How to Start a Security Company

How to Start a Security Company

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How To Start a Security Company

Starting your own security company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful security company.

Importantly, a crucial step in starting a security company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

16 Steps To Start a Security Company

  1. Decide Which Type of Security Company To Open
  2. Choose the Name for Your Security Company
  3. Develop Your Security Company Business Plan
  4. Choose the Legal Structure for Your Security Company
  5. Secure Startup Funding for Your Security Company (If Needed)
  6. Secure a Location for Your Business
  7. Register Your Security Company With the IRS
  8. Open a Business Bank Account
  9. Get a Business Credit Card
  10. Get the Required Business Licenses and Permits
  11. Get Business Insurance for Your Security Company
  12. Buy the Right Security Company Business Equipment
  13. Develop Your Security Company Marketing Materials
  14. Purchase and Setup the Software Needed to Run Your Security Company
  15. Hire Employees
  16. Open for Business


1. Decide Which Type of Security Company To Open

There are many types of security companies, each providing different services. Some common types of security businesses include home security companies, security guard companies, and event security companies.

Be sure to explore each type of security business and figure out which is a good match for your new business. You’ll also want to check the startup costs for each type of security business and do some local research to determine if there is a market for the services you want to provide.

2. Choose the Name for Your Security Company

Once you have picked which type of security business to open, you can choose a name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your security company:

  1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check
    to see if a suitable domain name is available.
  2. Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
  3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your security company.

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3. Develop Your Security Company Business Plan

One of the most important steps in starting a security company is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your security company.
  2. Company Overview – this section tells the reader about the history of your security company and what type of security company you operate. For example, do you offer event security, personal security, or private detective services? You can also include your mission statement in this section.
  3. Industry Analysis – here you will document key information about the security industry. Conduct market research and document how big the industry is and what trends are affecting it.
  4. Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, are your target customers homeowners or business owners?
  5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
    • Product: Determine and document what products/services you will offer
    • Prices: Document the prices of your products/services
    • Place: Where will your business be located and how will that location help you increase sales?
    • Promotions: What promotional methods will you use to attract potential clients to your security company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  7. Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  8. Management Team – this section details the background of your company’s management team.
  9. Financial Plan – finally, the financial plan answers questions including the following:
    • What startup costs will you incur?
    • How will your security company make money?
    • What are your projected sales and expenses for the next five years?
    • Do you need to raise funding to launch your business?

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4. Choose the Legal Structure for Your Security Company

Next you need to choose a legal business structure for your security company and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the security company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a security company together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a security company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a security company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your security company, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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5. Secure Startup Funding for Your Security Company (If Needed)

In developing your security company plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a security company to consider are personal savings, family and friends, credit card financing, business loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a security company that they believe has high potential for growth.

6. Secure a Location for Your Business

The next step to starting a security company is finding a location for your business. This is important because you will need a place to store your equipment and hold meetings with clients. You may want to consider renting office space or a warehouse.

To find the right space, consider:

  • Driving around to find the right areas while looking for “for lease” signs
  • Contacting a commercial real estate agent
  • Doing commercial real estate searches online
  • Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

7. Register Your Security Company With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

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8. Open a Business Bank Account

It is important to establish a bank account in your security company’ name. This process is fairly simple and involves the following steps:

  1. Identify and contact the bank you want to use
  2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  3. Complete the bank’s application form and provide all relevant information
  4. Meet with a banker to discuss your business needs and establish a relationship with them

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9. Get a Business Credit Card

You should get a business credit card for your security company to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

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10. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

  • General Business License – This will allow you to operate your business in your state.
  • Private Security Company License – In order to offer private security services, you will need to obtain a license from your state’s Private Security Board of Licensing.
  • Private Patrol Operator’s License – A private patrol operator license, or PPO license, is a license that is issued by the state in which a security company is operating. This license allows the security company to provide security services to businesses and individuals. In order to obtain a PPO license, the security company must meet certain requirements, such as having liability insurance and posting a bond.
  • Alarm Company License – If your security company will be installing and/or monitoring alarms, you will need to obtain an alarm company license.
  • Private Investigator License – If you plan on providing investigative services, you will need to obtain a private investigator license.
  • Firearms Permit – In order to provide armed security, you will need to obtain a license to carry firearms.
  • Zoning Permit – You will need to obtain a permit from your local zoning board in order to operate your business from a commercial location.

Depending on the type of security business you launch and where you open your company, you will have to obtain the necessary state, county and/or city licenses.

11. Get Business Insurance for Your Security Company

Business insurance policies that you should consider for your security company include:

  • General Liability Insurance – This type of insurance protects your security company from claims that may arise from injuries or property damage that your employees may cause while on the job.
  • Property Insurance – This type of insurance protects your security company’s building and equipment from damage or theft.
  • Workers’ Compensation Insurance – This type of insurance provides benefits to your employees if they are injured on the job.
  • Insurance Bonding – Insurance bonding lets customers know that there is money to reimburse them for any mistakes made by the security company. Some states require insurance bonding for security businesses.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

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12. Buy the Right Security Company Business Equipment

The type of equipment you need to start your security company largely depends on the services you plan to offer. To run the main office, you will most likely need computers, phones, printers, office furniture, and office supplies. You can also provide employee lockers and break room equipment.

You might also need equipment for your security team, including cell phones, radios, flashlights, uniforms, and security batons. Research the specific needs of your security services to make sure you and your employees are prepared and protected before you begin.

13. Develop Your Security Company Marketing Materials

Marketing materials will be required to attract and retain customers to your security company.

The key marketing materials you will need are as follows:

  1. Logo – Spend some time developing a good logo for your security company. Your logo might appear on uniforms, business cards, social media pages, your website, and across all your marketing efforts. The right logo can increase customer trust and awareness of your brand.
  2. Quickly and easily create a memorable business logo

    Use Smashing Logo’s unique logo builder to design your logo in just minutes.

  3. Website – Likewise, a professional security company website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how your target audience perceives you.
  4. Build a professional website for your business with B12 Website Builder

  5. Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your security company.

14. Purchase and Setup the Software Needed to Run Your Security Company

A security company needs a few types of software.

To begin, most security businesses need software that can help with scheduling and payroll. Other software options will depend on your security services. You might need programs that can do things like monitor alarms or track security patrols. Make sure to explore options that are required for your specific business needs.

Some popular security company software options include SureView, Silvertrac, and Trackforce Valiant.

Research the software that best suits your needs, purchase it, and set it up.

15. Hire Employees

Your new business might need security guards, office staff, and perhaps even a marketing team. Start by posting job ads for security professionals online and in local newspapers. You can also reach out to local colleges and universities to find potential candidates.

Once you’ve received a few applications, invite the candidates in for interviews. During the interview, be sure to ask each candidate about their experience in the security industry, as well as their availability.

Once you have selected the final candidates and conducted background checks, it’s time to make your final decision. Choose the candidates that you feel are the best fit for your company, and extend them an offer. You can plan to build your security personnel over time.

16. Open for Business

You are now ready to open your security company. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

 

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How To Start a Security Company FAQs

No, it's not hard to start a security company. Your first task is to make sure you understand the type of security services you want to offer and check that there is a need for those services in your area. Other challenges include funding the equipment and space needed to start your security business and finding customers. Following the steps outlined above will help you get started.

Starting a security company can be a challenge, especially if you have no experience in the industry. You might consider making connections with experienced professionals in the security industry who can mentor you or offer some insights into how a good security business is run. There are also training classes and online courses available to help you learn more about security as a whole.

The most common and profitable type of security company is a home security company. This type of business offers products and services that help protect homeowners from burglaries, fires, and other disasters. Home security companies typically offer 24-hour monitoring, home automation, and home security systems. There is a lot of competition in this space, however, and a different type of security business may be more profitable in your area.

There are a few things you'll need to take into account when budgeting for your new security company. The main costs involved will be hiring security guards, which can range from $10-$30 per hour depending on their experience and the type of training they have. You'll also need to factor in the cost of uniforms, equipment, and any office space or vehicles you'll need. Start-up costs for a security company can range from $5,000-$20,000 and beyond, depending on the size and scope of your operation.

When it comes to running a security company, there are some ongoing expenses that you need to be aware of, including:

  • Insurance - As with any business, it is important to have the right insurance in place. This will protect you in the event that something goes wrong and you are held liable. There are a few different types of insurance that you should consider, including property damage, liability, and workers' compensation.
  • Equipment & Other Purchases - You will also need to invest in some equipment. This includes things like CCTV cameras, alarm systems, and security guards. The cost of this equipment will vary depending on the size and scope of your business. Purchases count for about 10% of total industry revenue.
  • Employee Pay -  As you will be hiring employees to work for your company, you will need to factor in their pay. Employees should be paid a competitive wage, and you may also need to provide benefits like health insurance. Wages are often the largest cost for a security business.
  • Marketing - Finally, you need to think about marketing. This is essential in order to spread the word about your company and attract new customers. There are a number of different ways to market a security company, including online, offline, and through word of mouth.
  • Other - Rent and utility costs account for a small portion of total industry revenue.

 

There are several ways that a security company can make money. The most common business model is to earn money through the sale of products and services. A security company can also make money through the installation of security systems, the monitoring of security systems, and the provision of training services. The right business model for your security company will depend on what you offer.

Successful security companies can be profitable. There are many factors to consider when determining if your security business will make money, however. The size of your company, the services that you offer, and where you operate your business are all important considerations. Be sure to provide services that customers are willing to pay for in your area and you will be much more likely to make a profit.

Security company operators and executives receive varied pay amounts based on the success of the company.

There are a variety of reasons why security companies fail, from poor management to bad marketing. But whatever the reason, if you're thinking about starting a security company, it's important to be aware of the risks.

One of the biggest mistakes that people make when starting a security company is not doing enough research. Before you start any business, you need to understand the industry and the market. What are the trends? Who are the major players? What services do they offer? How much do they charge?

Another mistake is not having a clear niche. There are a lot of security companies out there, and if you're not focused on a specific market or type of customer, you'll have a hard time standing out. Figure out who your ideal customer is and what needs they have that you can fill. If you are a security guard company, make sure to fully understand that niche.

Finally, don't underestimate the importance of marketing. Marketing is how you let people know about your company and your services. If you don't have a plan for marketing, your security company will likely fail.

According to IbisWorld, there are 11,133 security companies in the U.S. that generated $31.7 billion in revenue last year. This represents an annual growth rate of 3.1% over the past 5 years.

Security guard services for buildings and grounds are, by far, the largest revenue segment for the industry. Investigation services account for 16% of the industry’s revenue and the remaining revenue is compromised of armored vehicle services, special event security and other service.

A number of factors affect the performance of the security company industry. These drivers include:

  • Corporate Profit – Changes in corporate profit can determine the renewal or upgrade of contracts and the recruitment of new clients. An increase in corporate profit will cause businesses to spend more on outsourced services, including those offered by this industry.
  • Number of Businesses – An increase in the number of businesses will boost demand for security services, since more businesses will require security services. The number of US businesses is expected to increase slowly in the coming years.
  • Crime Rate – Actual and perceived increases in crime lead to upgrades of security systems and services. The crime rate is expected to decline this year, representing a potential threat for the industry.
  • Value of Private Nonresidential Construction – An increase in this driver is likely to boost industry demand because many of these structures require security services. The total value of private nonresidential construction is expected to increase in the coming years.

The key customer segments in the security company industry are:

  • Retail and Leisure
  • Residential and other
  • Government clients
  • Financial Institutions
  • Corporations

 

Helpful Slideshows, Videos & Images

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How To Market and Manage a Private Security Firm‬

How To Run a Security Company | Entrepreneurial Concepts

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Why Hire a Security Guard infographic

Choosing the Best Home Security Company

Best Home Security Company infographic
 

Additional Resources in the Security Industry

For additional information on the security market, consider these industry resources:

 

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