How to Start a Locksmith Business
If the idea of being your own boss, working independently, and helping out people in need appeals to you, then the locksmith industry might offer an ideal business opportunity. By starting your own locksmith business, you can provide a variety of services that people need. You’ll also enjoy the ability to work on your own, potentially avoid ever having to hire employees and work in a field where every day is sure to bring something new. If you have some mechanical talents and are well-versed in technology, a locksmith career might be a natural fit for your skills.
Locksmiths specialize in security services and solutions. A locksmith business may offer just a few or a comprehensive menu of solutions. Some businesses specialize in commercial security, while others specialize in vehicle lockout services. Other common services include rekeying, cylinder repairs, home security, and emergency services. Because of the nature of locksmiths’ work, many of these businesses are partially or entirely mobile, often working out of vans or trucks.
Locksmiths need to be talented in many ways. Security systems and video cameras are becoming more typical aspects of a locksmith’s work. A locksmith may also work in a consultant capacity, recommending products and solutions for residential, commercial, and industrial use. Some locksmiths establish relationships with apartment owners or condominium owners, where they become the go-to locksmith for all of the services that the facility might need.
According to IBIS World, the locksmith industry experienced 4.3% growth from 2014 to 2019. This growth is driven by the construction and housing market. A strong housing market means there’s increased demand for locksmiths to install locks, gates, safes, and more. IBIS World predicts that demand for locksmiths will decelerate slightly from 2019 through 2024. The growth from 2014 to 2019 was higher than average, but the demand should continue to grow, just more moderately.
As of 2019, the locksmith industry was a $2 billion market. A total of 22,530 businesses employed 35,178 staff. Secrailway 24 Hour Locksmiths, Pop-A-Lock, and Mr. Rekey Locksmith held significant shares of the industry, but there are plenty of smaller, independently-run businesses, too.
The locksmith industry is evolving and being shaped by multiple trends. Locksmith Ledger International reports that advancing technology is one of those trends. While traditional mechanical lock systems will continue to be used, newer hybrid versions that combine mechanical and electronic locks will also be introduced. These hybrid models deliver additional features, but locksmiths will need to learn to work with them.
Similarly, video cameras are increasingly becoming standard parts of security systems, even for home use. Technology advancements also mean that vehicles, residences, and commercial buildings are equipped with new electronic locks. Locksmiths need to be trained in how to work with these newer lock styles.
The Airport Locksmith also highlights how technology is shaping the industry. Bluetooth-powered locks have become highly popular. They offer convenience since users can control them with mobile devices and applications. Wi-Fi locks are also popular and have become a standard element of smart homes. With more families embracing these new styles of locks, locksmiths will increasingly be asked to install and unlock these systems.
Locksmith businesses market to many types of customers. A single business might market to homeowners, the general public who drive cars, commercial property owners, and more.
Skills, experience, and education useful in running a locksmith business
A locksmith business owner doesn’t need a business degree, but certain skills and experiences can increase the chances of that business becoming a success.
Locksmith education. According to ACME Locksmith, some states require locksmiths to become certified. There are many locksmith training courses that can serve as an education foundation, but pursuing an apprenticeship also provides valuable in-the-field training experience. Plan to spend about a year learning the skills necessary for this profession.
Mechanical knowledge. An understanding of how devices function and skill in fixing and working with them are helpful in the locksmith business.
Problem-solving skills. No two days as a locksmith are ever the same, and locksmiths must be able to think on their feet and solve the problems that they face. The ability to stay calm and clear-headed under pressure is also a benefit.
Customer service skills. Interacting with customers is a large part of running a locksmith business, and those customers are often stressed and upset when they call for help. Locksmiths will benefit from strong customer service skills.
Marketing talents. The nature of the locksmith business means that most customers won’t be frequent returning customers, so the business needs to market to constantly bring in new customers. A locksmith who can do some or all of their marketing can save money while building a strong business.
Checklist for Starting a Locksmith Business
If you’re thinking about starting a locksmith business, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a 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 locksmith business.
Related: How to write a business plan
Step 2: Choose a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a locksmith business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Step 3: Name the Business
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 4: Select your Location
It’s possible to start a mobile locksmith 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 size of the space, location, and amenities.
Having a commercial building helps provide more visibility, and higher costs.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
A professional 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, 15 states 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 exams. Many states require an FBI criminal history background check and won’t allow people with felonies or misdemeanors to hold a license.
In addition to licensing, some states also require bonding insurance and certification.
Also, there are some general business registrations that a locksmith company may need, such as a business license, sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
Step 6: 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. While the cost to start is low, the borrower(s) will need to have good credit and personally invest 15-25% towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: 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 with Google local listings, Yelp, Angie’s List, 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.
Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a locksmith business. A few of these include:
– 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 auto insurance protects the business against expenses that might occur if a business vehicle were ever involved in an accident.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Factors like the business’s 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.
Step 10: Hire 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.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your locksmith business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost 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 a minimum of around $10,000 on locksmith equipment and transportation to get the business up and running.
Some of the more expensive costs to start a locksmith business include:
– Locksmith tools such as key cutters, key extractor, drills, screwdrivers, hammers, plug spinner, re-keying kits, key cutter, lock picking sets, and lockout kits.
– Inventory such as deadlocks, key blanks, etc.
– Business vehicle
– Vehicle signage
How much can a locksmith business owner make?
A locksmith’s income will depend on many factors, including the business’s 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.
Are there grants to start a locksmith business?
It’s extremely rare to find a grant to start a locksmith business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a locksmith business?
The NAICS code for a locksmith business is 561622.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?