Little Fish Tales, volume 1: Size Matters

Welcome to Little Fish Tales.

I have decided that I will periodically devote some of my blog space to real world tales from the small integrator – some rants, some raves, some random observations – all from the perspective of the little guy. In future editions of Little Fish Tales, I’ll share some of the vexation of dealing with manufacturers, the heartburn of bidding against the big guys, the struggle of differentiating oneself from the more disreputable little guys, and the frustrations of trying to grow and thrive in the big pond without getting eaten by the big fish. Of course, I’ll also talk about some of the benefits and blessings of being the little guy that the big guys might envy. Before getting to all that, however, let’s talk about the word “little.” After all, size matters!

 

 

Who are the little guys? Well, obviously I don’t mean our friends over at AVI-SPL or Whitlock! I suppose the simplest way to define “the little guys” is to look at Federal Government classifications. The US Small Business Administration (sba.gov) breaks out size standards for companies doing business in the US by revenue and/or by total number of employees, depending on the industry or job performed. As the AV world *still* isn’t an industry unto itself in the government’s eyes – at least according to the latest NAICS code breakdown of size standards at sba.gov – we’ll look at the ‘close enough’ classifications systems integrators fall into.


Construction and Contracting, Other Specialty Trade Contractors (NAICS 238990), which would be the classification that most closely matches AV Systems Integration, has a size standard of $14 million annually. That is a large sum of money for most systems integrators. In fact, 10 of the 50 companies listed in Systems Contractor News’ SCN Top 50 2010 list (published 12/2010) reveal commercial integration revenues of UNDER that benchmark and 4 of them have total revenues at or under the limit! 8% of our “big guys” as lauded in a major trade publication are actually “little guys” per the Federal Government.


The numbers get worse for other related NAICS classifications. Looking at the sales end of things, Radio/Television/Electronics Stores (NAICS 443112) has a size standard of $25.5 million annually. 15 of our SCN-listed “big guys” – a full 30% – are “little guys” in Federal Terms in this category. There are similar numbers in other related listings. What does this mean? Well, it means a couple of things.


First, it means that Federal Small Business Set-Asides don’t really help really little guys. They simply keep a few jobs from the AVI-SPLs and Whitlocks and give them to big guys a bit further down the list. Next, it means that competition among the “little guys” is particularly fierce, a topic that will be covered in depth in a later Little Fish Tales edition. Finally, it means that we as an industry need to step up our efforts to publicize and brand our industry.


Huh? Well, that point is two-fold. First, if we did a better job of letting folks know that AV exists and is a distinct and separate industry from IT/Facilities/Electrical/etc., we’d have universities offering courses and certificates or degrees in AV Technology. We’d have kids growing up saying, “I want to be in AV when I grow up” instead of “You do AV? What the heck is that??” And we’d have more companies hiring AV companies to do AV work instead of giving those jobs to their Security installers, their IT integrators, their electricians, or their Fire Safety equipment integrators. (Yes, I’ve seen it happen!) This would mean more AV jobs for AV companies, which in turn would grow the entire industry – including the size of the competent and legitimate small AV integrators!


Secondly, better knowledge of the AV world would wake up the SBA to the fact that those size standards are rather silly for our industry, and could perhaps be changed to better reflect the realities of AV companies and their relative sizes. Rather than excluding only a few firms and feeding set-asides to firms that could be among the Top 50 largest in the industry, they would be able to fulfill their mission of assisting truly small companies by spreading some of those widely-sought Federal buying dollars to businesses for whom that one Federal project could be a game-changer, rather than just “another day, another Federal dollar.”


Now, this massive rant aside, things aren’t always entirely grim for the little fish. Individual states have their own Small Business assistance programs and standards that are often more stringent than the Federal standards for set-asides. Here in Maryland, the limit is $10 million annually – a number that is fairer to ‘real’ little guys… even if there is still an SCN Top 50 firm that would make the cut! (Maryland recently upped that number from $4M/year in a move that made little integrators cringe, and mid-size ones rejoice!)


Additionally, even with the wide-open definition of “small business” from the Federal government, it *is* still possible for the little guy to land a big one. It’s a lot trickier and more competitive, but it can happen. My own tiny firm has had a couple of them over the past two decades, and not all were partnerships with big guys. It *can* happen, but it takes perseverance and sometimes a little luck. Still, it isn’t an impossible dream and each time it happens a little fish can grow just that eensy bit bigger in the AV pond.


Then again, what do I know? I’m just a little fish. ^_^

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