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 step guide to starting your locksmith business. 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 long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a locksmith business?
Starting a locksmithing business doesn’t cost a fortune. If you start working out of your home, it may cost a few hundred dollars for basic equipment like:
- Plug spinners
- Mechanical and computerized picks
- Key extractor
- Tension wrenches
- Electric pick guns
- Locksmith hammer
- Router drills
- Key cutters
A full-time operation with a wide range of services might have initial startup costs of between $5,000 and $10,000, with much of this money going toward more advanced tools like:
- Key decoders
- Lock bypass tools
- Specialized tools like automotive lock picking tools or safe cracking tools
- Drill jigs and guides
If you want to run an emergency on-site service, you'll also need a vehicle.
What are the ongoing expenses for a locksmith business?
Ongoing expenses for a locksmith business depend on the size of the business. Maintenance of service vehicles may run a few hundred to a few thousand dollars a year. Maintenance on tools is typically minimal, but may cost several hundred per year depending on the equipment used and your company’s maintenance needs.
Who is the target market?
Locksmiths serve a wide variety of customers. However, the most profitable customers are typically corporations and governments in need of ongoing service and maintenance. With that said, a 24/7 emergency service can be profitable for some locksmithing businesses since premium prices can be charged for what is essentially “after hours” work.
How does a locksmith business make money?
Locksmith businesses make money by designing and installing lock systems. They also make money by designing keys and performing various services related to locksmithing. This might include letting someone into their car or home if they’ve locked themselves out accidentally. It could also include making duplicate keys or fixing locks or security systems.
How much can you charge customers?
Most locksmiths charge a mobile fee of $35 and $150 if they have to go to the customer for service. For nights or weekends, you can charge between $150 and $250. For basic service, like changing a lock, locksmiths charge anywhere between $40 and $100, plus $5 to $25 per cylinder. If you’re installing new locks, you can charge up to $100 as a minimum fee, plus $20 to $30 per lock.
Copying a key should cost customers between $1.50 and $4 for standard keys. Specialized keys can be sold for up to $20 and “chipped” keys for vehicles may fetch prices between $50 and $175.
How much profit can a locksmith business make?
Locksmithing businesses tend to have a high markup on services. Because it’s a low-overhead business, most of what you charge is profit. A one-person locksmithing business can clean between $40,000 and $60,000 per year. However, if you employ other locksmiths, there’s no reason you can’t make a million dollars or more.
How can you make your business more profitable?
One of the best ways to build profits in the locksmithing business is to offer exceptional service and ask for referral business. However, beyond that, locksmiths who specialize tend to make more than generalists. For example, automobile lockout services tend to charge more than a general locksmith. Locksmith companies who specialize in corporate security also make more than generalists. Keep this in mind when considering whether a locksmithing business is right for you.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing 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 locksmith business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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.
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
State and Local Business Licensing Requirements
- Many states require a locksmithing business to validate that every locksmith working within that company is licensed due to the locksmith having access to a client’s home. Some states simply require a background check while other states require an approved training course.
- In many states, an apprenticeship is additionally required to teach a new locksmith the ropes of the business.
- Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
- In addition, certain local licensing or regulatory requirements may apply. For more information:
- 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.
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.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 a locksmith business
Marketing for locksmithing is not as difficult as it sounds. Most businesses that market to residential customers do so through Google. A local Google search has become, by far, the most reliable way for people to find local locksmiths. This is because Google curates local businesses in its local search.
In addition, locksmith businesses often advertise by putting a sign on their van or truck. They also invest in good signage in front of their office.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Locksmith businesses that stand out from the crowd tend to do best. Unless you’re the only locksmith in the area, you need to figure out what you can do that others cannot. For example, a locksmithing business might advertise a 99% success rate on opening locks without damaging the lock or door. Alternatively, the business might guarantee availability between certain hours or guarantee to have a technician out to a job site within a certain amount of time.
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 A Locksmith Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Locksmithing businesses are started by people who like working with their hands, have a background in mechanical engineering or are mechanically inclined, are creative and curious by nature, love puzzles, and who are night owls.
This business does not sleep. Customers may call at late or unusual hours for lockout services. A locksmith needs to be wide awake and able to think clearly when most people are asleep.
Locksmithing is a challenging business and not for individuals who give up easily. Technology changes at a rapid pace in this industry, so a constant desire to learn and discover new things is important.
Finally, locksmiths are charged with the public trust. Since a locksmithing business makes keys and locks for individuals, businesses, and governments, it holds the “keys to the kingdom.” A high standard of ethics is essential since they inherently put people in vulnerable positions when performing services like lockout, re-keying, and designing custom security locks and systems.
What happens during a typical day at a locksmith business?
Locksmiths make locks and keys, so a lot of the day-to-day activities revolve around that. However, a locksmith might also spend a lot of time changing or replacing locks in a building, updating old locks or replacing broken ones. A locksmithing business might be responsible for maintaining and updating security systems for corporations or governments. If you run a 24/7 emergency service, your typical day will likely include lockout services at odd or unusual hours.
What are some skills and experiences that will help you build a successful locksmith business?
The locksmithing business is, more or less, a trade profession which still operates under an apprenticeship program. There are also certifications you can get from trade organizations, like the Associated Locksmiths of America (ALOA).
Certified Registered Locksmith is one of three major certifications that increase a locksmith’s credibility and help educate potential candidates for apprenticeship. The other two certifications are the Certified Professional Locksmith (CPL) and Certified Master Locksmith (CML).
Most companies who hire locksmiths look for these certifications. Likewise, if you want to be taken seriously in the industry, all three are a practical requirement.
Other certifications include Registered Locksmith (RL), Certified Automotive Locksmith (CAL), Certified Professional Safe Tech (CPS), and Certified Master Safe Tech (CMST).
In addition to certifications, you’ll need a license. Some states require you have a certification before getting licensed to do business as a locksmith.
Before you can get licensed, you need to meet additional requirements:
- Be 18 years old.
- Complete training or apprenticeship.
- Pass a certification course and exam.
- Get a business license.
- Have a clean criminal history.
What is the growth potential for a locksmith business?
A locksmithing business is usually a small one. Most locksmiths are part of a family-owned operation or work as an apprentice under the original owner.
However, there is nothing that prevents a locksmithing business from becoming a large chain or franchise. Most locksmithing businesses remain small because of the unique nature of the business. It doesn’t scale well unless you use business systems (like franchise agreements).
TRUiC's YouTube Channel
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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.
How and when to build a team
Most locksmithing businesses are small, family-owned, operations. However, if you want to build a larger business, you’ll need to hire and train talent. It makes sense to hire extra help when you can’t perform all the basic tasks of the business yourself.
For example, some of the first roles you may want to fill include a bookkeeper and a receptionist. If you need additional help, hiring a locksmith will cost you between $22,141 and $56,597 in salary. This does not include benefits and other regulatory requirements.