Beyond the obvious ones, like securing the proper business licenses to sell security systems in the states and jurisdictions you plan on doing business, there is a seemingly endless list of things to consider before pulling the trigger on starting a new security business. We’ve compiled a short list of tips to help.
The following is a list of 10 questions to ask before taking the leap into starting a security company:
1. Is the family on board?
This one not only pertains to those with spouses and children but for those in a serious relationship, as many times when taking that leap to start that dream business we often forget to include or consider those closest to us in the decision. Beyond your personal motivation, this is a critically important consideration when starting a new business, which in order to succeed requires long hours and time away from home, for example, especially in those first key years while trying to get the business off the ground.
2. Where is my funding coming from?
Starting a security business can be a costly endeavor, especially upon start-up, and requires considerable equity if you want to be able to compete with established companies in the geographic regions and verticals you are looking to work in. Getting private equity from investors is one option, especially if you have an established background in security and a proven track record with other companies, but there are other options as well, such as franchise options (see #3).
3. Should I open a franchise location?
With all that is involved in getting a business off the ground today, from customer creation costs and creating a salesforce, to marketing and customer service, working with an established security company to open a franchise location might be the right solution for you. For example, Security 101, a commercial security company based in West Palm Beach, Fla., currently has 37 franchise locations in the U.S. In addition, CGL Electronic Security, based in Westwood, Mass., recently introduced a franchise model that it hopes to expand aggressively in the coming years. There are many benefits to working with an established security company, which can provide resources, expertise, guidance and even funding.
4. Residential or commercial or both?
Deciding on what market or markets you want to go after is another key consideration. On the residential side, there are opportunities for what is called recurring monthly revenue, or RMR, which is gained by charging for a monthly fee for monitoring of security systems and other smart home interactive services that are rising in popularity, such as doorbell cameras and remote access and control of lighting and heat, for example.
On the commercial side, there are businesses and buildings to secure, which requires a different selling and compensation model that is focused more on revenue gained per project as opposed to RMR on the residential side. There are increasing opportunities on the commercial side for RMR, though, especially if you sell managed services, such as running all of a buildings’ systems, including fire, access, video, visitor management, etc.
While a good percentage of security companies provide both residential and commercial, the ratio varies based on the company and its capabilities.
5. What are my sales compensation plans?
Building on the last question, having the right sales compensation plan worked out for your sales force is critically important because hiring and retaining good employees is one of the most challenging aspects to starting and running a successful company. Obviously, the sales model for selling home security systems will differ from one for selling a large commercial project, but this must all be spelled out and transparent to your salespeople with incentives for selling each.
6. What verticals will I focus on?
On the commercial side of things, it is important to pinpoint which verticals you want to play in at first. Obviously, it is important to work in verticals that you have expertise in and specific knowledge of, such as banking or gaming if you come from that world. Beyond that, though, look to see what is most in demand in the verticals you are looking to serve, such as emergency and mass notification systems in schools and universities, or hands-free access control in hospitals, for example.
7. Who am I going to partner with?
I cannot overemphasize the importance of this question, as you will not only need to partner with a dependable central station company to monitor your accounts but also with equipment providers to offer your customers the latest and greatest security equipment, whether it is residential or commercial.
On the monitoring side, it is important to research each of the potential central station monitoring companies you are going to work with and make sure the company aligns with your company’s overall culture and has a proven track record. The Monitoring Association is a great resource, and also helps to designate and provide certification for a central station company, showing it meets certain minimum standards and requirements.
8. How am I going to manage my business?
Many successful companies rely on the latest software programs and applications to help them run operations, accounting and payroll and manage projects, accounts, and employees—pretty much everything that makes a business function on a daily basis. Creating processes and procedures for every aspect of your business is critically important, and having systems in place to help you track your employees and accounts is vitally important.
9. What is my marketing strategy?
With the many different forms of marketing and advertising available today, it is important to ask yourself what your go-to-market strategy will be and what mix of marketing strategies you wish to employ, including online, direct to consumer or other channels, as well as understanding who your customer is. If you do not have a lot of experience in this area, hiring a marketing pro who has a proven track record of helping get a company off the ground could be highly beneficial
10. How important is customer service?
Last, but certainly not least, customer service can make or break your company. Providing great customer care can be a key differentiator between you and the competition, so make this the cornerstone upon which you build your business. Nothing can help or hurt your business more than word of mouth, so create a company culture that is founded on that business model, from your installers and technicians to your salespeople and those answering the phone.
Contact Security Alliance Command Center to learn more about starting a security business or to set up monitoring for a security business in Virginia or any of our surrounding states.