Boston Business Journal – May 2007 | by Sean McFadden

System 7: All Systems Go

Side-by-side showrooms demonstrate synergies, stimulate referrals and reflect System 7’s immersion in the building community.


In terms of its bottom-line growth, System 7, which has a nine-person staff, has turned a corner: Last year, its total revenue came in just under $600,000; this year, Lynch expects it to exceed $1 million.

"He listens to what my needs are, and he tailors the system to my needs," says customer Garrett Solomon, a Wellesley homeowner.

But simply staying on top of changes in technology can be a big challenge.

Says Lynch, "The biggest (source of) pain has been the countless late nights, saying to myself, 'Something didn't work correctly.' So, we have to figure that out ourselves.

For Lynch, a technology industry veteran, this business venture stands in stark contrast to the model of his previous company, the now-defunct Virtual Access Networks of Lawrence, which he founded in late 1998 and exited several years later.

On Sept. 11, 2001, Lynch was on a flight to Atlanta to attend a trade show at roughly the same time as the terrorist attacks. "It awoke in me a desire, as it did in many, to finally actually do something that I always wanted to do," he recalls. "I wanted to build a company from scratch, totally bootstrapped with no investors, and in my own backyard and in an emerging area of interest to me.

In building System 7, Lynch has taken a conservative approach to growth: "Everything has been completely organically funded," he says.

A major factor that can affect cash flow, says Lynch, is cost of goods sold, which on average can be 30 percent to 40 percent of the total value of a project, depending on the product mix for that particular assignment. System 7's contracts are structured such that the equipment is purchased before it's installed and paid for by the client, rather than the company floating the cost.

"Cash flow is OK for us," he says. "But it would break down in a quarter if we lost focus on our payment and contract discipline.

A key piece of his growth strategy, says Lynch, will come from educational outreach, by which the company will share some of its insights with schools that train architects, tradesmen, as well as other industry professionals.

And while nearly all of the company's present work has been in the residential market, Lynch hopes that within the next five years, System 7 will see a good chunk of its business come from commercial clients.

Joe Lautner, vice president of marketing and sales for HomeLogic LLC of Marblehead, one of System 7's product vendors, says of Lynch, "Gerry understands business, technology and how to put things together so that they're easy to understand.

Raising the profile of the company is an ongoing challenge, Lynch admits. But, he says, "I think the overall bigger challenge is knowing what type of business is for us and what is not and continuing to keep our niche well-identified. I want people to think of us as hiring an architect to design technology, as opposed to thinking of hiring a tradesman to install technology."

 

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