If you want to start a home security company you’ve come to the right place. The following provide everything you need to start a security company quickly and smoothly.
Licensing: First Step to start a home security company
First you must get licensed in your state. Each state has different requirements to start a home security company. These include passing a test, experience requirements, having insurance, and paying fees. Some alarm dealer programs have different requirements to join but all will require licensing. Save your self time and hassle by getting licensed before you do anything else, including contacting dealer programs.
Most states regulate the alarm industry and require an alarm company license before you can begin. Some require that companies have a qualified manager who knows the laws and is ultimately responsible for following them. Operating without a license is a serious violation in many states and can result in fines and even jail time.
If your state requires licensing expect the process to take at least 60-90 days if things go smoothly. For more difficult states like California, Florida, North Carolina and others it’s a good idea to hire a licensing consultant. They smooth out the process and help eliminate costly mistakes. One excellent consultant is API Processing.
Some states like Ohio, Colorado, and Kansas do not have any licensing requirements at the state level but may regulate alarm companies at the local level.
The second universal requirement is to have insurance, namely General Liability insurance and Errors and Omissions insurance. Most programs want at least $1 million of each before you can start a home security company. Some states will require additional coverage as will some dealer programs.
Don’t go through your local State Farm guy or your brother’s buddy for this coverage. Most general insurance agents don’t understand the specific needs of alarm dealer programs. Using a non-industry agent can add several weeks onto the process and be more expensive. This coverage is absolutely required for security dealer programs and wise to have for anyone that wants to start a home security company. Ken Kirschenbaum, a well respected industry attorney, has an article about the importance of the coverage here.
Click here for help finding industry specific insurance providers.
Insider tip: Wait until you are mostly done with the licensing and insurance process to begin contacting alarm dealer programs. If you wait they will take you much more seriously and the process will be better overall. From a dealer programs perspective, if you don’t have a license you aren’t serious about becoming a dealer.
Another requirement to start a home security company is to have proper paperwork. If you plan to keep accounts in house you will need alarm monitoring contracts and installation agreements with your branding. If you work exclusively with an alarm dealer program they will provide the paperwork. It is vital that the contracts you use conform to industry standards and have provisions for rate increases, limits of liability, and clauses that will allow you to sell or transfer the accounts in the future. If you fail to do this properly you will limit your ability to one day sell your company and reduce the value of that transaction. Ken Kirchenbaum’s law firm can provide the necessary contracts to protect your company and maintain value.
Deciding what equipment you want to use is another important step to start a home security company. When it comes to equipment, there are basically 2 things to figure out: which equipment do you want to use and where to get it from.
There are 4 major brands of equipment currently in use, with a few others competing for shelf-space. The 4 major brands are 2gig, Honeywell, GE/Interlogix, and DSC. Qolsys is a notable newcomer that is making waves but is not approved by all alarm dealer programs yet.
2gig equipment is by far the most popular when it comes to alarm dealer programs. It’s well designed, very intuitive for end users, popular among installers and makes remote trouble shooting simple. It is a wireless system and has everything necessary built right into the panel.
This is second most popular equipment brand among security dealers, largely because of the lower cost. Like the 2gig product it supports alarm.com interactive services, but it doesn’t look as nice and is not as easy to install. The touchscreen version, the Simon XTi, is clunky and very un-impressive. However if you have a hardwired system to install the Concord is an excellent choice as 2gig does not offer a large scale hard-wired solution.
Honeywell previously dominated the market and still has a lot of name recognition. Their hardware is solid and reliable, but their software is lacking. I had mine removed after only 2 weeks because I thought the user experience was very disappointing. Honeywell uses their own proprietary interactive service/backend, which is not as smooth as alarm.com and other competitors. Total Connect, their backend, has almost triple the number of service call issues compared to alarm.com. They do have some extra bells and whistles built into their software but overall they have struggled to compete on the software front.
DSC is the last major brand but doesn’t have a lot of traction with security dealer programs. The equipment is more expensive without offering any significant advantages. They do produce some very inexpensive hardwired systems which are very popular with home builders and mass installers looking for the cheapest possible equipment.
All equipment manufacturers sell through distributors. These distributors offer various perks like ongoing service, returns, and free trainings on different products. Signing up with a distributor is simple, just fill out an application. Some will even offer net 30 terms if you have acceptable credit history. Click here for special equipment pricing available only through Alarm Program Advisor.