I am strongly interested in getting into the Home Theater/Home Automation business here in Chicago. I have 12 years experience in Fortune 100 Information Techology shops doing things from network admistration and design to operations management and project management. While I make a decent living I am at the point in my life where I want to build something and have more contol over my future. I currently work full-time for the company that "Brings good things to life" and I attend graduate school at Northwestern University in Evanston, IL on Saturdays.

There seem to be three possible ways to get started....

1. Open a franchise.
2. Work with an successful existing company that wants to add Chicago to it's reach.
3. Start on my own and slowly develop a list of clients, referrals and know-how.

Option number 2 is the most attractive to me. How reasonable is it to expect this type of business relationship? Are business owners looking for these types of arrangements? I would love to have a business mentor/partner to assist in getting a shop up and running. There would be some type of sharing of the start-up expense, equity split and income split. Does anyone have any ideas on how to setup a fair partnership of this type?

I can open a franchise for about $150-200k. I will probably visit some of these franchises in the near future to see their retail format.

Any thoughts would be appreciated. I love keeping up-to-date on RC.com but I was wondering if there is a forum for installers that focuses on all things home theater vs. remote control focused.

Thanks.

Elmer

I run an operation that serves Chicago and the suburbs, and can probably speak to your questions.

Your option 2 is simple in concept and difficult in execution, especially for installers that may be long on nuts & bolts experience and short on experience with partnership laws and partnership ettiquite. You are asking, in essence "Take me on as a parnter for $XXX, teach me, split the profits and equity, and let me vote on major business decisions". Do I have this about right? If not, please set me straight.

If so, and you placed yourself in the position of being the owner of an ongoing business, is this an offer you would take? I suppose it might be a good deal if the $XXX was big enough, your base salary was low enough, and the potential partner was impressed with the general level of skill you can bring to the party.

Open a franchise for $150K to $200K. Wow, somebody feels their business is pretty good to ask that. I pride myself on what we do here, but that's a pretty steep price for entry. On the other hand, if you have no real experience in the business and they set you up with software systems, training programs, internal processes, access to vendors, and polish for the doorknob at the front entrance, then maybe.

You pose an interesting question.

I'm just curious, what skills and/or assets do you bring to the table that may be applicable to the industry?

JJP

about $150-200k :)

As a married man, marriage in my opionion requires a serious commitment and dedication.

You are talking about a business marriage. Do you think you are that committed to someone who may or may not share your values, goals, commitment? Do you realize that even if they match now, they will probably drift over time?

Bottom line: NO partnerships. Easy to get into. Hard to get out of.

Speaking from experience.
=Tom

Use a "shot gun" clause, it works fairly for all parties.

What I bring to the table is an ability to listen to customers, sort through the 'noise' and recommend fair and honest solutions in an uncompromising fashion. I also lead people to successful project closure on a daily basis. Most of these projects are in the $100,000+ range. You gain a lot of skills as a result of working for the largest corporation in the US and it applying it to a small shop to make it successful. I also have a passion for excellence and a penchant for getting things done.

Theaterworks, I was thinking more along the lines of....

I would setup a separate shop with a distinct business entity in a partnership holding. I would do my own marketing, sales and such but would look to the other partner's experience for the bidding assistance and execution phases as well as knowledge transference to complete the projects. Since we would potentially be in different geographic markets… the labor would typically not be shared.

Next week I plan to work with my lawyer to throw around some ideas.... I guess I wasn't looking for legal advice here. Looking more for the 'theoretically would you see this as a viable business opportunity' if you are the existing shop with experience?

I understand opt 2 is complicated and that's why I am asking for advice of those of who have gone before.... It might be best to pay a consulting fee to a successful business owner in another market with well defined deliverables.

Echoslob... The $150-200K is not sitting in my mattress right now. It would take some doing to round up the cash to open something like that... but it is possible or I wouldn't be wasting my time writing this.

The franchise situation is just that... a turn-key operation with a retail showroom and some degree of relationships already forged with some national home builders who want to have home automation and home theater as a profit center. I really haven't delved into this scenario to pick it apart yet.

Thanks for your time and feedback.

emillika:

It sounds like you have a good business head on your shoulders. I would be very careful of any franchises. There are very few in our industry that have any real value. Most of the so-called franchise opportunities I have seen are actually companies attempting to make all of their money through selling franchises, but it’s all smoke and mirrors and they have nothing to provide you but promises of belonging to a national network with builder contacts etc. Most of these franchises rank up their with the get rich quick schemes you see on late-night TV where the guys telling you how to get rich selling real estate actually got rich selling people his scam video tapes telling other people how to get rich selling real estate! I predict a lot of these companies selling franchise opportunities will disappear as quickly as they appeared.

I have seen a few (actually ONLY one) well-established high-end dealers selling franchises. I can see value in it but can’t say whether it’s a good value without knowing how much they are charging. Keep in mind that virtually no custom installation companies have a well-established brand name on a national basis – so the name of the franchise will have virtually no value, unlike Starbucks etc. So any value will come from the franchise already having business processes, software and manufacturers line all in place.

Here are a few things to know:
1.It's not very difficult to fid any number of manufacturers willing to sell you good product, but there will be exceptions. Companies like Crestron and AMX might not be beating down your door to sell to a new establishment. Otherwise, you won't have too much trouble obtaining decent lines, assuming you make a good impression on the sales rep.
2.All types of outstanding product is now available through distribution (as opposed to buying factory direct), so again you don’t really have to worry about having a difficult time obtaining product. Of course when you buy through distribution you do pay a higher price (usually about 10%) than a direct dealer, but a lot of companies starting out find the tradeoff of not having to commit to annual purchases or inventory etc a good one. And quite a few products are available only through distribution now, in which case just about everyone is getting pretty close to the same prices.

Normally, I don’t like to answer questions from guys that post these types of questions because they usually live in a fantasy world and think because they like home theater they can make a living out of it and have little regard for their first customers that they intend to learn on. But I like the fact that you seem to be a person who feels you can sell large projects but also realize you should involve someone in your company with experience in the industry.

Good luck.


This message was edited by QQQ on 10/26/02 01:50.30.

Re: your last question www.avsforum.com is by far the best home theater forum in my opinion.

in you were in ny i'd take you up on your offer. i'm an installer thats wants nothing to do with shoe polish. i'll glady run jobs if someone else brings them in.

My Opinion.....

I think to make it in this business, these days, you must be very service oriented. That means that you must be able to stay ahead of the technology curve and offer the services and products before the big guys. If you can do this, you may make it.
Another thing about the product lines...
The one's available through distribution are also avaialble at best buy and circuit city making the profit margins very low. Again you better have a great service dept.
The lines where you can make good money are probably tied up in the Chicago are and most likely won't risk current dealers to sign you on. Fat chance getting Denon (the high end stuff), Pioneer elite, integra, yamaha.
The post above this where the installer wants a business partner is probably the way to go.
That's what I have. I was the installer/owner and I took on a biz guru as a partner.

Jason Walter
www.electronics2you.biz
www.electronics2you.com