How to Start a Home Security Business

Part 1 - How to start a Home Security business - Background

Home security companies install and maintain security systems. Some companies charge an hourly rate only, while others charge hourly and flat-fees based on whether they have to travel to the customer’s location. Most security companies hire a team of electricians to perform installations. Owners are either electricians themselves or have a deep understanding of the trade.

Our guide is in 3 parts:

• Part 1 - How to start a Home Security business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a home security business?

Startup costs vary widely depending on the business model you choose. Buying a franchise can cost between $68,000 and $110,000 for a Signal88 Franchise. AmeriCop franchise fees range between $50,000 and $64,000.

If you want to sell to law enforcement, landlords, and businesses, then Background Screeners of America might be the best way to go. The startup costs going this route are less than $20,000.

To start your own independent company may cost less than this, but you will be competing in a highly competitive industry with established players. Most customers want to do business with companies that sell and service hardware as well as provide the monitoring service.

What are the ongoing expenses for a home security business?

Typical expenses for this business are low as far as product is concerned. A one-person alarm business can be started for between $10,000 and $50,000.

This is because the business is primarily a service-oriented business.

The primary expenses are vehicles for the installers, the hardware, and (if you run a monitoring service) phone lines and customer support staff. Once you start staffing a business, costs rise sharply:

• Vehicles: $20,000 to $30,000 per vehicle.

• Labor costs: $200,000+ per year for a small company.

• Overhead: $10,000 to $20,000 for equipment, office supplies, and other related costs.

Who is the target market?

A good client is usually one that has a lot to protect. These are usually upper middle class families with small children. Security companies find it difficult to profit outside of this niche, meaning poorer neighborhoods are not good candidates for services, even though they may benefit from having a security system.

How does a home security business make money?

There are two models for this business: independent and franchised. An independent security company may charge whatever they wish for services (whatever the market will bear) while a franchise operation may dictate minimum and maximum charges for services.

However, average installation costs range between $600 and $1,200. Some companies advertise “free” equipment and then charge a higher monthly service fee to make up for it.

According to A Secure Life, the monthly costs for monitoring range from $10 on the low end to $100 for premium services.

How much can you charge customers?

A typical client pays an upfront installation cost of between $600 and $1,000. Ongoing monthly maintenance costs range from $10 up to $100 for premium services.

How much profit can a home security business make?

Independent alarm businesses can bring in between $100,000 and $1,000,000 in revenue. However, one-person companies typically average between $50,000 and $60,000 per year.

How can you make your business more profitable?

Generating more profit from an alarm company usually involves offering supplemental services like alarm monitoring and premium services like email and text message alerts, remote access and control, 24/7 monitoring for intrusion, fire, environmental hazard, and life safety.

Day-to-Day and Growth

What happens during a typical day at a home security business?

Key day-to-day activities include monitoring customer accounts, installing new systems for clients, handling incoming service calls, and reducing attrition. In the home security business, it’s much cheaper to save a client account than it is to find a new one. So, a lot of time and money is spent on loss retention. A typical day may include several installation and service calls and multiple security-related calls.

What are some skills and experiences that will help you build a successful home security business?

Sales experience is helpful when first starting out. However, this is definitely something that can be learned on the job.

Basic experience setting up electronics and related IT skills are a must, as you will need to be able to quickly and efficiently install home security systems.

What is the growth potential for a home security business?

According to a recent IBIS World’s Security Alarm Services market research report, average annual growth in this industry is 4.3%. Smaller companies typically focus on installation and outsource the monitoring service. As the business grows, a company may bring the monitoring side of the business in-house.

How and when to build a team

Hiring employees makes sense when your business is large enough to support it. Some of the typical roles you’ll want to fill first are sales and installer positions as this is primarily how your business’s revenues will grow to support more staff. After that, accounting and bookkeeping roles should be filled.

Typical salaries for these positions vary according to region, but salesmen usually make between $30,000 and $100,000, depending on how good they are. Since salesmen usually work partially or wholly on commission, out of pocket labor costs are lower than with other industries. Installers typically make $50,000 per year.

Part 2 - Is a Home Security business the right fit for you?

Part 3 - Action plan to launch your Home Security business in 90 days