Start a security guard 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 security guard 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 a security guard company?
Costs for starting a security guard business are minimal. The largest cost is insurance, which can be up to $3,000 for a 6-month term. Legal and regulatory costs will run about $500. The cost for basic equipment and uniforms varies. If guards have their own firearms or force equipment, then the cost will be minimal. If not, they can range from just a couple hundred dollars for a used handgun to several thousand dollars.
Uniforms will run about $100 per guard or officer.
Some local and state laws require security companies to maintain an office. Minimize these costs by using shared-space small offices. A shared office will cost several hundred dollars per month, depending on where you live. Dedicated offices can run several thousand per month.
This is a business where having a large office isn’t important. Only get as much office space as you absolutely need.
Marketing materials for the new business will likely run $1,000 to $2,000.
Websites are another cost you should consider. They will run you between $300 and $500 for a basic website. Hosting should cost no more than $100 per year. In many cases, you can find hosting for much less.
What are the ongoing expenses for a security guard company?
Normal ongoing expenses for this business are minimal. Mostly, you’re paying for insurance, an office, a security team’s salary (and related expenses).
Who is the target market?
Security companies typically work with wealthier clients who have valuable property to protect. These clients are usually businesses that guard valuable information, tangible items, or individuals within their premises.
On rare occasions, a company might be hired to protect an individual, like a local or national celebrity, a political figure, or CEO of a large company.
How does a security guard company make money?
Most security companies charge clients an hourly rate or flat fee for services. Larger security guard companies have corporate or commercial clients. The ideal client is one who signs a multi-year service contract. However, when you’re just starting out, these types of clients are hard to get.
How much can you charge customers?
Security guard companies tend to have a range of prices, depending on the services they’re offering. For unarmed security, you can charge between $10 and $25 per hour. For armed security, you can charge from $35, up to even $100, if it’s a special or high-risk event.
However, this is not the only way to charge clients. Security contracts, including both short and long-term contracts, can fetch a much higher total fee for services. Some companies will charge “by the job,” in which case the company is charging a contract fee. These fees can amount to several thousand dollars per contract.
In some cases, a client pays monthly, semi-annually, or annually for services and renews the contract for many years. This is an ideal scenario, and produces stable long-term income for the business.
Per-contract fees are usually reserved for established clients, however.
Another factor affecting what you can charge clients is the number of security personnel on-site for a job. Most companies charge more if there are more guards on-site.
How much profit can a security guard company make?
Security companies can generate approximately $40,000-$60,000 per security guard, per year. If you hire a team of 5 security guards at startup, then you may be able to clear $300,000 in revenue. Net profits vary based on your insurance costs, labor costs, and regulatory costs in your state.
How can you make your business more profitable?
Most security businesses could benefit from specialization and charging higher prices. Closing higher-paying clients will also bring in more money.
For example, instead of offering generic security services to a local business, try specializing in bodyguard services, mall services, or catered event services for politicians. If your company becomes known for providing security for high-profile clients, you’ll have very little competition.
Also, a security guard typically has all the skills necessary to provide bodyguard services as well. However, the term “bodyguard” typically connotes a larger, muscular person who is capable of intimidating potential threats to the client’s person. If you feel as though you can provide these services--which typically involve protection of individual people--this is an effective way to increase clientele.
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 Security Guard 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 security guard 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
In most states, it is necessary to obtain a license to work as a security guard. Certain other state permits and licenses may be needed to operate a security guard 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.
In addition, certain local licensing or regulatory requirements may apply. 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
Security guard businesses should require 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, and service level expectations. Here is an example of one such service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your security guard 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.
Certificate of Occupancy
A security guard business typically features an office from which clerical operations are carried out. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a security guard business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your security guard business will be in compliance and able to obtain a CO.
Here is a list of relevant considerations when starting a security guard service from Cornell University Law School’s website.
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 a security guard company
Many security companies rely on direct mail, social media, and referrals for business. Contact your local mailing list broker and ask about lists of businesses that have hired security companies in the past. Mail these companies with your offer. You can also try sending out fliers and handing out business cards to local companies.
How to keep customers coming back
Specialization is a great way to stand out from the crowd. How many companies do special events in your area? If you’re the only one, then you’ll get all the business in that niche.
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 Security Guard 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?
This business is suitable for individuals who are passionate about personal security and want to help others feel more secure in their homes and businesses. It may require working long hours or unusual schedules, like nights and weekends. Because of this, the business may not be suitable for individuals with family commitments or other obligations that fall outside of traditional 9-5 work days.
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 a security guard company?
Day-to-day activities of a security company include preparing security-related documents like incident reports and proposals, strategic or tactical initiatives and reviewing these documents. Management also needs to provide ongoing training and education for subordinates, plan security detail for special and high-risk events, and review financial reports to make sure security operations are never in jeopardy.
A security company’s management also needs to maintain its budget for security operations, order security-related supplies and equipment, coordinate operations and activities with law enforcement (and other agencies), and attend meetings and professional seminars. In rare circumstances, you may also have to coordinate and provide support during emergencies.
What are some skills and experiences that will help you build a successful security guard company?
Security guards typically have some form of formal training from combat fields such as policing, military service, etc. In addition to this, security professionals should a have a private patrol operator’s license and extensive knowledge of law enforcement techniques.
What is the growth potential for a security guard company?
These businesses can be run at a small or large scale. A small security business can be run by just a handful of individuals. When operating a small company, the biggest concern is usually cost control and recouping the startup costs, like insurance, office space, and equipment.
All other things being equal, it’s easier to recoup these costs with a minimum staff of 5 people than with 3. The more guards you can hire, the better.
Large operations are more expensive to run, but also tend to have more stable income and more lucrative service contracts because they are more likely to land large multi-year corporate contracts.
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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 a security guard company?
Partnering with local HOAs, landlords, and local businesses could help you secure your initial security contracts. Try to keep costs associated with office space to a minimum. In most cases, you won’t need a large office when you’re just starting out.
How and when to build a team
In most cases, it makes sense to take on a team of 3 to 5 security professionals when you’re first starting out. Not only does this help you recover the initial startup costs, it helps build your revenue stream faster, since you can take on more work. As your company grows and becomes more well-known, you can hire additional security guards as finances allow.