Mounting Frustration...

[ValleyOne]

As some of you may know, I am trying to get my own little security business up and running. I have been trying to do this for a while now and getting frustrated, ok a VERY frustrted.

I have a strong business plan, a cash flow that is intentially longer than 12 months to reflect my marketing strategies as well as a higher than normal interest rate. Basically, I made it as "Worst Case Scenario" as I could, including having to take a large hit the month of renewal on my insurance policies (auto and $1 million (for starters) Gen Liab.). (A major transmission failure on the patrol vehicle requiring temporary vehicle replacement, repairs etc. Had this all priced out and went with the higest bidders just to push the envelope) My cash flow stands strong and survived.

I was in communication with a local represntative of a national company that was capitol investment firm (for lack of better term). I attended a lecture she gave at a local SBA sponsored class, and was told that they make investments into all businesses from gas stations to strip clubs. Her and I seemed to be on the same page at the end of the lecture, as she knew what I wanted to do and gave me some confidence that she and her company could make this happen. I emailed her all my info, she promised to get back to me. I emailled her back a few days later to let her know that I had my first customer on my waiting list. My thinking was this would should promise on my part for the desire and ability to make this happen. She emailed me back and actually had no clue who I was, she mentioned business that her and I have never done like financiing some property then wished me well. I was like WTF!?!? I emailed her several times and finally got it through her head what I was trying to do, and she wrote back said, "Oh we don't do that... Sorry."

I have been in contact with my local SBA point of contact or whatever they call it, and they have since gone out of business. Rather funny since their business was helping others stay in business with consultations-guess they shoulda listened to themselves.

Anyhow, I got frustrated with the constant denial, and emailed my local SBA District Manager, who in turn gave me updated SBA contact info that will be followed through ASAP.

I guess my little rant is to those that have been successful in starting up and getting their dream off the ground, how did you do this?

LOL, I actually had a banker ask me if I had access to an "Angel Investor" I politely told her that if I did, we wouldn't be talking together on the phone would we?

ARRGGHH!!!

So now I continue to work for others and watch oppurtunities to make money come and go . I bring these to the attention of the owner and he doesn't seem interested in pursuing them as he is happy with the minimal accounts that he has. I guess that is one benefit from being V E R Y wealthy, with several properties in several states, as well as three other businesses. I mean we just finnished a temp acct where OT was rampant and no one cared one bit. It drove me nuts because I knew someone had to pay for it most likely the owner, but he never batted an eye. Eventhough our (temp) hourly rate for us $12 (not the billed rate) and we were working 12/hr shifts left and right with two on per shift 24/7.

So, again, to those that have done it; How did you get your dream off the ground?

[Rooney]

I understand the pain. First of all, I'm not in the guard business but am a systems integrator and manufacturer. When we started we were a small alarm company with 2 people. We worked hard and were able to get a couple hundred good accounts. In 1998 we designed a new system to market to Law Enforcement and Government. The capital to start off was the hard part. We had funds available, just not the level needed. We went to meetings with the SBA and financial institutions with our business plan. They all said they were "Impressed by our depth in the plan". Then no word. We finally managed to get our first orders. Luckily the orders were of the quantities that we had enough funds to complete them. After the orders were complete we put the funds into an account for more orders, and so on, and so on. I was writing my paycheck for $250 a week to BARELY survive as the business grew. Business funding is a VERY troublesome aspect. One thing I have learned is, it is not always how much you know, but, who you know. Good luck and I wish you many successes in your venture.

If you are a veteran I would also recommend the VA small business program. They are helpful.

[ValleyOne]

We went to meetings with the SBA and financial institutions with our business plan. They all said they were "Impressed by our depth in the plan". Then no word.

That's exactly where I am at... I tried to plan for a wide plethera of what if's and still get through the first year...

Thanks for your input and support.

[hrdickinson]

V.O. - It sounds like your business plan may be TOO professional (said tongue-in-cheek) and to aggresive in terms of growth. Unfortunately, no financial institution (whether or not backed by the SBA) will intentionally fund lossess without adequate collateral backing it up. It appears you have a handle on how substantial this cumulative amount can get before the profits from each invoice collected, begins to reduce it.

If you have the cash resources (or available credit) to quickly sell and startup a few hundred weekly hours, can establish credit terms with a uniform vendor, etc., and your personal cash requirements are low enough, you might have a better chance of getting into business. Borrowing to purchase a hard asset like a patrol vehicle, is generally not a problem.

Once you get established, build a new business plan and try to scale it down so that you are able to fund your own growth.

A start-up in this industry is too small for the venture capital groups unless the plan involved acquiring two ore more firms and integrating them successfully and that takes a proven track record with such activities.

Alternatively, perhaps you can find a company owner that would like to retire and sell to you on a payout basis with very little cash up front.

Bottom line is that if you don't have firm committments for some work from day one, a start up is very difficult.

Richard

[SecTrainer]

ValleyOne - have you thought about looking for a partner or partners? There are pluses and minuses, of course, but you might find just the right people who would be interested in your business proposal as silent partners.

This can be easier if you plan to specialize in a particular niche such as real estate security, for instance, which would give you a natural entree to RE brokers, construction company owners, etc. These people would easily see the need for the service and find it intriguing, and heck, they might also be customers! There's a lot in it for them if you can show it to them.

[ValleyOne]

V.O. - It sounds like your business plan may be TOO professional (said tongue-in-cheek) and to aggresive in terms of growth. Unfortunately, no financial institution (whether or not backed by the SBA) will intentionally fund lossess without adequate collateral backing it up. It appears you have a handle on how substantial this cumulative amount can get before the profits from each invoice collected, begins to reduce it.

I feel as though I have a "Less than optimal" growth outlined. In that I mean I have predicted that I will have a trickle of accuonts signing up.

It may have been an error but I have opted to sub-contract a sales person. This person is dedicated to helping me obtain accounts. I felt it was needed as I can only work so many hours in a day, and it would help curb expenses as it is a contracted position (set own hours, etc) and thusly cut out further expenses (FICAQ and the like.)

If you have the cash resources (or available credit) to quickly sell and startup a few hundred weekly hours, can establish credit terms with a uniform vendor, etc., and your personal cash requirements are low enough, you might have a better chance of getting into business. Borrowing to purchase a hard asset like a patrol vehicle, is generally not a problem.

Sadly, I am as broke as one can get....

Alternatively, perhaps you can find a company owner that would like to retire and sell to you on a payout basis with very little cash up front.

I think, this may be a possibility... Would have to prusue this avenue more, but as of now I am not sure...

Bottom line is that if you don't have firm committments for some work from day one, a start up is very difficult.

Richard

True enough...

[ValleyOne]

ValleyOne - have you thought about looking for a partner or partners? There are pluses and minuses, of course, but you might find just the right people who would be interested in your business proposal as silent partners.

This can be easier if you plan to specialize in a particular niche such as real estate security, for instance, which would give you a natural entree to RE brokers, construction company owners, etc. These people would easily see the need for the service and find it intriguing, and heck, they might also be customers! There's a lot in it for them if you can show it to them.

To be completely honest the thought of having a partner does scare the hell out of me. I have heard WAY to many horror stories I suppose, but I guess I should look at those stories as they were being told by the partner who thwarted the evil partner...

As far as the real estate angle, that sounds promising.

Thanks to everyone. Please keep the ideas flowing

[SecTrainer]

To be completely honest the thought of having a partner does scare the hell out of me.

Well, there are better partners and worse ones. More importantly, there are better partnership agreements and worse ones.

You would consult with an attorney to learn how a partnership agreement can be set up properly in order to minimize problems. I daresay that at least some of the horror stories you've heard could have been averted by proper partnership agreements.

Some agreements, for instance, specifically limit one or more of the partners' degree of participation in the business just to investment and finance-related activities, denying them any operational decision-making. Again, check with an attorney.

Here's a Nolo article on partnership agreements.

There is also a way to establish a "corporate" form of "partnership", an LLC, in such a way that the other investors are actually stockholders but do not have direct operational control. It would be necessary to structure the "stock offering" in such a way that you have majority ownership even though you don't actually put in that much cash. This can be done, I believe, by placing a dollar value on your contribution in the form of "good will", etc. Again...an attorney's just what you need.

[SecTrainer]

To be completely honest the thought of having a partner does scare the hell out of me. I have heard WAY to many horror stories I suppose, but I guess I should look at those stories as they were being told by the partner who thwarted the evil partner...

As far as the real estate angle, that sounds promising.

Thanks to everyone. Please keep the ideas flowing

The real estate niche covers a lot of ground:

1. Properties under construction.

2. Commercial and rental properties under professional management.

3. Vacant properties on the market.

4. Real estate agents who must show properties at night or in remote areas and need escort or oversight.

5. Vacation/resort properties that are vacant part of the year.

6. Properties that are vacant due to extended absence/illness or other confinement of the owner.

...etc. I'm sure there are more. The clients are construction firms, property owners, property managers, real estate brokers, timeshare agencies, etc. Even travel agents could be alerted to your service and tell their clients about it when an extended trip is being planned.

What about an agreement to provide "pro bono" home patrol for an elderly citizen who is suddenly taken to the hospital and is naturally worried about his property? The social workers at the area hospitals are made aware of this service and notify you when they have a patient in this situation. What great PR mileage you could get out of that! Legalities must be observed, of course.

These days, there are no-install wireless/cellular motion detectors and Web cameras, etc. that you can place in a property temporarily, also, and probably some other technologies you could use as well. Look into this.

Depending on the situation, you would charge by the patrol visit, by the day, week, etc., etc. You'd need different schedules of charges to cover different situations, of course.

Good luck!

[Badge714]

Have you thought about buying an existing company? That's the way I'd go if I wanted my own outfit.

[N. A. Corbier]

The problem with buying existing companies is that you have to deal with the reputation that the former company had. The employees that the former company had. The relationship between the former company and everyone else.

Cheap companies are usually ones that have bad reps, etc. Ones that take a lot of effort to work around. Licenses usually aren't transferrable, and you have to reapply to the state for your security firm license, etc.

If you buy a cheap bad company and then work to rename it, fire all the idiots, and turn it around... This may be more than building a new firm from scratch.

[integrator97]

Plus you're paying money for almost nothing. In that case, I'd say buy the contracts and customer lists only. Why pay for the name and all the other bad stuff then.

[Curtis Baillie]

Here's how I did it.

In the 70's I left LE for awhile. I took the test (Ohio) for a PI and SG license. I had retainers lined up for the PI side with local attorneys - which included office space and administrative help. I only wanted the PI side but took the SG test as I though down the road you never know. I had $5,000 invested and leased every thing I needed.

Two months into the new business I received a call from two very large businesses to provide strike security (unrelated). At that point I had all the business I could handle. I went from me to 26 employees in 6 months. I also picked up work for local GM and Ford plants, (WC investigations).

Then I bid for a contract at a nuke power plant - and won. My staff grew, my income grew - along with my frustrations. I no longer was doing what I loved, investigations. I had become a full time administrator - one of the reasons I left LE.

Someone made me an offier and I sold. My $5,000 investmnent suddenly was worth ..... a huge sum of money. I moved to Arizona and I went to work for the AG's office. End of story.

[SecTrainer]

In the 70's I left LE for awhile. I took the test (Ohio) for a PI and SG license. I had retainers lined up for the PI side with local attorneys - which included office space and administrative help. I only wanted the PI side but took the SG test as I though down the road you never know. I had $5,000 invested and leased every thing I needed.

Two months into the new business I received a call from two very large businesses to provide strike security (unrelated). At that point I had all the business I could handle. I went from me to 26 employees in 6 months. I also picked up work for local GM and Ford plants, (WC investigations).

Then I bid for a contract at a nuke power plant - and won. My staff grew, my income grew - along with my frustrations. I no longer was doing what I loved, investigations. I had become a full time administrator - one of the reasons I left LE.

Someone made me an offier and I sold. My $5,000 investmnent suddenly was worth ..... a huge sum of money. I moved to Arizona and I went to work for the AG's office. End of story.

Today, though, your $5 grand would just about cover the liability insurance. Things have changed!

However, the approach still makes sense. Start with services that aren't as capital-intensive, like investigations, and build from there.

[MRSE_S3]

I just purchased an existing business in security 6 months ago. I know all of your frustrations as it relates to a security company. I just want to say that not all loan officers know what the hell they are doing. I was fortune enough to come across one that 1. knew what he was doing 2. explained to me what I needed to have for an SBA loan.

I understand that you have a strong business plan. Have you tried your local S.C.O.R.E group. (Basically a group of retired business owners that work in conjunction with the SBA to help people secure loans.)

Also, SBA should have a list of lenders that specifically deal with SBA backed loans. SCORE can also be looked up on line, do a google search and you will find them. They were alot of help to get my plans up and off the ground. If you need any more help or have more questions you can PM me.

I would also recommend getting involved in a business networking group in your area.

Are you a veteran of the armed forces... that could help as well. There are many different avenues to pursue for a loan. I would also recommend that you start small, less than $100,000.