Disclaimer: This is a machine generated PDF of selected content from our products.

This functionality is provided solely for your

convenience and is in no way intended to replace original scanned PDF. Neither Cengage Learning nor its licensors make any
representations or warranties with respect to the machine generated PDF. The PDF is automatically generated "AS IS" and "AS
AVAILABLE" and are not retained in our systems. CENGAGE LEARNING AND ITS LICENSORS SPECIFICALLY DISCLAIM ANY
AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES FOR AVAILABILITY,
ACCURACY, TIMELINESS, COMPLETENESS, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Your use of the machine generated PDF is subject to all use restrictions contained in The Cengage Learning
Subscription and License Agreement and/or the Gale Business: Entrepreneurship Terms and Conditions and by using the machine
generated PDF functionality you agree to forgo any and all claims against Cengage Learning or its licensors for your use of the
machine generated PDF functionality and any output derived therefrom.

Smart Home Automation Consulting & Installation Business:

The Smarter Home LLC
Author: Paul Greenland
Editor: Kristin B. Mallegg
Date: 2015
From: Business Plans Handbook(Vol. 36. )
Publisher: Gale, a Cengage Company
Document Type: Topic overview; Business plan
Length: 2,314 words

The Smarter Home LLC is a newly established smart home automation consulting and installation business.

"EXECUTIVE SUMMARY "

The ability to remotely unlock doors, operate appliances, or use video cameras to see who just rang the doorbell was once science
fiction. Later, such “smart home automation” capabilities became options for only the wealthiest of homeowners. By 2015 the
“Internet of Things” had arrived, giving everyday consumers the ability to manage their home or apartment through apps on their
mobile device.

From individual devices like thermostats, to off-the-shelf systems sold at home improvement stores and big-box retailers, to systems
offered by leading telecommunications and cable companies, consumers had a wide range of options for automating different
aspects of their home environment in areas such as security, climate control, and entertainment. Independent consultants/installers
also fulfilled an important niche in the smart home automation technology market, which was expected to reach $71 billion by the
year 2018, up from $25 billion in 2012, according to Icontrol Networks Inc.’s 2014 State of the Smart Home Report.

Located in Ridgway, Minnesota, The Smarter Home LLC is a newly established smart home automation consulting and installation
business, formed by retired electrical engineer Larry Colberg and his nephew, electrician Pete Fenton. The inspiration to establish the
business occurred three years ago when Fenton successfully installed an automation system in his own home. This led to several
projects for family and friends, and ultimately a steady stream of side jobs that provided much-needed income during the economic
slowdown. With more demand than his part-time schedule can accommodate, and considering the rapid growth occurring in the
smart home automation market, Fenton decided to establish a dedicated business in partnership with his uncle.

"MARKET ANALYSIS"
Overview

According to the State of the Smart Home Report, published by Icontrol Networks Inc. in 2014, the firm Juniper Research projected
that the market for smart home automation technology will total approximately $71 billion by the year 2018, an significant increase
from $25 billion in 2012. Icontrol Networks’ report further indicated that “smart” devices were being adopted at a rapid pace.
Compared to an estimated 1.9 billion devices in use as of 2014, the number of smart devices was expected to total 9 billion four
years later. One of the report’s main findings is that family security is an important consideration among consumers when choosing a
home automation solution. In addition, it revealed that about one-third of Americans would spend as much as $3,000 for a
comprehensive system.

Local Market

The Smarter Home will target upper-middle-class consumers who account for nearly 65 percent of the local population in Ridgway.
Specifically, the business will focus its marketing efforts on busy working professionals (e.g., doctors, attorneys, nurses, engineers,
and professors), who constitute a significant portion of the local workforce. Ridgway is home to a large medical center, four colleges
and universities, and several leading corporations in the technology and aviation industries. Healthcare, in particular, is a major
employer in Ridgway and the surrounding region, with about 1,700 facilities categorized under health & medical services (including
immediate care clinics, family medicine clinics, and specialty care centers). In all, healthcare workers account for 16.5 percent of the
region’s service employees.
Competition

At the lower end of the market, The Smarter Home will face competition from off-the-shelf systems available at leading retailers, such
as the home improvement store chain, Lowe’s. Companies marketing do-it-yourself systems include Wink Inc.; iSmart Alarm Inc.;
Samsung Electronics; and Icontrol Networks Inc. In addition, telecommunications and cable companies also are offering a variety of
security and home automation systems for consumers, in connection with their strategies to generate additional revenue and secure
more significant consumer wallet share through bundling. In addition to alarm companies such as ADT, competitors in this category
include AT&T, Comcast, and Cox Communications.

The Smarter Home will differentiate itself against these types of competitors by offering consulting services that will help consumers
choose the very best options to meet their needs, based on their specific budget and life circumstances. In addition, the company will
offer high-quality systems that are modular, scalable, and cost-effective, providing customers with the ability to automate a single
room/space to an entire property.

Significant competition also will come from companies that are similar to The Smarter Home. In particular, there are three
independent installers currently operating in the Ridgway market, including:

Noble Electric LLC—A local group of licensed electricians with extensive experience performing low-voltage wiring projects,
for whom smart home automation simply is an additional service offering.
Awesome Entertainment Inc.—A company whose primary focus is entertainment/audio-visual systems.
Ridgway Security Corp.—A well-established local security/alarm installation firm.

The Smarter Home’s differential will be its exclusive focus on all aspects of smart home automation. With smart home automation as
its core competency, the business will seek to establish itself as a regional expert. Importantly, the company will emphasize its ability
to provide integrated systems that meet all of a customer’s needs.

"SERVICES"
Home Automation Systems

The Smarter Home’s systems, which include a mix of both hardwired and wireless options, include software and mobile apps, as well
as a variety of hardware. In addition to automation hubs, which provide connectivity to various digital devices, installation projects will
include a variety of components, such as:

Central Controllers
Control Boxes
Power Distribution Units
Switchers
Touch Panels
Transmitters & Receivers

One of the differentiating features of the systems offered by The Smarter Home is that they are compatible with multiple
communication protocols. Although consumers may have existing devices in their homes that are compatible with smart home
automation, they may not all use the same language to communicate. The Smarter Home’s systems maximize configuration options
for the customer because they are compatible with protocols such as ZigBee, Wi-Fi, and Bluetooth LE.

Packages

The Smarter Home will market three levels of base packages for customers seeking a whole-home automation solution. These
modular packages can then be customized (or expanded at a later time) based on the customer’s specific needs or situation:

Bronze ($3,500): Ideal for smaller homes/living spaces, or customers who want only the most fundamental level of
automation. Includes basic safety/security and climate control options.
Silver ($5,000): Ideal for medium-sized homes/living spaces, this package provides a more extensive offering of everything
included in the Bronze package, along with automation features for appliances and some home entertainment.
Gold ($15,000): This package is ideal for larger homes/living spaces and customers seeking a very robust home automation
experience. It includes more extensive home entertainment options, as well as features such as automated window
treatments/shading, irrigation, etc.

"OPERATIONS"
Process

The Smarter Home will begin every new client relationship with a discovery process, in order to learn more about a customer’s house,
condominium, or apartment and identify specific smart home automation goals and objectives. Customers may wish to automate
many different aspects of their living space, including:

Appliances (electrical plugs and switches)

Audio-Visual Systems
Climate Control/HVAC (thermostats)
 Irrigation (sprinkler systems)
Lighting (light switches and lightbulbs)
Pet Monitoring/Management
Safety (smoke alarms, fire alarms, gas leak detectors, carbon monoxide detectors, water sensors, etc.)
Security (alarms, cameras, window and door locks, etc.)
Shading (window treatments)

Once specific goals and objectives have been identified, The Smarter Home will develop a detailed project estimate that includes
specific milestones and timelines. This information will then become part of a formal written agreement with the customer.

Payment

The Smarter Home will require customers to pay for all hardware in advance, along with 50 percent of installation labor costs. The
remaining 50 percent will be due upon completion, or at mutually agreed upon milestones. The Smarter Home will accept payments
via check or credit card.

Suppliers

The Smarter Home will obtain control systems from two leading vendors (Pine Technologies and Fenway Integration Co.), which offer
systems that are somewhat advanced, but not too technical for the business to install. Some smart home automation installers work
with systems that require computer programming knowledge. In addition to the vendors that The Smarter Home will work with, other
leading industry suppliers include companies such as Creston, AMX, and Elan Home Systems.

Location

The Smarter Home will begin operations from affordable leased space in downtown Ridgway, Minnesota. Formerly a small retail
storefront, the location provides space for several home automation displays and a meeting area where customers can have
conversations with the owners. The back portion of the storefront includes a small office and an area with overhead door access for
storing hardware, wiring, and other supplies. Because The Smarter Home will follow a “just-in-time” approach (e.g., only storing
hardware components that have been ordered for specific jobs, versus keeping them in inventory), the owners believe that the space
will meet the business’ needs for its first several years of operations.

Insurance

The Smarter Home is bonded and insured. Copies of the business’ insurance policies and other documentation are available upon
request.

"PERSONNEL"
The Smarter Home is being established by retired electrical engineer Larry Colberg and his nephew, Pete Fenton.

Larry Colberg

With more than 35 years of technical and management experience, Larry will provide key leadership for the business. In addition to
handling administrative functions, he will serve as the main contact for The Smarter Home’s customers, helping them to identify their
home automation goals and plan their systems. Prior to his early retirement, Larry enjoyed a successful career with Parkway Aviation,
most recently serving as vice president of electrical engineering.

Pete Fenton

Pete will serve as the main installer, and also will be responsible for overseeing independent contractors when additional labor is
required for larger projects. A licensed electrician, he brings more than 15 years of practical experience to the business, having
worked for a local electric firm and two residential construction companies. In addition, Pete also worked as a part-time as an installer
for a leading security company. He will be responsible for handling all electrical-related work, when required.

Independent Contractors

To keep their labor costs low and have the flexibility to scale their workforce up and down based on project volume, Larry and Pete
will rely upon a pool of skilled independent contractors who have previous installation experience with telecommunications, cable, or
alarm companies. The owners have obtained an independent contractor agreement from a leading online legal document service,
which they have modified to meet their specific needs. The agreement addresses the finer points of matters such as taxes,
compensation, and liability.

Training & Continuing Education

Both Larry and Pete will take full advantage of technical training opportunities offered by their suppliers, in order to stay current on the
technologies they are installing, as well as emerging industry trends.

Professional and Advisory Support

The Smarter Home will use the local accounting firm, Parkview Financial Services Inc., for assistance with tax preparation and
bookkeeping. In addition, the owners have established a commercial checking account with Ridgway Community Bank, and will
utilize a popular mobile point-of-sale service to accept credit card and debit card payments from customers.

"GROWTH STRATEGY"
The Smarter Home has established the following growth targets for its first three years of operations. Projections are based on a total
of 49 work weeks, allowing for holidays and vacation-related downtime.

Year One: Focus on establishing The Smarter Home in the local market and promoting general awareness of the benefits associated
with smart home automation. Perform 49 installations in each package category (bronze, silver, and gold). Generate net income of
$59,522 on adjusted gross revenue of $209,622.

Year Two: Continue to establish local brand recognition for The Smarter Home. Perform 74 installations in each package category
(bronze, silver, and gold). Generate net income of $108,952 on adjusted gross revenue of $317,052. Secure at least one contract
with a custom homebuilder.

Year Three: Perform 98 installations in each package category (bronze, silver, and gold). Generate net income of $153,144 on
adjusted gross revenue of $419,244. Secure at least two contracts with custom homebuilders. Develop regional expansion plans for
The Smarter Home, capitalizing on growth opportunities in the nearby communities of Creston and Applewood.

"MARKETING & SALES"

The Smarter Home has developed the following marketing tactics to grow the business:

A four-color brochure will be developed to promote the business and the smart home automation systems that it sells. The
brochure will be ideal for direct marketing campaigns.
A referral program that offers a 15 percent discount for friends and family.
A social media strategy involving highly targeted advertising on popular social networking sites, such as Facebook.
A sustained commercial direct marketing program targeting homebuilders and remodeling companies.
A sustained consumer direct marketing program targeting homeowners with household incomes of $75,000 and up.
A Web site with complete details about The Smarter Home and its smart home automation systems.
Active membership in the Ridgway Chamber of Commerce.
Affordable vinyl vehicle signage to promote the business via mobile advertising.
Development of a smart home automation blog, providing homeowners with information regarding the advantages associated
with automating different aspects of their home.
Magnetic business cards that will double as advertising specialties.
The use of media relations to promote the owners’ position as regional smart home automation experts (e.g., guest columns
and interviews with local radio, TV, newspaper outlets).
Trade show marketing at home building and remodeling shows.

"FINANCIAL ANALYSIS"
A complete set of projected financial statements have been prepared with the owners’ accountants, which are available upon request.
The following graph shows projected gross and net revenues for The Smarter Home’s first three years of operations:

The owners anticipate that revenues will break down, on a package basis, as follows:
Following are revenue and expense projections for the first three years of The Smarter Home’s operations:

Financing

The owners will begin operations with $20,000 in capital, which Pete Fenton has saved from doing smart home automation
installations on an independent basis over the past few years. In addition, Larry Colberg will borrow $25,000 from his savings and
contribute the funds to the business in the form of a personal loan, which the business will repay (with interest) within its first three
years of operations.

"EVALUATION & ADJUSTMENT "

This plan will be evaluated quarterly during The Smarter Home’s first year of operations, and semi-annually thereafter.

Full Text: COPYRIGHT 2016 Gale, Cengage Learning

Source Citation (MLA 9th Edition)
Greenland, Paul. "Smart Home Automation Consulting & Installation Business: The Smarter Home LLC." Business Plans Handbook,
edited by Kristin B. Mallegg, vol. 36, Gale, 2015. Gale Business: Entrepreneurship,
link.gale.com/apps/doc/LYTDQD985830993/SBRC?u=navyship&sid=bookmark-SBRC&xid=8c0e7ed3. Accessed 8 Dec. 2021.
Gale Document Number: GALE|LYTDQD985830993