My Library and Courses
Last Update: Sunday February 16, 2020

Key Idea: Treat Service Business As Asset Management

Being at Theatrical Lighting was fun. We saw the equipment stacked and repairs being made. We saw David's crew set up for a big show and we attended the show. We were thinking, "Wow. There's no business like show business."     More...

Key Question:

A: 

You must measure what you own.

David said, "we're in the asset management business." This tells us why he is successful. He articulated so clearly what he has to do everyday and that is maximize the return on his investment. He has to know where every piece of equipment is and how he is collecting for its use. He also has to know when he lands a new job if he should buy or rent the equipment he might not have on hand to handle the project. He walks a tight rope. 

Q: What are the assets of your business and would it help you to think in terms of being in the asset management business?

A: Every business will have different answers to this question but it is much easier for a manufacturer or wholesaler to think in terms of assets than it is a service provider. Also, most of us have a product/service bundle. A spa sells a facial but also it sells the cream the customer can take home. Do we tend to be better at counting the bottles of cream and making sure our ordering is in balance with sales than we are at measuring the service assets we have?

Even though David rents equipment, he thinks in terms of a bundle including both product and people. Also, in follow-up conversations with David and Janet, we learned that it took years for them to teach a banker that they are bankable. Their first loan was in 1981 for $3,000 and they were charged 21% interest. They paid that loan back early to prove to the banker that they are a quality investment. They took out another small loan and paid it back early. Over and over they demonstrated their character and ability to pay. Janet said, "We worked on bankers slowly to establish good credit. and we cultivate that relationship." Janet went on to say that they had to educate the bankers about lighting. They do that by inviting the banker to show up when their equipment is in use locally. David explains to the banker how different lights achieve different affects on stage. David and Janet even include the banker in company parties.

NOTE: If you are thinking about getting a loan from a bank, or expanding your line of credit, first look at RMA: The Risk Management Association's ratios for your industry and see if you are within the norm (based on information from 150,000+ loans per year contributed by 3000+ banks).

Janet and David have all of their business assets in Theatrical Lighting. All of their time and energy is devoted to the company they have been working on since 1981. However, personally they own a portfolio of real estate including all the buildings that serve as a location for Theatrical Lighting. In 2003 they moved into a 58,000 square foot building which they own and have leased out all the other space they own around Huntsville.

Think about it

What are you doing to invest in those kind of assets your banker needs to justify a loan or increased LOC? Do you know your key critical ratios? Do you know how you compare within your overall industry? When it comes to asset allocation, is it smart to put all of your eggs in one basket? What system can you put in place to measure the return on your investment for your existing assets?

Clip from: Theatrical Lighting

Huntsville, Alabama: Meet David Milly.  When he was a student at University of Alabama at Huntsville, he earned money booking entertainment and dances for his school. From his first booking, Earl Scruggs Review, a country-bluegrass band (of Deliverance fame), he knew this was what he wanted to do.

To book the lighting package for the show, he engaged Luna Tech, a sole proprietor, and they struck up a friendship. By the time he graduated in 1975 they had a partnership and then they formed a corporation to protect themselves from the liability involved with manufacturing and creating pyrotechnic special effects. David was initially a 25% stockholder in the business, yet by 1981 he negotiated a buyout of just the lighting division to be on his own.  That's a story, but this one just gets better.

At that time there was no trade association for the lighting industry. In 1987 a few of the fellows started one, Theatrical Dealers Association, and David was quick to join and serve on the board. He initiated a Small Business Development Committee. Today this national association is known as ESTA or the Entertainment Services and Technology Association. 

David has also been an active member of the Huntsville Chamber of Commerce and the Better Business Bureau for three decades. In this episode of the show you will meet all kinds of people who love Huntsville, who love Janet and David Milly, and love the stuff of making their community a great place to live.

Go to all the Key Ideas and videos of this episode...
Go to the homepage for this episode...

Theatrical Lighting Systems

David Milly, CEP / founder

1221 Jordon Lane
P.O. Box 2646
Huntsville, AL 35804
256-533-7025

Visit our web site: http://www.tlsinc.com

Office: 256-533-7025

Business Classification:
Lighting Supplies

Year Founded: 1981

Treat Service Business As Asset Management

DAVID: (Voiceover) You know, we're a moving company. But asset management--how to efficiently manage the assets that you've got, keep them generating revenue and moving them around and knowing where they are. That's our big problem, knowing where they are.

Unidentified Man: The brown is downstage.

HATTIE: (Voiceover) A typical lighting rig for a major concert involves 30,000 pounds of equipment and can fill one to two tractor-trailers. And the show always goes on, even in the rain.


DAVID: Lighting focuses your attention on what you want them to see. If it's dark, people are looking around, they don't know what to look at. You bring the light up--Boom!--that's what they're focusing their attention on, and it is the energy of a show. If the entertainer's moving around, the lights are moving around. If the entertainer is doing a slow ballad, the lights are a slow ballad. So it sets the mood and the tempo for the show and for the entertainer.

 

Not a member yet? Learn!  Be empowered! Join us!