How Much Does It Cost To Start a Security Company?
Learn how much it costs to start a security company with a breakdown of expenses for small to large-scale operations and cost-saving strategies.
Starting a security company requires careful planning, especially when costs range from more than $40,000 for smaller operations to over $500,000 for larger ones.
This guide covers:
- How much does it cost to start a security company?
- Breakdown of things to buy
- Recurring costs
- Hidden costs
- Financing options
- Tips
Let’s get started by establishing a ballpark cost range before getting into the specifics.
Total estimated cost range for starting a security company
To estimate these startup costs, we reviewed the most up-to-date sources for small to mid-sized security companies and calculated the numbers accordingly.
These figures can provide a framework for budgeting, as actual costs can vary widely depending on your location, the size of your company, and the services you plan to offer.
For simplicity, we based salary calculations on the assumption that your company has only one guard to pay, avoiding the variability that additional staffing might introduce at this stage.
So, how much is it to start a security company? That will depend on the company’s scale:
Small-scale security startup costs
For those running small-scale operations (a limited number of clients and guards providing security for smaller events or businesses), expect a startup cost of roughly $35,000 to $115,000.
This ballpark figure accounts for the essentials: Think insurance, a modest office space, necessary licenses and legal fees, basic equipment and uniforms, marketing efforts, and a bit of a safety net in the form of an emergency fund.
Medium to large-scale security startup costs
For running medium to large-scale operations (a larger team of guards, providing services across multiple locations, or offering specialized security for high-profile clients or events), you're looking at a range of $150,000 to $500,000 or even higher.
Keep in mind that the more guards you employ, the more vehicles you need, and the wider your service area, the higher the associated costs will climb.
Example scenarios and costs
Let's break down some hypothetical scenarios to see how these costs might play out:
- Scenario 1: A smaller urban security company might require an initial investment of around $40,000 or more. This includes uniforms, equipment, insurance, marketing, training, and a small office space for coordination and administration.
- Scenario 2: A regional security firm providing multi-site corporate security and event protection services with a mid-size team would spend over $100,000 in startup costs.
- Scenario 3: A high-end personal protection firm catering to VIPs could easily see startup costs reach $200,000 or more. This is due to extensive training, high-quality equipment, and insurance premiums.
Note: All figures expressed are based on the startup cost breakdown provided in the next section.
How much does it cost to start a security company? Key start-up cost breakdown
Note: Keep in mind that hiring and training costs are expressed per guard. So you’d have to multiply those costs according to how many guards you’re hiring.
Let's break down the key expenses you'll encounter on your journey to launching your own security company, along with estimated costs to give you a clearer picture:
Business registration and licensing fees
The first step is registering your business and securing the necessary licenses to operate legally. Depending on your location and the services you plan to offer, these costs can range from a few hundred to several thousand dollars.
For example, forming an LLC could cost anywhere from $40 to $500, while obtaining specific security licenses could add another few hundred dollars.
Startup costs can vary significantly depending on the state in which you're operating. For instance, if you're wondering how much it costs to start a security company in California, you'll also need to factor in the cost of obtaining a Private Patrol Operator (PPO) license.
This license costs $1,350, and you'll need to account for additional fees for background checks and regulatory requirements, which can bring the total close to $2,000 or more.
Keep in mind that this is a one-time cost for the company to operate legally, and it does not need to be multiplied by the number of guards employed by the company.
Insurance costs
Most security companies expect to pay around $4,000 to $12,000 or more annually, depending on factors such as the size of the company, the number of employees, and whether guards are armed.
You'll need to invest in comprehensive insurance coverage, including general liability, worker’s compensation, and potentially professional liability insurance.
In California, the state's highly litigious environment, particularly due to the frequent use of time-limited demands and the risk of bad faith claims, may necessitate additional coverage or higher policy limits to protect against significant financial exposure.
This increase in protection can also lead to higher insurance costs as businesses seek to mitigate these risks.
Initial equipment costs
Smaller firms can pay as little as $1,800 to get the basics to start, while larger firms with patrol vehicles can easily pay over $50,000.
Ensuring your security team is properly outfitted involves a few essential investments:
- Uniforms: Uniforms typically range from $60 to $100 per guard, depending on the quality and features such as branding or additional protective gear.
- Radios: Two-way radios essential for communication typically cost around $1,000 or more, depending on the features, such as range, durability, and whether they are digital or analog.
- Flashlights: High-quality tactical flashlights, vital for nighttime operations, range from $30 to $150 depending on brightness and durability.
- Patrol vehicles: Used patrol vehicles vary widely in cost, generally ranging from $15,000 or more depending on condition and required modifications, such as security-specific equipment.
- Body cameras: Security personnel may also require body cameras, which can range from $200 to $1,000, based on features such as video quality, storage capacity, and durability.
Marketing and branding
You can get started with a basic website and business card for around $300. If you want to invest in professional marketing and branding, expect to pay between $11,000 and $70,000, with website design and development being the most fluctuating factor.
Technology investments
You can invest around $300 in some admin tools to save time, or you could invest thousands in top solutions.
Consider investing in workplace management tools for scheduling, billing, and reporting, which range from $2 to over $70 per user per month, depending on the features and number of users.
However, security management software like Belfry may be an even better investment. Belfry automates HR tasks and offers features specifically tailored to security firms, such as GPS tracking and surveillance integration, making it a top choice for security businesses.
Hiring and training costs
You'll need to allocate funds for recruiting, background checks, thorough training, and any required certifications.
According to recent salary figures, budget allocation would be divided into three categories:
- Low end: Starting from $20,350 in yearly salaries per guard. If we take into account that the cost of a security guard training program can go from $100 to more than $1000, the total cost would be around $1,700 per guard per month.
- Mid-range: Given that the average salary of a security guard in the US is $34,580 and we need to factor in training costs, the total would be around $3,000 per guard per month.
- High end: The highest salaries can exceed $72,490 a year. If we consider training costs, we see that you’re looking at more than $6,000 per guard per month.
Remember, these are just the key startup costs. There are other expenses to consider depending on your specific business model and location — especially those that are recurring every month and year.
What are the recurring costs of running a security company?
The recurring costs for running a security company can vary widely depending on the size and scope of the business. Based on the estimated ranges:
- Low end: Starting from around $30,000, which includes basic operational expenses and minimal marketing efforts.
- Mid-range: Around $50,00, covering moderate salaries, office costs, and more comprehensive marketing activities.
- High end: More than $100,000, which accounts for higher employee wages, extensive marketing strategies, and increased operational costs in urban areas.
Keep in mind salary costs are counted per year and per guard, so that figures may differ according to the size of your team and your specific needs.
Let's dive into some key recurring expenses and what you might expect to pay:
Employee salaries and benefits
Your guards and administrative staff are the backbone of your operation. Their salaries and benefits, including health insurance, retirement contributions, and paid time off, will be your most significant recurring expense.
Security guards in the US earn about $34,580 a year on average, but this can be higher depending on location and experience.
Don't forget to factor in additional costs for benefits, which could add another 20-30% to your payroll expenses.
Operational costs
Operational costs include rent for your office space, which can vary significantly depending on location and size. You might find office space for as low as $500 per month, or you could pay an average of $14,800 annually per employee in cities like New York. This could mean you’re paying over $100,000 per year.
You’ll pay 3 to 4 times less in markets like Dallas, Chicago, Atlanta, and Houston.
Other operational costs include utilities, communication costs, fuel and maintenance for any company vehicles (budget at least $900 per vehicle annually), and other day-to-day expenses like office supplies and software subscriptions.
Insurance renewal fees
Remember that crucial insurance coverage we talked about earlier? It needs to be renewed annually. The cost will depend on the type and extent of your coverage, but expect to pay around $7,300 annually.
Compliance and licensing renewal fees
Just like your insurance, those business licenses and any certifications your guards hold will need to be renewed periodically. These fees can range from a few hundred dollars to several thousand, depending on your location and the specific requirements.
Marketing and client acquisition costs
You'll need to budget for ongoing digital marketing efforts. According to WebFX, basic email marketing services typically fall within the range of $300 to $1,500 per month, while PPC campaigns can cost anywhere from $100 to $10,000, depending on the scale of the campaign.
Consider the costs of networking events and any other strategies you use to keep your sales pipeline flowing, too. The costs of these depend on factors like travel expenses and whether or not the networking event requires you to pay a fee to participate.
Hidden costs to consider when starting a security company
It’s important to plan for unexpected expenses so that you’re prepared for any surprise costs. If the question “How much does it cost to start a security company?” keeps popping into your mind, it's crucial to be aware of these hidden costs:
- Legal and accounting fees: Lawyers can help with contracts, compliance, and liability issues, while accountants ensure your financial records are in order. Budget for these services, as they can easily add several thousand dollars to your annual expenses.
- Unexpected expenses: Equipment can break down, emergencies can arise, and liability claims can surface. Set aside a contingency fund to handle these events. Aim for at least 3-6 months' worth of operating expenses to give yourself a buffer.
- Technology upgrades: To stay competitive and offer cutting-edge services, you'll need to keep your tech up-to-date. This means budgeting for software upgrades or brand-new equipment tech. These costs can easily creep up on you, so it's important to plan.
Financing options for starting a security company
We’ll now explore a few avenues to secure the funding you need to get your business off the ground. Consider these three financing options:
Self-funding
If you have personal savings or investments, self-funding can be a great way to maintain full control of your business. It's not always feasible for everyone, but it's worth considering if you have the resources.
Small business loans
Banks and other financial institutions offer small business loans that could be suitable for your security venture. The U.S. Small Business Administration (SBA) also offers loan programs with favorable terms and interest rates.
If you decide to go this route, be prepared to present a solid business plan and financial projections to secure a loan.
Investor funding
If you have a compelling business idea and a strong growth plan, you might attract investors or partners willing to provide capital in exchange for equity in your company.
This option can provide a significant cash infusion, but it also means sharing ownership and decision-making. It’s a balancing act, so be ready to negotiate the terms if you think you could be getting a better deal.
Grants and local incentives
Depending on your location and the nature of your security services, you might be eligible for grants or local incentives designed to support small businesses.
Do your research and explore these potential funding sources — they could provide a welcome financial boost without the burden of debt or equity dilution.
Cost-saving tips for new security companies
Let's now explore a few tips to help you stretch your budget and make the most of it:
- Leverage the right tech: Security management software can automate tasks like scheduling, billing, and reporting, freeing up your time and reducing the need for additional administrative staff. Use technology to make your job easier and save time.
- Optimize resource allocation: Make strategic choices about where you invest your resources. Focus on essential personnel, marketing that delivers results, and equipment that meets your immediate needs. You can always upgrade as your business grows.
- Start small and scale gradually: Begin with a manageable number of clients or contracts and gradually expand as you build your reputation and financial stability. This approach allows you to learn and adapt without overextending your resources.
FAQs
How much does it cost to start a security company in Texas?
In Texas, startup costs for a security company start at approximately $75,000 or more. This includes the necessary licensing fees, office setup, insurance, and equipment. For an in-depth look at how to start a security company in Texas, check out our article about it.
How much does it cost to start a security company in California?
In California, startup costs are generally higher, ranging from $75,000 to more than $100,000. This increase is due to more expensive licensing fees, higher insurance requirements (with at least $1,000,000 in liability coverage), and additional regulatory costs like background checks.
For more on how to start a security company in California, consult our primer.
Next steps: Manage your security company costs with Belfry
We've explained the costs of starting a security company, but the journey doesn't end there. Building a sustainable and profitable business requires more than just an initial investment.
That's where Belfry comes in. Our all-in-one platform is designed to make security management smoother and help companies reduce operational costs by automating time-consuming tasks that traditionally drain resources.
Here’s how Belfry helps optimize costs:
- Zero-hassle scheduling and payroll: Our system automates these processes, guaranteeing accurate time tracking, shift management, and compliant payroll processing, even for government contracts.
- Clear performance insights: You can gain valuable visibility into your operations with our performance analytics. Monitor key metrics, identify areas for improvement, and make informed decisions to make sure you’re always being cost-efficient.
- Simplified financial management: Generate professional invoices, track payments, and manage your accounts receivable with ease. Belfry takes care of it so you can focus on growing your business while saving on costs.
- Better client engagement: Delight your clients with our user-friendly client portal. Provide real-time access to reports, facilitate communication with on-site officers, and show your commitment to quality services. This means more clients and potentially lower client acquisition costs.