How much do Security Companies make?
A Look into the Money behind Security companies.
As a security company ourselves we as many do believe transparency is key. This article looks specifically at the Door Work and Event security side of the market, factoring in low level security guarding contracts as well.
I tell many people I come across how ‘smoke and mirrors’ other people can be, but actually it’s pretty straight forward. The industry to date is riddled with rogue traders and half thought out attempts at puzzling together their own firm. Let me lay it out for you to be the judge based on my experience having run 3 companies (one of my own and area manager of two others). I have also worked privately for several organisations as a front line operative.
The best thing about my experience and those I closely socialise with is we will openly admit we’ve got it wrong sometimes. That we have admittedly found ourselves on both sides of the fence unintentionally. From working for rogue operators, to pricing and competing for jobs wrongly, to experience just what happens when you make these mistakes. One thing is certain, we collectively now avoid the quote wars. How low can you go!
There are always margins for negotiation upon bulk bookings or big orders. You can earn less but overall make more with big orders, you can negotiate say £1.00 per hour less with security in exchange for giving them the benefit of a better guarantee of hours, Event and casual work specifically (I do fully appreciate how other companies can with no back bone crumble on these promises) but it can create jobs and create a win-win all round if done properly. Never get beaten so low you’ll not make much money yourself I’ve learned.
Honest clients and those that need a certain level of safety at their events and establishments know that as a company, you need to make a profit. Or what point is there picking up the phone to them. Without profit, trust me, you cannot provide a good service.
Let’s look at the numbers.
“I am Sam from Bluemilk enterprise. I need one of your event security for 5 hours” Price quoted £14.00 per hour. Unless your doing the job yourself, the company should earn no more than £20.00 or £25.00 if like me, you pay a good going rate to your team.
I worked out one Christmas a few years back that every job I got, no matter the size or length of booking, on average each booking created for me 12 emails back and forth with the client. These would be spread before and after the event. Some less, some more. With an average of three phone calls. From discussing the event itself, to chasing invoices if needed. E-mails take me about 2-3minutes each, the same for a phone call. But these are not all done at once, far from it. This is stretched over a month or even longer. People normally book two weeks before an event, and I allow 14 days to a first time customer for payment. It’s all about trust. Though big companies accounts departments tend to get in the way of this.
All that for £20.00! Alone it is not worth it. Especially if you are charging less! A mistake I made many times at the start. Let me show you a reason why it is worth it.
Here’s another example.
“I am Callum, I run BrickDisco. I can pay £13.50 per hour for each security. I need 2 security on Thursday and Sunday for 6 hours each and I need 3 security on Friday and Saturdays again for six hours each. I need this every week” This new client has just created 10 bookings for you a week!
10 x 6 = 60 hours x 3.5 = £210.00 per week (average security factored at £10.00ph). For some one this could be a full time job organising these guys, and even better if they themselves worked the at the brickdisco, however I would not advise them working their own job – more about that later!
You might look at this and think “YES, I’VE MADE IT, MONEY IN THE BANK EACH WEEK” here’s why, much like before, this surprisingly isn’t a good deal just on its own. The biggest benefit of this job is not the money, but the regular bookings. Let me explain why.
Let’s say you do two shifts yourself at Brickdisco and earn £330.00 from this job per week. If you count on solely on this job as income, I can guarantee you, maybe not this month, maybe not this year but any experienced security owner will tell you at some point or another you are likely to lose most your jobs. To keep your jobs for longevity is a talent, customer service, remaining on hand at all time, but not in their face.
Personally this is one of many reasons I do not make a habit of working my own jobs, it is a short-term solution, and if your good at what you do, you’ll rarely have time because you’ll be so busy with organising bookings.
So you’ve got your £330.00 a week. Let’s stick with this and imagine you have a few double pay bank holidays, and few extra bookings from the venue on top but as well, you yourself want a few weeks off work. So £330.00 x 52 weeks in the year = £17,160 per year before deductions.
Let’s now talk about deductions.
There are many. Not to mention the biggest, tax. As my accountant once told me “you cannot make money without paying tax”. Don’t ever do cash jobs in this industry, again a subject I’d like to go more into detail in another article. Any profit you earn is taxed after your personal allowance. The consequences are never worth the money of not paying the tax. You can easily factor in £1,200.00 a year for insurance, I doubt this is something Brickdisco will cover themselves, or consider using you without. You will also undoubtedly have irregularity in some shape or form in the term of staff. In this scenario you can offer just one other person four days work a week, they themselves will need time off at some stage. Your two weekend staff, may not want just weekend work and go elsewhere for better offers, so you need to consider when starting up the cost of recruitment. Advertising for staff is a cost that should be taken seriously and spent correctly. If you want to become accredited you can deduct many more man hours than money, though the paperwork adds up, as well as the SIA’s subscription cost. This is all if you just want to stay still with one job.
All in all even the good “contracts” are only worth a crust if you have either a few or a lot of them. Two massive benefits are that when I started, if I didn’t get a booking, I didn’t spend any money. I advertised by emailing companies, I only got insurance after landing my first client to reduce the cost at the start. Paper work was created in my spare time and done by myself. Some minor stationary costs incurred only.
The other and main benefit point of “How much do security companies make”, Is they do well if they consistently have jobs on. I also keep overheads very low which helps. I make sure all the bases are covered and insurance is up to scratch, but I avoid using any admin staff by doing it myself and I use supervising staff only if I have more than 7 people working at one time. Luckily it hasn’t got that low in a while otherwise this can be done myself.
Security companies should not look at any one job and go “this is a big earner” they would be better off seeing it as “this helps”. Having a good week is great, having a good month is better, but to survive we need a good year. Like many small and medium sized companies you can suffer from fewer bookings in January and February, the quiet month as well as an October low. I only look at what they call the bottom line. All my good weeks vs all of my bad weeks. The Year to date figure on my accounting is the main figure. I put my basic salary in which is far from exciting though it gives me a job which I’m thankful for and see if I am minus or plus. To put it in basic, security companies make about 30% to 40% total of what the guard will, however only about 7 to 15% is what they actually take home after the deductions.
(Based on small to medium business studies and research in the event security staffing industry).
by James Johns
Savysec Security Services