a very successful company. It has its own fleet
of 10 trucks, 30 employees and a cumulative growth rate since 2000 of
800 percent. But success didn’t come easily.

“There were lots of 80-hour weeks, lots of sacrifices,” Knutsen says.

Nevertheless, success in security integration is not rocket science.

“In the beginning, we found clients by reading the newspapers and by
examining developers’ billboards – just by paying attention,” Knutsen
says. 

Once they found prospects, they didn’t try to sell them right away.

“We sat down with them and asked them what they liked and didn’t like
with the security companies they were doing business with,” he says.
“Whenever they had a complaint, mostly it was ‘failure to deliver.’ “

Knutsen says integrators need to understand what their customers are trying to accomplish.

“If a customer tells you they need to have such-and-such a product, ask
them why,” he says. “Many customers have preconceived notions about
what they need that are incorrect and they sometimes need to be
corrected.”
For the time being CIS sources its products, such as license plate
recognition cameras manufactured by Extreme CCTV (recently purchased by
the security division of Bosch), also located in Burnaby.

In the future, Knutsen says, CIS might also turn its hand to manufacturing some of the products it uses.

Number of employees – 30
How long in business – eight years under present management
Area of operation – Canada and the U.S.; mostly B.C.
Areas served – 100 per cent commercial

Peter Caulfield is a Vancouver-based freelance writer.


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