Locksmiths are people who are highly in demand. You never know when you might lock yourself out of your home or your vehicle. It can be extremely difficult to unlock a locked door when you don’t know the specific mechanics of the lock itself. By knowing how to start a locksmith business, you’ll be able to provide this needed service and make some good money doing it at the same time.
It all begins with the realization that your services are going to be required 24/7. You will need to be prepared to respond to emergencies at 3pm and at 3am every day. Because of this, you may wish to hire employees who can help to cover these late night hours on a rotating basis so that everyone can get some needed sleep throughout the week. This would require having an EIN from the IRS and a local business license to begin the hiring process.
Then you’ll be ready to follow these additional steps.
1. Make Sure That You’ve Met All of Your Licensing Requirements.
There are more than a dozen states in the US that require locksmiths to complete a specific set of requirements in order to be licensed. You will need to met these requirements, including any certifications or degrees that are necessary, before you’ll be granted the opportunity to apply for a business license.
2. Locksmiths Need to be Bonded.
All businesses need insurance in order to protect themselves from the unforeseen incidents that may occur. Locksmiths need another level of insurance, called a surety bond, in order to work in most communities. If you can’t find a good price for a bond through a local insurance company, talk with the Associated Locksmiths of America about their bonding program. It’s offered as part of an optional membership benefit. Why are bonds required? A locksmith has the skills to break into homes. While you’re at it, make sure that you sign up for the general liability insurance that you’re going to need as well.
3. Select the Best Business Structure to Meet Your Needs.
Although a locksmith could be a sole proprietor, there would be a lot of personal financial risk to that business structure. Sole proprietors are unable to separate personal and business finances. If someone were to start litigation proceedings, all of your personal assets would be at risk. Select a limited liability company or incorporate your business for the best protection options.
4. Get Prepared to Collect Sales Tax.
Almost all jurisdictions consider a locksmith’s trade as a service for hire. This means that the the labor and any parts that are used for the job are also charged sales tax. You’ll need to be prepared to collect this tax and then pay it when asked. The best solution for this is to create a separate account where you transfer sales tax funds immediately when collected instead of taking everything out of your general revenue funds.
5. Set a Realistic Pricing Structure.
There are undoubtedly more locksmiths in your area who are already in business. Instead of trying to undercut them with your pricing, set rates that are competitive with the existing rates that are maintained by the community already. Many new locksmiths try to set themselves apart by offering low prices, but all this does is start a price war. You’ll have more business at first, but only until another locksmith undercuts you. A realistic pricing structure will keep everyone happily employed.
6. Make Sure That You’ve Got Equipment and Supplies on Hand.
Depending on the extend of services that you plan to provide, you may need a retail shop with key making equipment, roadside serving equipment, and the ability to install or repair locks at homes and businesses. These locks may even be electronic in nature. You’ll want to evaluate your the customer segments in your community, identify their needs, and then stock up accordingly.
7. Secure your Commercial Location.
A locksmith service is not generally going to be run out of a home office, although there are a few exceptions to this rule. You’ll want a location that is centrally located in your primary service community and easy to reach when people have a need for your service. Offering mobile locksmithing services will also mean that you’ll need a van or truck that will let you reach a job site with your tools.
Knowing how to start a locksmith service can help you put your unique skill set to profitable use. Follow these steps today and you’ll be able to build a foundation of entrepreneurial success.