LAST EDIT July 28, 2016
This article is based on content this site's How to Start a Security Guard Company ebook. The book includes 116 pages of must have advice for private security entrepreneur, a sample e security agency business plan and a resource directory for cutting costs. The book is currently free to those who request it.
There isn't much incentive to make a career working within one of the big security agencies. Even when an officer works his way up the ranks he will all-too-often become a human resource drone stuck behind a desk where he mostly tries to keep each shift staffed with a warm body.
So how much does it cost to get away from the big security companies and start a security company?
The low cost of entry presents one of the most attractive components of starting a business in the security industry.
There are few upfront costs because running a security company requires very little in capital assets.
Also the security business owner may chose to work one of his own standing posts. This allows him to continuing earning an income without building in a overhead for his own salary. Using this strategy he keeps upfront costs low while he builds his company.
Here is a breakdown of the minimum required upfront cost.
The majority of a new security agency's costs are related to insurance.
The company must purchase general liability insurance, workers' compensation insurance and pay unemployment insurance withholdings.
Insurance costs will vary by location but it isn't unreasonable to price in $500 per month.
Thus, if the agency starts with just one eight hour nightly onsite client it will divide the 240 hours of monthly onsite work into $500 to determine the per-hour charge necessary to pay the insurance bill.
The new security guard company would need to charge $2 per-hour to cover insurance costs for this one client.
But, adding a second 240 hour per-month client will not greatly change insurance costs but would immediately drop the amount needed for insurance to just $1 per hour.
You can see why it is so important for the new startup to quickly acquire a handful clients to spread out the cost of the insurance.
Pricing in $2 per hour for insurance isn't going to allow the new agency to compete against companies which disperse out their insurance cost.
The new startup should set aside enough resources to purchase six months of coverage in advance.
In this example a new company must be prepared to pay out $3,000 prior to starting. Most insurance companies will allow the agency to make monthly payments.
New agency owners should follow the cost avoidance strategies in the How to Start a Security Guard Company ebook. This book shows the reader how to drive down insurance cost.
There are some regulatory costs to get the legal paperwork filed but this shouldn't amount to much.
These costs include obtaining a security license from the state or cities where the agency plans to provide services.
It also includes the paperwork to establish the company's legal status as an LLC or corporation.
The new company owner should plan for at least $500 of outlay for these costs.
These licenses will likely need renewed at some time so the renewal costs must be priced into the company's pricing model.
Many guards have accumulated their own equipment over time and the new agency will not need to pay for their use of force equipment etc.
However, the company will certainly want to provide the basic uniform with a patch and a badge. New startups should expect an outlay of at least $100 per officer in basic uniform costs.
For this projection let's assume at least three officers will need a uniform during the agencies first few months.
This is a very important focus of the new company as these materials should look and feel professional.
A new company should expect an initial cost of $1000 for quality marketing materials from an online service such as UPrinting.com.
The company should also develop a Web presence. A Web presence is the new phone book listing and it is an essential expense.
The new company should start out on a free Wordpress platform using the instructions found here.
It is important to host the site on a domain owned and branded by the company. This shouldn't cost more than $40 for the domain and hosting for the first year using this offer from BlueHost.
Local business or security licensing laws might require the agency to maintain an office.
All effort should be taken to mitigate this cost.
Perhaps a local business co-op can provide a shared office space for a minimal fee such as $50 or $100 a month. This will likely meet the requirements of the agency licensing law, provide a mailing address and give access to a shared conference room which could prove beneficial for client meetings.
Here's another cost cutting option: some businesses or office property managers might be willing to trade office space for a certain amount of free security coverage or even for just providing free alarm response.
If the office isn't mandated by law the startup shouldn't spend any time worrying about reserving an office until they get big enough to justify one. Most client meetings take place at the client's facility and officers do not need an office because they will go straight to the post when they go on duty.
There is no excuse for the business to spend any significant amount of startup capital on office space.
The contingency fund should be indexed as a percent of the company's total revenue. As the company grows so should the fund. The new owner should place at least $2,500 in the fund as an initial seeding.
This will help fund unexpected expenses and give the company a bit of breathing room.
What are the Components of the Security Guard Company Business Plan - The necessary elements of the Security Guard Company's business plan. Click to Read
How to Lower the Cost of the Securty Guard Company's Insurance Premiums - Methods for cutting the cost of insurance and undercutting the price model of the big security companies. Click to Read
How Much Should a Company Charge for Security Patrol? - Methods for charging for patrol route services. Click to Read
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