Start an internet security company by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your internet security company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an internet security company?
While you will need some office space, it is probably the least expensive part of your business. Unless you are doing all the development programming yourself, your payroll budget will likely be the largest upfront investment. You will also need examples of computer systems and software that you are trying to protect. For a reasonable attempt at creating a cyber security business, you will be looking at $500,000 to cover operating expenses and development for the first year before you start to bring in paying customers.
What are the ongoing expenses for an internet security company?
Programming and development must be constantly in motion in order to avoid falling victim to the next internet attack. Your payroll and training, including constant upgrades to equipment, will always be your biggest expense.
Who is the target market?
While your product can be used by every person who owns or operates a digital device, the most lucrative clients are corporations and government facilities looking to protect massive databases and their customer's personal information.
How does an internet security company make money?
Most customers will buy virus protection for their personal computers on an annual basis. Corporations will pay a monthly fee for active and constant surveillance of their systems and real time repairs for any cracks in their walls.
How much can you charge customers?
Individuals currently pay between $50 and $100 a year for protection for their laptops. Corporations will be happy to pay thousands of dollars in consulting fees to protect their expansive networks.
How much profit can an internet security company make?
A large cyber security firm can see income in the million dollar bracket when it is serving corporations. If you focus on the individual market, you may struggle to generate a profit unless you acquire rights to be included in a laptop or smartphone product launch.
How can you make your business more profitable?
Innovation in security programming will make your protection more valuable to the consumer compared to the competition. You'll need the brightest IT specialists to create solutions nobody else can offer.
What will you name your business?
Choosing the right name is very important. If you don’t have a name in mind already, read our detailed guide on how to name a business or get some help brainstorming a name with our Internet Security Company Business Name Generator.
Then, when registering a business name we recommend checking if the business name is available in your state, federally by doing a trademark search, searching the web, and making sure the name you choose is available as a web domain to secure it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your internet security company is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a internet security business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Internet security businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your internet security business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market an internet security company
In order to break into the cyber security market you will need to make a large splash at multiple tech shows, conventions, and seminars. Your foot will get in the door when you make yourself known to the major software developers such as Microsoft, Google, Apple, Android, etc. You must be able to demonstrate that your product can deflect a cyber attack, perhaps by allowing their security experts to try and hack a system protected by your product.
How to keep customers coming back
You will begin to build a serious client base when your security systems are highlighted wherever individuals or businesses are shopping for their next tech upgrade. Once your business is protecting information, your track record and ability to generate new protections quickly and accurately will help to increase your reach and maintain clients' loyalty.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start An Internet Security Company In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The best qualified individual to establish a new cyber security company will be highly motivated with an in depth and up to date understanding of the architecture, administration, and management of operating systems, along with multiple certifications in a variety of programming languages. While the owner of this business may not actually write the software, they need to completely understand how their product functions in a real world situation.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at an internet security company?
Those who own and operate a cyber security company will need to know how to:
- Identify emerging threats on the internet and find weaknesses in operating systems, apps, and networks
- Develop new patches that can protect clients' data and systems from an attack
- Constantly expand knowledge of new devices, software, firmware, network architecture, etc.
- Stay current with latest programming languages
- Develop marketing campaigns to reach out to new customers in the PC and corporate world
- Conduct person-to-person sales of your products and services
- Repair networks, servers, and computers that have come under attack
- Provide 24/7 support for clients through the phone, online, and in person when needed
- Handle payroll, vendors, and maintain offices
- Hire and develop new talent
What are some skills and experiences that will help you build a successful internet security company?
The people working for you will need to have extensive knowledge of:
- Programming and certifications in the latest languages used in the current marketplace
- Firewalls and network load balancers
- Structure of network architecture
- Database structures
- How cyber attacks are executed and be able to reverse program solutions in short order
As the owner and operator of the business, you will need:
- Aggressive marketing skills
- Ability to identify customers whose cyber security problems are not being addressed currently
- Ability to hire and develop your killer programming team
- Have keen attention to detail
- Be ready to expand your business when you are successful in creating a unique security product or procedure that everybody needs
- Strong understanding of how databases are used in corporations, hospitals, financial institutions, and government facilities
What is the growth potential for an internet security company?
With the entire planet on high alert regarding cyber security attacks, the opportunity for an internet security business to expand into the global market is very real. However, that is not accomplished without hiring genius programmers in the field who can readily adapt to changes in programming, hardware, and angle of attack executing an effective defense.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting an internet security company?
You will need to demonstrate the ability to do more for your clients compared to other firms, which may include protection for specific devices, a newer iteration of virus protection, or work to have your product included with the sale of the latest release of a new PC, smartphone, or even advanced gaming system. You need name recognition to become a serious player in this business.
How and when to build a team
This is an industry that heavily relies upon the ingenuity of your programming and analysis teams. Start hiring valuable employees as soon as you have funding in place. Your marketing team will run a close second as their creative ideas needed to reach the public will be responsible for launching your product and brand. Don't be shy about hiring people away from your successful competition, as they will have insider info on what works and what doesn't.