How to start a security company: a founder's guide

Starting a security company can be a rewarding venture, blending skills like risk assessment and personnel management with sharp business acumen. With a market valued in the tens of billions, there is steady demand for security services across commercial properties, residential communities, and special events.

This guide will take you through the practical steps of validating your business concept, obtaining necessary licenses, hiring the right staff, and acquiring equipment to help you launch a successful security company in the U.S.

Step 1: Validate your business concept and plan

First, define your niche. Will you focus on residential patrols, commercial properties, or event security? Check local crime maps from your police department and data from the Bureau of Justice Statistics to identify high-demand areas and services.

Next, size up the competition. Use Google Maps and business directories like Dun & Bradstreet to find local security firms. Review their websites and online reviews to understand their specialties, client base, and what customers say about them. This helps you find a gap in the market.

Estimate your startup costs

Initial costs can range from $20,000 to over $50,000. Key expenses include state licensing ($500-$2,500), insurance deposits ($5,000-$12,000), and equipment like uniforms and radios ($10,000+). Don't forget guard training, which can be $300-$1,000 per person.

Many new owners underestimate the cost of general liability and workers' compensation insurance. It is a significant upfront expense. You might want to get quotes from several insurance brokers who specialize in the security industry before you finalize your budget.

Here are 3 immediate steps to take:

• Define your specific security service niche (e.g., event, residential, commercial).
• Research three local competitors to analyze their services and pricing.
• Contact an insurance broker specializing in security to get a preliminary quote.

Step 2: Establish your legal entity and secure licenses

First, choose a business structure. Most security companies start as a Limited Liability Company (LLC) because it protects your personal assets from business debts and lawsuits. An S Corporation is another option that can offer tax advantages once your profits grow, but an LLC is simpler to manage initially.

Once your business entity is registered with the state, you must secure the proper licenses. This is a non-negotiable step, and operating without a license carries severe penalties.

State and local licensing

Each state has its own regulatory body, often a Bureau of Security Services or Department of Public Safety. You will need to apply for a Private Security Agency license, which can cost between $500 and $2,500 and take 60 to 120 days to process.

The application requires extensive background checks, fingerprinting, and proof of insurance. A common delay is underestimating the time for the owner's background check, so submit your personal information as early as possible. You will also need a local business permit from your city or county, which is usually under $100.

Here are 4 immediate steps to take:

• Register your business as an LLC with your Secretary of State.
• Identify your state’s security licensing board and download the agency application.
• Schedule an appointment for your required fingerprinting and background check.
• Contact your city clerk’s office to apply for a local business permit.

Step 3: Secure your insurance and manage risk

Your next move is to secure the right insurance. A standard General Liability policy with $1 million per occurrence and $2 million aggregate coverage is the baseline. Expect annual premiums for this to start between $7,000 and $15,000 for a new company.

You will also need Workers' Compensation insurance as soon as you hire your first guard. If you use company vehicles for patrols, a Commercial Auto policy is mandatory. Professional Liability, or Errors and Omissions, protects you from claims of negligence in your services.

Find a policy that covers industry risks

A mistake some new owners make is grabbing a generic policy. Security work has unique risks like potential assault and battery claims, which many standard policies exclude. You must confirm your policy includes this coverage, sometimes as an added rider.

You might want to work with brokers who specialize in the security industry. Consider getting quotes from providers like The Hartford, Hiscox, or a specialized agency like Joseph Chiarello & Co. They understand the specific exposures and can find appropriate coverage.

Here are 4 immediate steps to take:

• Request quotes for a $1M/$2M general liability policy.
• Confirm with brokers that assault and battery coverage is included.
• Contact a specialized provider like The Hartford to discuss your needs.
• Get a preliminary quote for workers' compensation insurance.

Step 4: Set up your office and get equipment

You do not need a large office to start. A small commercial space of 200-400 square feet is enough for administrative work and storing equipment. When you look for a lease, try to negotiate a shorter term, like 1-2 years, to keep your options open as you grow.

Gear up your guards

Your guards' appearance reflects your brand. A full uniform set, including shirts, pants, a jacket, and boots, will cost between $300 and $500 per guard. You can find these items from suppliers like Galls or 5.11 Tactical, who often have no minimum order for basic apparel.

Reliable communication is non-negotiable. Plan to spend $150 to $400 per unit for professional two-way radios from a brand like Motorola. Some owners buy cheaper radios to save money, but this can backfire if they fail during an incident. It is better to invest in dependable gear from the start.

If you offer vehicle patrols, a reliable used sedan is a practical first choice. You can add a professional vehicle wrap for branding, which typically costs between $2,000 and $4,000. This makes your presence known and adds a layer of credibility.

Here are 4 immediate steps to take:

• Search for commercial office spaces between 200 and 400 square feet.
• Request a quote for uniform packages from a supplier like Galls.
• Price out a set of 4-6 professional-grade two-way radios.
• If offering patrols, research costs for a reliable used vehicle and a wrap.

Step 5: Set up your payment processing

Now that your company is taking shape, you need a way to get paid. For ongoing commercial contracts, invoicing with Net 30 terms is standard. For one-off events or residential clients, you should require a deposit upfront with the balance due upon service completion.

You will need a system to handle these payments. While some clients still use checks, many prefer digital options. Look for a payment solution that can manage recurring invoices for contract clients and also accept one-time payments easily. Many new owners get locked into solutions with high fees.

For security companies that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone—just tap and done.

At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful for collecting payment for a last-minute event detail. This rate is competitive, as many other providers charge between 2.5% and 3.5% per transaction.

Getting started is straightforward.

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done—no waiting for bank transfers.

Here are 3 immediate steps to take:

• Decide on your payment terms for different service types (e.g., Net 30, upfront).
• Research payment solutions that handle recurring billing for contract clients.
• Download the JIM app to test its on-the-go payment capabilities.

Step 6: Secure your funding and manage finances

With your startup costs estimated, you need to secure capital. The Small Business Administration (SBA) is a common starting point. An SBA 7(a) loan is a good option, but you will likely need a credit score over 680 and a detailed business plan to qualify for amounts between $25,000 and $150,000.

Some new owners are tempted to use personal credit cards for initial expenses. You might want to avoid this, as the high interest rates can quickly drain your cash flow. A dedicated business loan or line of credit offers better terms and protects your personal credit score.

Calculate your working capital

You should have at least six months of operating expenses in the bank before you land your first client. This working capital covers payroll, insurance premiums, rent, and fuel. For a small operation with 2-4 guards, this typically means having $30,000 to $60,000 set aside.

Many owners get into trouble by not planning for the 30- to 60-day gap between starting a contract and receiving the first payment. Your working capital is the bridge that covers your expenses during this period. Also look into grants for veteran-owned businesses, as many security professionals have military backgrounds.

Here are 4 immediate steps to take:

• Draft a 6-month operating budget to determine your exact working capital needs.
• Check your personal credit score to see if you meet SBA loan requirements.
• Research the SBA 7(a) loan application process on the SBA website.
• Open a dedicated business checking account to keep finances separate.

Step 7: Hire your team and set up operations

Hiring your first guards

Your first hires will be Security Officers. Expect to pay between $17 and $25 per hour, depending on your market. Their primary duties are to observe, patrol, and report. Every guard you hire must have a valid state-issued security license, often called a "guard card."

Some new owners hire friends to fill shifts, but this can risk your insurance and license if they are not properly certified. You should always verify a candidate's license status with your state's licensing board before making an offer. Also, certifications in CPR and First Aid are a major plus.

Managing your schedule and payroll

Once you have a contract, you need to manage shifts. Software like TrackTik or OfficerReports helps with scheduling, incident reporting, and GPS tracking. This technology also provides professional-looking reports for your clients, which adds a lot of value.

Your guard payroll will be your largest single expense. A good rule of thumb is that direct labor costs will consume 50-60% of your revenue. If you bill a client $30 per hour for service, about $15-$18 of that will go directly to the guard's wages.

Here are 4 immediate steps to take:

• Post a job ad on Indeed for a licensed Security Officer.
• Check your state’s security board website to learn how to verify a guard card.
• Request a demo from a scheduling software provider like TrackTik.
• Calculate a sample bill rate using a target guard wage of $18/hour.

Step 8: Market your business and get clients

Your first clients will likely come from direct outreach. Focus on businesses that have a clear need for security. Think property management firms, construction site managers, and homeowners' associations (HOAs). A personal email or phone call often works better than general advertising.

Some new owners wait for the phone to ring, which is a slow path to growth. You might want to create a professional one-page sales sheet that details your services. It is a great leave-behind after a meeting and shows you are prepared.

Establish your digital footprint

Next, claim your digital space. Set up a Google Business Profile so you appear in local searches. A simple website that lists your services, license number, and insurance details builds immediate credibility with potential clients who look you up online.

As you start your outreach, aim to convert 1-2% of your cold calls or emails into meetings. Your first few contracts are the toughest. Once you deliver great service, referrals will start to come in and become a major source of new business.

Here are 3 immediate steps to take:

• Create a target list of 20 local property managers or construction companies.
• Set up and verify your Google Business Profile.
• Draft a one-page sales sheet outlining your core services.

Step 9: Set your pricing and profit margins

Calculate your bill rate

Your pricing must cover guard wages, overhead, and profit. A common model is to mark up the guard's hourly wage by 70-100%. For example, if you pay a guard $18 per hour, your bill rate to the client should be between $30 and $36 per hour.

Some new owners just double the wage and forget to factor in overhead. Costs like payroll taxes, insurance, and software can eat up 25-35% of your bill rate. This oversight can quickly erase your profit margin, so you might want to calculate these costs carefully.

Offer contract and event pricing

For ongoing clients like property managers, you can offer a flat monthly fee. This provides you with predictable revenue. For one-off events, you might charge a premium, especially for last-minute bookings or holidays. Always require a deposit for event work.

To see what your market will bear, you can call a few local competitors. Pose as a potential customer and ask for a quote on a standard service, like a four-hour security detail for a small party. This gives you real-world pricing data without guesswork.

Here are 3 immediate steps to take:

• Calculate a bill rate using a target guard wage of $18/hour and a 75% markup.
• Call two local competitors to get a price quote for a 4-hour event.
• Draft a sample monthly contract price for a client needing 20 hours of security per week.

Step 10: Maintain quality and scale your operations

Set your quality standards

To maintain quality, you should conduct unannounced site inspections at least twice a month per location. Review all incident reports weekly to identify performance trends or training gaps. A great metric to track is your client complaint rate, with a goal of zero per contract each month.

You can also measure performance with client feedback. For contract clients, schedule a formal check-in call every quarter. For one-off events, send a simple 3-question survey the next day. This direct input is more valuable than any internal metric you can create.

Plan your growth

A clear signal to hire more guards is when your team consistently logs over 45 hours per week. Another sign is when you have to turn down more than two qualified contract bids in a single month because you lack the staff. This shows demand has outpaced your capacity.

As you expand to multiple sites, your scheduling software like TrackTik or OfficerReports will help you manage the complexity. For your own development, you might look into certifications from ASIS International. The Certified Protection Professional (CPP) designation adds major credibility for larger contracts.

Here are 4 immediate steps to take:

• Create a simple checklist for your unannounced site inspections.
• Draft a 3-question client feedback survey for event services.
• Set a calendar reminder to review your team's weekly hours for overtime.
• Look up the experience requirements for the CPP certification on the ASIS website.

Building a security company is about earning trust. Your reputation for reliability is your greatest asset, so focus on quality service from your very first contract. You have the steps to begin. Now it is time to execute your plan with confidence.

And when it comes to getting paid, a simple approach works best. JIM lets you accept cards right on your smartphone for a flat 1.99% fee, with no extra hardware needed. Download JIM and have your payment system ready to go.