Security sweep: products and services involving security provide booming sales for small business owners

Black Enterprise, April, 1997 by Ann Brown

Security is peace of mind. And those who provide it have been cashing in on this $100 billion business, which includes security products like alarm systems and personal safety items such as pepper spray and physical security services. According to the American Society for Industrial Security (ASIS), physical security services, which grew 15% annually in the 1990s, is the seventh-fastest growing service industry.

There are many reasons for the expected boom. These days it's not only high-profile government officials who request personal security. Business people, doctors, animal rights activists and strike replacement workers are just a few of those who need some type of security service. Moreover, institutions are seeking consultants to advise them on handling suspicious packages.

Washingtonian, D.C.'s monthly lifestyle and business profile magazine, found that private security officers nearly triple the estimated 684,000 policemen in the U.S. There are 1.8 million people employed in private security. Residential areas are turning to private security instead of relying solely on local police. Mark Jackson, co-owner of DSI (District Security Inc.), a full-service security and investigation firm based in Cincinnati, Ohio, says providing residential security generates nearly 60% of his business, while 35% and 10% come from investigative and executive protection, respectively. Opportunities for black security firms are increasing in communities that see a need for more personalized care, says Jackson. "Many of the housing developments served are in lower income areas [and] communities who have not had good relationships with police, so they need security that understands the community."

Despite growth potential, C. Chuck Culpepper Jr., owner and managing investigator of Culpepper Investigations, a five-year-old company based in El Sobrante, California, says few blacks will have the option of owning such firms. "The opportunities to be employed as security guards are excellent, but the opportunities to own and operate security firms are limited," says Culpepper, who used personal finances to start his firm at home. "The main barriers for entry into the market are undercapitalization and client base."

Currently, there are 160,000 private security firms in the nation, up from 70,000 in 1980. Security Management, a trade publication, reports that "a less stable work force and ever-developing technology are working in security's favor." Trang Duong, a marketing communication specialist for ASIS, says two of the hottest growth segments in security are computer security, with companies looking for ways to protect information on the Internet, and workplace violence consultants. With downsizing, companies have found the need to secure themselves against employee retaliation. According to ASIS, revenues for privately-held security firms now top $100 billion, a sizable jump from $20 billion in 1980.

Jackson advises that when opening a security firm, look for a niche. The highest growth potential is in alarm companies and manufacturers and distributors of security products like anti-theft devices and home and office security systems (12%). This is followed by contract guards (8%) and private investigators (7%).

Start-up capital for a small security services firm can be as little as $10,000; and includes rent, office equipment, liability insurance, workmen's compensation, an operating license and salaries. Estimated annual revenues for private security guard companies are $980,000; for private investigative firms, $160,000; proprietary security services (such as computer security), $272,000; and manufacturers and distributors, $5 million, according to ASIS.

Inquire about a state license and insurance and training requirements. Most states require $350,000 in general liability insurance to get a license. You'll need workmen's compensation and malpractice insurance as well as surety bonds. (Some states don't require a professional state license to operate either a security or investigations business but local laws require the owner to possess a city or county business license.)

Law enforcement training isn't a must for all types of security firms, Jackson says. However, providers of armed security generally need a minimum of 20 hours weapons and safety training. Check your local and state training requirements for specifics. Expect a background check from the State Department of Justice, FBI and State Bureau of Collection and Investigative Services.

Earnings vary depending on the work, client and locale. Investigative and bodyguard services can run $100-$150 per hour and surveillance services, $60-$70 per hour.

For more information regarding security services, contact the National Council of Investigation & Security Services (800-445-8408) or the American Society for Industrial Security (703-522-5800).