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How To Start A Security Guard Business

How To Start A Security Guard Business

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How To Start A Security Guard Business

How To Start A Security Guard Business

With crime on the rise in many areas, the demand for private security services continues to grow. Starting your own security guard company can be a great business opportunity if you have the right skills and experience. In this article, we’ll provide an overview of the security guard industry and what you need to know to start your own successful business.

Business Overview

A security guard company provides protection services for commercial and residential clients. Guards patrol properties, monitor surveillance systems, control access, and respond to incidents. Common clients include office buildings, shopping malls, apartment complexes, and construction sites. Your services will focus on preventing crime and providing peace of mind.

There are plenty of different needs for security guards, and these businesses may choose to specialize in one or more areas like site security, retail security, loss prevention, event security, gate guarding, and bodyguarding.

A security guard business offers a client convenience and peace of mind. By providing guards who are already trained, experienced, and knowledgeable, these businesses take some responsibility off the client. Security guards may be armed or unarmed, depending on the security guard business and the client’s requirements, and services can generally be tailored to the client’s specific needs. Some security contracts are ongoing, while others may be short-term contracts designed to accommodate an event or change requiring additional coverage.

Industry Summary

The security services industry in the United States has grown at an annual rate of .9% over the last five years to reach an expected $48 billion in sales by the end 2023. What makes this industry particularly appealing is its resilience. Even during economic downturns, the need for physical security services often remains stable or even increases. Businesses, events, and communities will always prioritize safety, making this a relatively recession-proof sector.

Large national companies such as Allied Universal Security Services, Securitas, and Brinks dominate the industry, but there are still plenty of opportunities for smaller, privately-owned security guard businesses to provide specialized services and focus on their communities.

With increasing concerns over public safety and security, the demand for security services is on the rise. The industry is seeing a shift towards more technologically advanced security solutions, with an increased emphasis on cybersecurity alongside traditional physical security measures. Therefore, staying updated with the latest trends and advancements in the security field can give your business a competitive edge.

Target Market

The target market for a security guard business is incredibly diverse as these services are required across a wide range of industries and environments. Here are some of the key segments:

  1. Commercial properties: This includes office buildings, shopping malls, retail stores, and other commercial establishments that require regular security services to protect their property and patrons.
  2. Residential communities: Gated communities, apartment complexes, and other residential areas often hire security guards for the safety of their residents and property.
  3. Construction sites: Construction sites are a hotspot for theft and vandalism, making security services vital.
  4. Hospitals and healthcare facilities: These facilities require security guards to ensure the safety of patients, staff, and visitors, as well as to handle any potential disturbances.
  5. Schools and universities: Educational institutions often need security guards to maintain a safe and secure environment for students and staff.
  6. Event organizers: Concerts, festivals, sports events, and other large gatherings usually require security services to manage crowds and ensure safety.
  7. Government agencies: Many government buildings and facilities require security personnel for protection and access control.
  8. Financial institutions: Banks and other financial institutions are a prime target for thieves, so they often employ security guards.
  9. Hotels and resorts: These establishments need security guards to ensure the safety and security of their guests and staff.

Remember, each segment has its unique needs and challenges, so it’s essential to understand these nuances when marketing your security guard services.

Checklist To Start A Security Guard Business

Starting a successful security guard company takes more than just having a background in security. It calls for a deep understanding of the market, knowledge of industry trends, and the ability to navigate through the various legal requirements and licensing procedures. But our guide should help you be well on your way to establishing a successful security guard business.

Step 1: Assess the Market

When it comes to launching a security guard business, or any business for that matter, it’s not enough to simply have a good idea. Before diving headlong into operations, securing equipment, or even selecting a business name, the fundamental first step is market research.

Why?

Because no matter how stellar your concept may be, it won’t get you far without a demand for your services. Market research gives you the critical insights needed to assess this demand, shape your offerings, and identify the niches you could specialize in.

To understand if there’s enough customer interest for your security guard business, start with a localized approach. Look at the existing businesses in your area. Are there many commercial spaces, schools, or events that might require security? Examine the types of security services already available and identify gaps you could fill. Also, talking to potential customers before starting the business, you may even get some customers ready to sign up!

It might be tempting to offer many different services to appeal to many different clients, but this strategy can backfire if you’re not truly equipped to fulfill each service type. Also, by focusing on a broad market, you’re likely to face more competition. That’s why finding a niche is important. Maybe there’s a rising demand for event security in your area, or perhaps local businesses are looking for specialized security training. Researching a niche isn’t just about spotting a gap; it’s about identifying a gap you can fill exceptionally well.

Step 2: Write a Business Plan

After verifying that a market exists for a new security business, the next step in starting your business should be to write a business plan.  Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Writing a business plan for your security guard business isn’t just a formality for the bank, it’s a tool that acts as your business’s roadmap and helps get the ideas out of your head and on paper, which is useful to iron out the vision.

If funding is being requested, there are a few sections that I recommend spending some extra time on. These include:

Market analysis: In this section, you should detail why you believe your security guard business will succeed. This could include identifying gaps in the current market, specific niches you plan to target, or unique services you’ll offer. Highlight any trends or industry data that support your predictions. Lenders will want to see that you’ve done your homework and understand the market you’re entering.

Management team: The management team section is where you outline who is running the business. This is significant because lenders often correlate the potential success of a business with the expertise and experience of its management team (which includes the owners). Detail each team member’s background, skills, and role within the business. Show how their combined experiences contribute to the potential success of your security guard business.

Financial projections: This section will be where lenders will spend the most time. It’s where you lay out your expected income, expenses, and profitability. You’ll want to provide a detailed breakdown of your start-up costs, along with projected revenue and expenses. Lenders want to see that your projections are reasonable, and that the business has the potential to be profitable and repay any loans.

Before showing your plan to any financial institution, it’s a good idea to have an experienced business owner or an accountant go through your plan and projections. They can identify any weak spots you might have missed, giving you a chance to address them before your lender does.

Related: How to write a business plan

Step 3: Source Funding

Securing the funds to kick off your security guard business is a pivotal step in turning your vision into reality. While the type of funding you pursue will depend on various factors like your business needs, creditworthiness, and available resources, let’s go over some of the most common sources available to security guard businesses.

Personal savings: Starting with your own stash is the most straightforward way to fund your business. If your savings aren’t enough to cover all startup costs, you’ll need to look for other sources.

Traditional lending: Banks and credit unions are the usual go-to for business financing. In addition to a good business plan, they’ll check out your credit score and collateral. If a bank considers your business too risky, an SBA (Small Business Administration) loan guarantee could tip the scales in your favor. These government-backed loans assure the lender that a portion of the loan will be repaid, even if you default.

Friends and family: Financing from friends and family can be a viable option. However, it’s essential to treat these arrangements professionally. Ensure that all agreements are put in writing to prevent misunderstandings and protect relationships.

Microloans: If your funding needs are modest or traditional lenders aren’t biting, microloans could be your answer. Organizations like Accion, Kiva, and local economic development groups offer smaller loan amounts, often with fewer restrictions. Some even provide valuable business training along with the loan, offering a two-fold benefit.

Local investors: While venture capital is generally not a fit for most security guard businesses, local private investors could be an option. These are typically individuals with a higher net worth who take an interest in community business development. But bear in mind, attracting an investor can be tough. Most are looking for businesses that promise rapid growth and scalability. Your business plan and pitch need to be compelling enough to show high returns on their investment.

Related: Finding the money to start a business

Step 4: Register the Business

Starting your own security guard business involves several steps to ensure it’s registered properly and operates legally. This means selecting a business structure, registering your business name, and obtaining the necessary licenses and permits.

Every state has different requirements, but here is a general overview:

Business structure: You have four main choices for business structure: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each has its pros and cons:

  • Sole proprietorship: The advantage here is the ease of startup and lower costs. You are the business, so there’s less paperwork, and you report the income and expenses on your personal tax return. The downside is you have no liability protection, so your personal assets are at risk in case of business debts or lawsuits.
  • Partnership: An option if you’re starting with someone else. Partnerships are similar to the sole proprietor due to the owner’s unlimited liability but are easier to set up than corporations.
  • Corporation: Corporations offer excellent liability protection, separating your personal assets from business debts. But they are the most complex of the four to set up and maintain.
  • Limited Liability Company (LLC): Combines the liability protection of a corporation with the ease of administration of a sole proprietorship or partnership.

Most security guard companies are structured as limited liability companies (LLCs). An LLC provides personal liability protection for the owners while still allowing pass-through taxation like a sole proprietorship or partnership. Forming an LLC involves filing articles of organization with your state and creating an operating agreement.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming a security guard company

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Private security companies are heavily regulated and will require licensing, typically at both the state and local levels.  At a minimum, most businesses will need to complete certification, such as a Security Guard License, Private Patrol Operator License, Qualified Manager License, which often includes undergoing a background check, passing an exam, meeting experience requirements, and maintaining insurance coverage. Specific steps to obtain a license can be found through your state’s licensing body.  For companies offering armed security guards, further requirements may apply.

Most state licenses require a high school diploma and experience as a law enforcement officer.  Also, individuals with a felony record or any misdemeanors within the last 5-10 years are typically ineligible to apply.

In addition to the licenses and certificates required of the guards themselves, a security service will need to register for general business permits. These permits and licenses can vary based on the state and town where the business is located and may include a local business license, tax permit, and Employer Identification Number, among others.

Related: Common business licenses, permits, and registrations by state

Step 5: Set Up Operations

With the licensing out of the way, the next step is to begin setting up operations.

Determine if you will operate remotely or need office space. Many security guard businesses are able to run virtually, which reduces overhead costs. If you’re working remotely, ensure you have a reliable internet connection and a quiet, dedicated workspace. This could be a home office or any quiet space where you can focus on administrative tasks and client communication. If you’re planning to set up an office space, consider its accessibility for potential clients and employees, safety, and proximity to areas where you expect to offer your services.

Having a physical office can project a more professional image when meeting with clients. If opting for office space, look for a location that is affordable yet accessible for clients and employees.

Step 6: Obtain Business Insurance

Getting your finances in order is a big win, but you’re not quite done with the prep work. The next key step is securing the right insurance coverage. Providing security services is risky,which makes security guard insurance is more than just a safety net, but a cornerstone of your business that can protect your finances. In the security guard industry, certain types of insurance are not just recommended but often mandatory, depending on your jurisdiction and the clients you serve. A few of these include:

  • General liability insurance This type of insurance can protect your business from claims of bodily injury, property damage, and advertising injury. Many states require proof of general liability coverage as a condition for obtaining a business license.
  • Professional liability insurance/errors & omissions: This insurance covers claims of negligence related to professional services provided by your business. It’s particularly relevant for security businesses as it covers any legal defense costs if a client sues for negligence or failure to perform professional duties.
  • Assault and battery insurance: Given the nature of security work, there’s a risk of physical altercations. Assault and battery insurance can cover claims related to instances where a security guard is involved in a physical confrontation.
  • Commercial auto insurance: This type of insurance can help cover expenses resulting from a business vehicle being involved in an accident.
  • Surety bond: Surety bonding may be required in some states to ensure that the business will comply with all state rules and regulations and cover any financial damages caused by the company.

Many providers offer “Business Owner’s Policies” that bundle essential coverages like general liability and property insurance into a single plan, often at a discounted rate. So, shop around to find a bundle that fits your specific needs. We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.

Step 7: Hire Staff

Hiring employees is a foundational step for a security guard business. Typically, a security guard business will have different roles such as security officers, administrative staff, and perhaps even a sales team for client acquisition.

Before you begin hiring, let’s talk about the legal nuts and bolts you need to sort out before you hire your first employee. Each state is different, but here is a general overview.

Obtaining an EIN: An Employer Identification Number (EIN) is a unique identification number that is required by the IRS for businesses that plan to hire employees.

Employment eligibility: You must verify that every employee is legally eligible to work in the U.S. Employers typically do this using Form I-9, Employment Eligibility Verification.

State reporting: Each state has different reporting requirements for new hires, so it’s important to understand and comply with the specific rules in your state.

Labor laws: Complying with federal and state labor laws, which cover areas like minimum wage, overtime pay, recordkeeping, and youth employment standards, is crucial.

State requirements for certification: Depending on your location, your security guards may need to be licensed or certified. Ensure you’re familiar with local regulations and that all employees meet these requirements.

Related: Hiring your first employee

Step 8: Create a Marketing Plan

With the launch of your business getting close, the next step to cover is getting the word out to potential clients. Marketing is a critical aspect of running a successful security guard business.

Here are a few effective ways other security businesses market their business:

Website: A well-designed, user-friendly website can serve as a powerful marketing tool. It’s a platform where you can showcase your services, share customer testimonials, and provide informative content.

Local SEO: Optimizing your website for local search engine results can make your business more visible to potential clients in your area. This includes using relevant keywords and listing your business on online directories like Google My Business can improve your visibility on search engine results and map listings..

Social media: Social media platforms are useful for connecting with prospects and clients. Posting regular updates about your services, sharing security tips, and engaging with followers can enhance your online presence.

Email marketing: Sending regular newsletters or promotional emails can keep your business top of mind for your clients. These communications can include updates on your services, security advice, and case studies demonstrating your effectiveness.

Networking: Joining local business organizations such as the Chamber of Commerce can provide networking opportunities and make your business known within your community. Attending meetings and participating in events can help you build relationships with potential clients.

Related: Low-cost ideas to market a new business

Step 9: Prepare to Launch!

As you approach the final stages of starting your security guard business, there are likely several steps left to finish. Some common ones include:

Set up bookkeeping: Implementing an efficient bookkeeping system is vital for managing your finances. Hiring a bookkeeper or using software like Wave Accounting (FREE) or Quickbooks can help track income, expenses, payroll, and taxes, making financial reporting and tax filing easier.

Draft contracts: Establishing clear contracts is important in the security industry. Examples include service agreements with clients detailing the scope of services, guard employment contracts, and non-disclosure agreements to protect sensitive information.

An attorney is best for drafting contracts, but RocketLawyer and Law Depot have free and inexpensive templates that may be helpful to start with.

Opening a bank account: A separate business bank account simplifies your finances by keeping your personal and business transactions separate.

Implement management software: Consider investing in management software like OfficerReports, Silvertrac, or TrackTik. These platforms can help with scheduling, incident reporting, and tracking guard activities.

Set pricing: Determine competitive yet profitable pricing for your services. Consider factors like operating costs, local market rates, and the value you provide when setting your prices.

Join industry associations: Membership in associations like ASIS International, National Association of Security Companies (NASCO), and International Association of Professional Security Consultants (IAPSC) can provide networking opportunities, industry updates, and professional development resources.

Greg’s Tip: When bidding on security contracts, resist the urge to undercut competitors. Submitting very low bids may win business initially, but winning an unprofitable contract can sink a new security business.

Greg's Business Tip

Common Questions When Starting A Security Guard Business

How much does it cost to start a security guard business?

Starting a security guard business can be a low-cost venture compared to other industries, but there are several costs involved that potential owners should be aware of.

The average startup costs for a security guard business can range anywhere from $5,000 to over $100,000.

Here are some of the key costs involved:

Licensing fees: Expect to shell out around $500 to $2,000. This includes fees for business registration, licenses, and professional licensing.

Office space: If you’re not working from home, renting a small office can cost anywhere from $500 to $2,000 per month, depending on the location. Initial deposits often include first and last month’s rent and a security deposit.

Equipment: Uniforms, security gear like flashlights and radios, and office furniture can add up to $5,000 to $10,000.

Technology: Computers, security software, and surveillance tech may set you back another $5,000 to $10,000.

Initial payroll: Even if you’re starting with a small team, training and the first month of payroll might hover around $10,000.

Insurance: For general liability and property insurance, expect an initial outlay of around $2,000 to $4,000.

Marketing: Setting up a website, some initial SEO work, and perhaps some local advertising could be in the neighborhood of $2,000 to $4,000.

Vehicles: If your services involve patrolling, used vehicles can cost around $5,000 to $15,000 each.

Management software: Specialized security management or point-of-sale software can range from $500 to $2,000 upfront.

Miscellaneous supplies: Additional costs for office supplies and minor unexpected expenses can be around $1,000.

Also, as you plan your budget, it’s recommended to have three to six months of operating expenses on hand as a buffer. This could cover unexpected costs or periods of slow business.

The costs to start a security business can add up quickly, so it’s important to accurately estimate expenses when developing your business plan. Taking time to thoroughly plan the business entity, services offered, staffing needs, licensing, insurance and capital requirements helps turn what can be an expensive endeavor into a strategic investment poised for success.

How profitable is a security guard business?

Determining the profit potential for a private security company can vary significantly depending on several factors like location, scale, and specialization.

However, a common industry formula to estimate profit revolves around your billable rate versus your expenses. Let’s break down some simplified math to provide an example.

Assume you’re charging $40 per hour for your security services, which is common in the industry for general security services. If you have 5 security guards each working 40 hours a week, that’s a total of 200 hours per week or approximately 800 hours per month. At $40 per hour, your potential monthly revenue would be $32,000.

From this revenue, you need to subtract your expenses. Let’s say you pay your guards $15 per hour, which equates to $12,000 per month. Add additional overhead costs like equipment, office rent, utilities, insurance, marketing, etc., which we’ll ballpark at $10,000 per month.

So, your total expenses are $22,000 per month, leaving you with a gross income of $10,000 per month.

Keep in mind this is a simplified example that doesn’t account for taxes, fluctuations in work, or other unforeseen costs. But it gives you a baseline to start from.

What skills are needed to run a security guard business?

Starting a security guard company doesn’t require a business degree, but certain skills and experiences are valuable in starting and running this business.

Security guard experience: A business owner who has previously worked as a security guard will have a better understanding of the challenges of the industry. This experience may also result in connections and a network that can be helpful when starting a new business.

Physical fitness: Working as a security guard requires spending plenty of time on your feet. This can be a demanding job, so physical fitness is an advantage.

Attention to detail and awareness: A business owner will need to take care of details, like assignments and invoicing, daily. When on the job, attention to detail and awareness are important qualities for any security guard.

Security guard training and license: Some states require security guards to receive formal training and be licensed. Colleges, career centers, and state-approved programs generally offer this training. Most programs require that applicants have a clean criminal record.

Firearms training and license: If a security guard will be armed, they will need to take a firearms training course and become licensed. Requirements vary from state to state.

Ability to stay calm under pressure: Security guards may encounter tense situations and will need to stay calm and think clearly under pressure.

Management experience: Previous experience in hiring, training, and managing staff will be helpful when building a security guard business and expanding with new employees.

What is the NAICS code for a security guard business?

The NAICS code for a security guard business is 561612.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
International Foundation for Protection Officers
United Federation of Special Police and Security Officers, Inc.
United Government Security Officers of America

How To Start A Security Guard Business

How To Start A Security Guard Business

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