Costs to Start a Locksmith Business
Locksmith businesses are relatively affordable to start, especially if you already have access to a vehicle that you can use for the business. Plan to spend about $10,000 on tools and equipment to get the business up and running.
Some of the more expensive startup costs for a locksmith business include:
- Tools
- Equipment and supplies
- Business vehicle
- Uniforms
- Vehicle signage
Steps to Starting a Locksmith business
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
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Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
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Step 3. Select your Location
It’s possible to start a smaller business right out of your home or garage, saving on rent costs. As that business expands, then it may be time to rent a commercial space. Rental costs will depend on the space’s location, size, and amenities. Some businesses operate entirely out of their vehicles for years; the right option depends on the business’ model.
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Step 4. Apply for Business Licenses and Permits
A locksmith business owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.
In addition to standard business licenses and permits, many states require locksmiths to obtain a locksmith license. According to BizFluent, there are 15 states that require licensing including; California, Connecticut, New Jersey, North Carolina, and Oregon. The process of getting a license usually involves a criminal background check and some states require locksmiths to pass written tests.
Some other common local, state and, federal registrations a locksmith business may need include, a , , and Occupancy Permit among others.
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Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a locksmith business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
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Step 6. Get your Marketing Plan in Place
Locksmith businesses need to continuously market to bring in new customers. Some common marketing techniques include social media marketing, online advertising, print advertising, and radio advertising. A locksmith might also network with apartment building owners, realtors, and condominium owners to encourage them to refer the business to their customers. Marketing costs will depend on the volume and type of activity performed.
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Step 7. Get Insurance
A locksmith business needs several types of insurance for full coverage:
- General liability insurance offers protection against expenses that could occur if a customer is ever injured while on the business’ property or as a result of the business’ work.
- Commercial property insurance can help to cover expenses and losses that the business might face if its equipment is ever damaged or destroyed by an event like a fire.
- Commercial auto insurance helps to protect the business against expenses that might occur if a business vehicle were ever involved in an accident.
- Workmans comp insurance helps to cover expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Factors like the business’ location, the number of employees on staff, and the value of its equipment and vehicle will all affect insurance policy costs. To get the best idea of what to budget for insurance, request quotes from multiple companies. When evaluating the quotes, compare not only the premiums, but also the plan exclusions, coverage limitations, and deductibles compare.
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Step 8. Hiring Employees
Many locksmiths work independently and manage their businesses on their own. If a business does well and you’re turning away work, you might consider hiring another locksmith or taking on an apprentice. Average salaries vary by state. For instance, according to ZipRecruiter, locksmiths in New York earn an average of $20.60 per hour, while locksmiths in Connecticut earn an average of $18.90 per hour.
If a business does hire an employee, the budget needs to include not only salary costs, but also other related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are all common employee-related expenses.
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How much can you potentially make owning a locksmith business?
A locksmith’s income will depend on many factors, including the business’ location, services offered, profit margins, and how long the business has been in operation. According to Locksmith Plus, locksmith salaries average between $40,000 and $60,000 per year. Average hourly rates range between $21 and $28, but rates average $25 per hour.
Things to consider before starting a locksmith business
When starting a business, it can be easy to become overwhelmed with all of the potential services you could offer. Rather than simultaneously offering rekeying, vehicle services, emergency services, and home security system setups, focus on one or two of these areas to start. By honing your skills and developing a strong reputation for your quality work, you can build up your business and then later expand into these other areas if you should choose.
Running a locksmith business means working long hours. Providing emergency services means that you will get calls late at night and on the weekends, and this can create a lifestyle change that you’ll need to be prepared for. Some locksmiths find this transition is a difficult one, and the first year in business can be challenging.
Because technology has become integral in both home and vehicle security, the locks and technology that’s used will continue to evolve. Be sure that you regularly invest your time in learning these new systems so that you’re able to stay competitive and deliver customers the solutions they need.
Resources:
Associated Locksmiths of America
Society of Professional Locksmiths
