I’m a New Yorker. I have a passion about business and people. When COVID-19 struck the world, I picked up the phone and touched base with CEOs and executives from guarding firms. That industry is going through a challenging situation – and more than 40 CEOs, Vice Presidents, and Executives of guarding companies are struggling to make sense of how to thrive in this current situation. Here are a few commonalities that each security industry professional had to share.
Employee to Employer Relations – Those Who Employ More Than 500 Employees
“What about the guarding companies that have more than 500 employees?”
Most of the legislation within the CARES Act is providing stimulus to businesses, employees and industries impacted by the pandemic. These initiatives are being earmarked for companies that operate with less than 500 employees. This leaves much speculation for companies who operate with just over 500 employees. There is a lot of concern for these companies on how this will impact them, especially the concern that they will have a lot of struggles should this continue.
Financial Strains – Impediments on Credit Renegotiations and with Receivables
“We are working on renegotiating our credit with the banks, but we’re getting held up.”
While plenty of guarding firms rely on lines of credit to maintain business consistency in times of fluctuation, the downturn in some of these businesses is causing security firms to add to their credit lines, renegotiate rates, and to look into SBA and paycheck protection loans. A huge challenge they’re facing is that banks are unwilling to give them definitive dates on when they can take advantage. There’s too much hurrying up and waiting at the moment – and while they’re waiting, business is dwindling and lines of credit are getting used up.
“We are VERY concerned about our receivables”
It’s hard enough to ensure timely payment in a regular economy; now we are seeing guarding companies delaying payment even further. In many cases, clients are delaying payment to pay their own employees first or to pay vendors who provide them with critical goods (e.g. toilet paper). Companies are dealing with slow receivables and are relying solely on credit to keep up with business operations (referenced above).
Business Adaptation – Increased Premium Rates for Maintaining a Guard Pool
“We are actually seeing our clients willing to pay a premium on some guards to ensure they are still with us when business resumes.”
This is an excellent example of how guarding businesses are adapting to keep their employees around. One of the CEOs I spoke with said “Some of my higher-end clients in property and retail have expressed concern on not wanting to lose the officers I put on their post and are willing to pay premium rates to keep them on my team.” This shows how essential these security officers have become to the clients’ daily operations and indicates the value they have for them. This same CEO continued to say “When this is all over and [companies] resume operations, [we] want to keep that officer on the post and are willing to pay extra to reserve them.”
New Revenue Streams – Different Forms of Income for Guarding Firms
“Even though hours have declined, we’ve been able to boost revenue with specials.”
Time and time again, this is a common theme I’ve seen for guarding firms – especially those that work in the industry sectors currently thriving, such as groceries, pharmacies and retail. Those firms are being asked for additional resources to help with COVID-19 specific special work. One CEO told me that their clients are asking for extra support in terms of adhering to specific mandates, such as social distancing and product limits sold in supermarkets.
“We have been adding specials to work on crowd control at supermarkets with things like making sure customers are keeping social distancing, or making sure they are adhering to product limits, such as toilet paper, and keeping the peace in a crazy time has brought on more officers to our locations.”
Success Measures – Different Industry Successes Dependent on Industries Served
“Success is largely dependent on the type of Industry you serve.”
There is one factor that balances a security firm’s success during times like these – an industry niche. Many of the guard firms I’ve spoken with focus on specific industry niches. Consequentially, they’re unable to break out of them. Those currently suffering are those who typically serve public and entertainment sectors, such as churches, schools and stadiums. As one CEO told me, “Since the pandemic broke out and these places all shut down, my overall revenue is down 80 percent, and at this point it’s better for me to close shop and reopen when this is all over.”
On the other side of the coin, there is much success for guard firms working in what is deemed essential areas, such as Supermarkets, GovCon and Healthcare. These firms have experienced an increased demand for their services; and, as a result, are hiring more workers. These firms are not reaching out to struggling industries to offer Sub-Contract work, although logical. Despite already having the training and the staff to fill the void, some guarding firms have been unable to break the ice. One CEO put it “We just don’t really have any relationship with them and there is a lot of people we can hire on our own right now, so we’re hiring in and putting these folks on a post.” To sum up, for them, the fastest path is to hire in, rather than sub out.
Government Incentive – Employees Leveraging Government Subsidies
“We are concerned about employees taking leave to leverage government subsidies.”
There are a lot of positives and negatives to government assistance during this unprecedented time. Unfortunately, despite most CEOs looking out for what’s best for their employees, many are struggling to support their employee’s needs and address their real concerns.
I’ve spoken to many CEOs who have indicated their unease in maintaining their employee trust. The bottom line is that employees are expressing fear in not getting enough work, or, if furloughed, many would prefer to collect unemployment and get rehired to maintain a steady income. In an extreme case, one CEO told me he had an employee fake exposure to COVID-19 only to take advantage of the $1,200 Families First payment from the Government. All in all, most CEOs are looking out for what’s best for their employees. Yet, as more and more companies are struggling, employees will be looking to make moves that work best for them and their families.
Future Industry Business – How CODIV-19 Has Shaped the Industry
“COVID-19 has changed how we do business now and in the future.”
“We will never operate the same way.” This sentiment is heard across all CEOs. One CEO said, “We now have enacted specific pandemic related training for our officers and this will most likely continue to be provided even after this is over.” Others are looking at how to future-proof their operations and have indicated how the mandatory shelter-in-place orders ultimately forced them to face hard facts about how they were running their operations. Much of what was done in person or on paper was simplified when they were forced to manage remote workers.
“If it’s one thing we learned, is how much paper and personal interaction is unnecessary. We’ve implemented so much paperless systems to operate a remote workforce, that it’s just made it something we will continue. I can send out schedules’ remotes, receive incident reports, use direct deposits for payroll and email invoices to clients. We’re never going back to paper.”
Although many CEOs experienced benefits to their operations, the same couldn’t be said of others. It’s saddening to hear how most CEOs expressed to me their doubts in returning to “business as usual”. One CEO of a smaller guarding firm told me that he didn’t see himself getting back to the level they were six months ago. “We’ve scaled down in response and until we start to see more changes to how we operate, we’re going to minimize risk and operate smaller and much leaner for a while, I’m afraid.” The lasting impact of this pandemic has cost these executives much, in terms of business and in entrepreneurial spirit. Business will not be the same for a while as companies will now either be thriving or just surviving.
We are seeing the physical guarding industry at a crossroads, if you will. On the one hand, the guarding business that have supported the “essentials” in this unprecedented time have been growing and will continue to grow, while the firms that have supported the closed areas – schools, stadiums, churches – are struggling, and some may not survive.
What Does the Future of our Industry Look Like?
The executives I talked with are not entirely sure when there will be a “normal”, if ever. In the conversations I had, there are four common threads about the future of the guarding industry, post-pandemic.
Pivoting and Expanding Client Types (“Future Proofing Clients”)
Guarding firms that contract with closed facilities are taking the biggest hit. They are now looking to pivot and expand to more essential industries, such as energy, infrastructure and even tech/data centers. Much of this will encompass GovCon, but there’s a lot of opportunity to work in private sector infrastructure. They need to future-proof their business to have essential clients if disaster strikes again.
Strong Impact on Receivables will Require Negotiations
Not only have folks started going back to their banks and renegotiating their lines of credit, but they are seeing more pressure on the customer side. In some cases, it’s the retailer or supermarket that is delaying payment because they need to pay the delivery trucks and staff, and then they will pay the security firm. In other cases, it’s that they are now renegotiating contracts and reducing coverage since fewer people are on site. Either way, the way in which we receive, collect and safeguard finances will experience change.
Finding New Talent in Unlikely Places
A few executives I spoke with mentioned that, in this time, they are aggressively recruiting for more customer-centric talent. Many of the place they are looking. Retail, Food Service industry, Events – all the places that have been shut down. There is great talent that can provide a customer-centric face to the business, and as they start to come out of the pandemic, they will need these people to demonstrate value to the client.
Convergence of Security Systems and Physical Security
The physical guarding industry, at least from the firms that I’ve spoken to, is in a place where they need to combine systems and people and use intelligence to detect the next threat. Converging cybersecurity and threat detection to know when and where to deploy security officers is the lesson learned in this pandemic, and I would expect that you will see more and my systems-based companies looking at physical security companies (and vice versa). The ability to detect and deploy is a value add to the industry.
New Technologies – Robotics and Security
I wouldn’t call this a lesson learned, but it has come up and it’s interesting. Robots have been a hotly debated topic since we first started seeing them in the industry. And now, I’m hearing more and more firms looking at these technology options as a remote, contact-less way to monitor and communicate threats, while keeping health, safety and distancing in mind. There’s a lot of value, not only in providing a remote option, but the data recording options that can be derived from it. We might start to see a resurgence on the robot discussion once we come out from under this pandemic.
I continue to do what I do best – talk to people – and get a sense of how the market is reacting from all sides of this story. This is only the beginning as I will continue to get the voice of the industry.
Be safe, be healthy and be vigilant.