Bring On the New... -

Bring On the New...

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Imagine that you could go back and re-play 2004. How many things would you do differently and why? Would you have bought certain inventory or hired/fired certain staff? Would you have made the same business decisions?

Looking back on 2004, I never would have predicted that it would be such a busy year. There were many of the repeat jobs and clients that we count on every year, but there were some long-term relationships that dissolved for various reasons. There were a lot of new clients and jobs, so many that I wonder if that kind of growth can continue. Speaking to people in the industry around the country, most shared the same evaluation of the year. Many, however, are still struggling to regain too much lost ground.

In our business, it is hard to look forward too far and try to make business decisions. I always tell people that I cannot forecast more than 30 days out. In fact, only 25 percent of our business gives us two weeks or more notice of an event. We are at the mercy of too many business variables that can change in a moment.
As if economic variables werent enough to keep us awake at night, the industry issues that haunt us continue to develop in the shadows, waiting to see if someone notices or tries to intervene before its too late.

Some of the industry issues that we have been discussing for what seems like forever have finally subsided, only to be replaced by new, more delicate issues. It seems like the hotel exclusivity issue has finally started to wane. Dragging that topic, kicking and screaming, into the limelight, brought it to the attention of the very people it affects the most: the clients. They have been educated a lot and the big offenders have softened their stance in a lot of places. Not to say that this has gone away, it has only subsided for the moment. Like the waves washing to shore, the tide will come in again.

The new hotbed of controversy surrounds the definition of a client or end-user. Much of this will be hard to prove and even harder to stop, but there are signs that several of the self-proclaimed wholesale cross-rental sources are working directly with the end-client at a discount structure similar to that of the rental market. As was my experience with the hotel exclusivity issue, I personally have not been affected; I am relying on the word of my peers in the industry. I do know that when speaking with one of the national wholesale companies, they indicated that when renting to a venue and helping that venue find qualified technical staff, the wholesale line became very blurry. The venue (not the in-house AV) is most certainly my client, but should they be able to rent directly from the wholesaler at my discount structure? In a separate conversation, that same wholesaler made it clear that they do not rent to end-users. Time will tell how this plays out.

Anticompetitive behavior continues: At one point this year, I spoke to a former employee of a national AV rental company that specializes in hotel in-house AV. We had beaten the in-house AV on a bid (no exclusive contract in the venue) and they were upset, to say the least. Apparently, the in-house at the venue sent word to central purchasing, which sent word to several other of its in-house offices that they should not cross-rent from us anymore because we were cutting into their business.

As a business manager, I have a right to decide whom we do business with, but I cannot recall stopping my staff from doing business with a competitor because we lost a bid to them. The client has a right to get the best value and service for their investment. Once again, this will be hard to prove and even harder to stop, but just hearing of it makes my stomach turn.

So whats to look forward to? I suspect that we will continue to see the return of some semblance of normalcy to out business. Some jobs will get bigger, some new business will be had but like all things in nature, there must be a balance. I predict that as the economy improves and there is more stability domestically, well start to see more corporate mergers or strategic partnerships that will affect our business. As the corporate entities join, there will be less AV business in one market and uncertainty in another. As long as we maintain some stability domestically, our market should trend toward growth.

But what is growth? Is it having more clients, more revenue, more jobs? The cost of typical AV inventory has decreased meaning that our gross revenue per asset will decrease. We all have to either be a lot more creative in generating revenue or continue to work harder for less money, and that is the bottom line.


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