This PCV success-story-in-the-making comes to us this morning from our Regional Director of Business Advising in San Diego, Chuck Sinks –
RNX designs and installs high-technology in-home digital electronic systems. RNX integrated systems manage audio, video, home management (air conditioning, window coverings, sprinkler systems, etc) and other in-home systems – with the touch of wireless device or in-home panel. The company does anything that makes high-technology in-home resort life “comfortable.” Many of RNX’s systems are included in new construction of resort homes.
RNX is located in Indio, California. Indio is one of the premier communities in Southern California’s Coachella Valley, a desert region famous for warm weather, resort communities, world-class golf courses, retirement and second “weekend getaway” homes. Thousands of people living in the greater Southern California metropolitan areas of Los Angeles, Orange and San Diego counties flock to the Valley for long weekends, vacations and golf getaways. For decades the Valley has steadily grown. In the mid point of the 2000-2010 decade, development in the area experienced extraordinary growth.
With business robust in 2007, Jo and John the owners of RNX, made the decision to purchase a commercial building utilizing the SBA 504 program from which they would operate a thriving RNX operation. A beautiful showroom was constructed where homeowners, developers, contractors and others could see first hand the incredible “digital home” John and his staff could design and install.
When the economic downturn began in 2008/2009, the Coachella Valley was hit especially hard. New construction of upper end homes and golf communities essentially ceased. Half built golf-course developments were left un-finished, developers and contractors left bankrupt. RNX’s business volume was cut by double-digit percentages. In 2009, business activity really “tanked.” Unfortunately, with the purchase of the commercial building RNX’s fixed costs were set — and they were high. Principal and interest payments on the real estate loans along with property tax, insurance and business park association fees, manageable at 2007 business volumes, were very challenging at the depressed business level which remained into 2010 and beyond.
In partnership with CDC-Small Business Finance, PCV began a business advising relationship with the owners of RNX International in the summer of 2010. Several meetings, conference calls, financial documents, debt structure, a top to bottom analysis of the business operations, cash flow projection models, etc. were reviewed and developed by PCV Advisors and the owners of RNX. California Enterprise Zone credits (where RNX is domiciled), were explored with the RNX owners and experts referred by PCV. In early 2011, at the peak of PCV’s business advising to ”right size” RNX’s operations and expenses, the local community bank where RNX had a long banking relationship, and the bank that held the first trust deed on the RNX commercial property, was failing and taken over in an FDIC arranged acquisition. The loss of the local banking relationship, combined with the potentially conflicted motivations of the acquiring bank armed with FDIC guarantees, complicated RNX’s outlook and added pressure to an already delicate situation. But the streamlined business pushed on.
The economic downturn hit this small business hard. But RNX continues to thrive – thanks to the can do attitude of the owners phenomenal employees, products and service offerings of the company.
Today, with the help of PCV’s small business advising and a lot of hard work, RNX has a reduced it’s debt service profile and significantly streamlined business operations. RNX is a survivor. Challenges remain for the company every day. But RNX has put itself in an excellent position to take advantage of a rebounding economy, hire workers and expand. This small business just needs the Southern California economy to cooperate!
Thanks for sharing, Chuck, we’ll look forward to hearing more.