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Batten-Hatchez Security

Executive Summary

Opportunity

Problem

In the current political climate, with increasing fears of terrorist activity, and the current economic climate, which promises an upswing in general and in outsourced services especially, this business is launching at the right time. The business will target large retail stores and building management companies first in order to establish a strong base of clients in Coastalburg.

Solution

Batten-Hatchez Security will remove worries for clients who require security guards for their buildings, facilities, and events by providing excellent customer service for clients and in-depth training for their employees.

Market

[Note: marketing info here is out of date; included for illustration purposes only. Dates have been changed.

According to IBISWorld, there were 41,000 security services firms in the U.S. in 20XX running 56,000 establishments. The average size of a firm was $700,000 revenue per year based on these numbers, meaning that the industry includes both small and larger companies. There are few barriers to entry, as long as basic legal requirements are met, as the capital investment in the business is very low. The industry depends on a supply of labor, often using retired police officers as security guards.

As security guard services are sold business-to-business, marketing and advertisement is generally targeted on the markets and industries the security companies seek to serve. Businesses generally search for security guard providers on the Internet or through referrals from other companies they trust.

Competition

[Note: marketing info here is out of date; included for illustration purposes only. Dates have been changed.

Top players in the industry include Securitas AB, Allied Security LLC, The Brink’s Company, and G4S plc. Huge players provide services for a huge range of markets, including governments, chemical and petrochemical, colleges and universities, commercial real estate, financial institutions, health care facilities, manufacturing and industrial, residential communities, shopping centers, and temporary security services.

Why Us?

Batten-Hatchez Security will remove worries for clients who require security guards for their buildings, facilities, and events by providing excellent customer service for clients and in-depth training for their employees

Expectations

Forecast

The business expects respectable sales of in the first year, almost doubling by the end of the third year. Gross margins will be similar to the industry average, based on guard labor costs vs. billings. After the initial investment and launch, a lean first year, and the establishment of an office and training space in the second year, the business will be poised to expand through its own financing after three years. After the business is proved replicable in additional cities, the business may be sold to provide an exit for the initial investor and founders.

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year

Financing Needed

The $76,700 investment as follows: 

Louis Giordano $15,000

Jared Case $15,000

Unspecified family/friend investment: $46,700

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Opportunity

Problem & Solution

Problem Worth Solving

In the current political climate, with increasing fears of terrorist activity, and the current economic climate, which promises an upswing in general and in outsourced services especially, this business is launching at the right time. The business will target large retail stores and building management companies first in order to establish a strong base of clients in Coastalburg.

Our Solution

Located in Coastalburg at its launch, the business will provide security guards, security audits, and referrals to equipment providers to commercial buildings, retail businesses, and, eventually special event venues and other clients. The business seeks to acquire capital from an angel investor and will expand to additional cities in Ourstate and beyond if successful.

Target Market

Market Size & Segments

[Note: marketing info here is out of date; included for illustration purposes only. Dates have been changed.

The market for security guard services includes building management companies, retail businesses, event venues, and other businesses. IBISworld.com reports that the security services industry as a whole was $29.7 billion in 20xx. While this number includes investigative services and armored car services, it is estimated that security guards accounted for $22.3 billion. This represents approximately 540,000 employees in the security guard industry.

While market revenue has dropped 2% in 20xx due to the recession, it is expected that the market will rise again due to increasing outsourcing of security services by companies who will delay hiring their own full-time employees as the recession ends. The continuing and growing concerns about security brought on by international terrorism are also expected to contribute to growth in the industry.

Of the potential targets available in Coastalburg Batten-Hatchez Security will focus on building management companies and retail businesses at the outset. These businesses require steady security needs and serving them is simpler than serving special events.

Building management companies generally install surveillance equipment and employ security guards to monitor that equipment, to staff front desks/security checks, and sometimes for general patrol. These companies often work with a number of commercial or residential buildings and look to establish a relationship with one reliable vendor for all of their security guard needs. While some buildings require night-shift guards, others require only day coverage.

Large retail businesses use security guards to deter theft and to provide safety. These include department stores and other retail stores over 4,000 square feet, although some smaller stores may use security guards if they sell high-priced items (designer fashion, jewelry, technology, etc.). Retailers require more guards during the day. Some simply lock the store at night while some larger department stores use night patrols as well.

Event venues use security guards to monitor guest lists and fire capacities and to organize emergency response. Nightclubs and bars may be included in this category. However, most nightclubs and bars employ their own security personnel (or "bouncers") directly and do not use vendors. Event security has the same risks as other security, but there is limited time for security audits and situations change fast, making this a higher stress business that requires better trained guards. Events tend to happen in the evenings with weekday nights for corporate events and weekend nights for private events.

Educational institutions, such as primary and secondary schools and colleges, generally employ security officers to guard and patrol their buildings and campuses. Often these institutions employ their own in-house security staff, but they will sometimes use outsources security vendors. These institutions require night and day patrols.

Batten-Hatchez Security will target the first two of these target markets initially, building management companies and retail businesses. Both segments require ongoing security vendors and are eager to establish long-term relationships. Once relationships are established, good customer service, quality assurance, and competitive pricing can ensure that the relationships are retained and that the security provider is considered a true partner in the protection of the building or businesses’ assets and people.

Furthermore, the other two target markets listed will be taken on at a later date, if at all. Event venues require more specialized services and may be a slower market to tackle. Educational institutions are often eager to establish their own security staffs, making this a difficult market to establish a strong foothold in as well.

Competition

Current Alternatives

[Note: marketing info here is out of date; included for illustration purposes only. Dates have been changed.

Top players in the industry include Securitas AB, Allied Security LLC, The Brink’s Company, and G4S plc. Huge players provide services for a huge range of markets, including governments, chemical and petrochemical, colleges and universities, commercial real estate, financial institutions, health care facilities, manufacturing and industrial, residential communities, shopping centers, and temporary security services.

Smaller security companies achieve success based on the expertise and reputation of their founding managers and the growth of a team with a similar track record. The continued success of a company depends on client satisfaction, leading to referrals.

Larger institutions and governments may receive several bids for security contracts, while smaller businesses (such as many that Batten-Hatchez Security will target) often prefer to try out security companies and move on if they do not meet expectations.

The smaller the amount of assets being protected, the more willing a company will be to risk their security on educated hunches about a security company without feeling the need to do due diligence on a number of options.

IBISworld reports the following about the security industry:

While the public’s perception of the rising crime rate assists revenue, the most significant factor which increases the demand for this industry’s services is a breach of an existing security system, a break-in or a near break in. The economic crisis has hurt demand over the past two years but things will soon begin to improve.

In Coastalburg, security guard service competitors include securityguard.com, Top Guard Security, US Security Guard Services, and Trend Security Corporation.

Our Advantages

Batten-Hatchez Security will built a competitive edge through high levels of customer service and assurance. The company will strive to not be a broker between clients and contracted security guards, as some security guard providers become, but instead be a partner in the security and protection of client’s assets, with security guards as a major tool in that protection. This strategy will require Chindit Batten to carefully audit a client’s security situation and to work with them on plans to upgrade and maintain that security. He will continually check in with clients and with the guards sent to client sites to learn about the challenges they are facing.

Keys to Success

Keys to Success

Batten-Hatchez Security believes the keys to success in its industry include:

  1. No incidents. No mistakes. No failures. Security is about peace of mind. Credibility is everything.
  2. Listening carefully to client concerns and objectives to create customized security guard packages
  3. Knowing what the client does not know (bringing deep security expertise as well as knowledge of legal regulations and liability to the table)
  4. Training security guards carefully and maintaining their training and certifications (e.g. to carry firearms)
  5. Monitoring the quality of security guard service to offer quality assurance
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Execution

Marketing & Sales

Marketing Plan

To reach its target markets of building management companies and large retail businesses, Batten-Hatchez Security will use the following tactics:

  • Development of a basic "brochure" website with services and contact information
  • Advertising in trade publications read by managers in these two industries
  • Advertising online with Google AdWords around keywords for security services and security guards, especially associated with these two types of customers
  • Business cards and brochures for Chindit Batten to distribute on appointments and while networking with Coastalburg-area business networking groups
  • Direct selling work based on purchasing or developing target lists
  • Direct mail of brochures and letters to these target lists of potential clients in Coastalburg

Sales Plan

Chindit Batten will be the primary salesperson for Batten-Hatchez Security. He will meet with clients at their buildings to perform an initial consultation and will create proposals for security services based on the client’s needs. Batten will track sales prospects and clients with ACT!, a client management database system. 

Batten’s sales strategy will be to listen carefully to the needs of the client and to provide assurance through stories of his experience and a canny understanding of their needs and concerns. While his proposals may not be the lowest cost bids a potential client receives, he will follow up with care and the same personal attention that clients will receive if they move forward with using Batten-Hatchez Security.

Milestones & Metrics

Milestones Table

Key Metrics

Our Key Metrics are:

  1. The number of retweets and twitter follows. Our customers are constantly chatting with each other and us to figure out how people feel about us 
  2. Our blog views and shares. We demonstrate our knowledge by writing expert posts about security. The number of people who visit our site will give us a idea of how our blog subjects mix with our customer’s concerns. 
  3. Market research – Keep a pretty good idea of what our competitors are doing and how much they are charging. This allows our customer service to sell our customer service on our specific services 
  4. # of customer recommendations on Facebook and twitter and professional service sites. 
  5. # of training certificates and how that affects how much people are willing to pay. 

 

 

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Company

Overview

Ownership & Structure

Chindit Batten is CEO and founder of Batten-Hatchez Security. He currently owns 60% of the business and the remaining 40% of shares are owned by his partner and co-founder, Viipuri Hatchez, COO. The business is incorporated as an S Corporation to enable additional investment for its launch. The founders shares will be diluted as up to 40% of shares will be given to friends/family investors.

Team

Management Team

Batten-Hatchez Security is a startup security company founded by Chindit Batten, a former police sergeant and security company manager with fifteen years in law enforcement and ten years in security work. The business will provide security guards to commercial buildings, retail businesses, and special events. The business will launch in Coastalburg but will expand to additional cities if successful.

Personnel Table

2020 2021 2022
Chindit Batten $43,200 $44,064 $44,945
Vilpuri Hatchez $43,200 $44,064 $44,945
Admin / Call Center Assistants (3.33) $183,600 $187,270
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Financial Plan

Forecast

Key Assumptions

The long-term interest rate is 6% for a home equity loan taken out in year 2 to cover the cash needs for a move to an office space.

In addition to the assumptions shown in this table, the business makes the following assumptions:

  • That the security guard industry will experience an overall upswing in the next three years
  • That the sales record of Chindit Batten at his previous firm can be replicated at Batten-Hatchez

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

Start-up Expenses are 

Legal Fees $15,000

Surety Bond $1,200

Stationery $2,000

Insurance $10,000

Training $5,000

Website $2,000

Brochure $1,500

TOTAL START-UP EXPENSES $36,700

Sources of Funds

Our sources of funds are investors:  Louis Giordano, Jared Case, and family and friends. 

 

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $359,926 $453,780 $555,330
Operating Expenses
Salaries & Wages $86,400 $271,728 $277,160
Employee Related Expenses $17,280 $54,346 $55,432
Marketing $19,200 $19,200 $19,200
Promotion $16,800 $16,800 $16,800
Surety Bond $1,380 $1,380 $1,380
Training $6,516 $6,516 $6,516
Licences and Permits $7,356 $7,356 $7,356
Interest Incurred $164
Depreciation and Amortization $0 $0 $0
Gain or Loss from Sale of Assets
Income Taxes $30,724 $11,469 $25,723
Total Expenses $739,266 $1,021,315 $1,108,237
Net Profit $174,106 $64,985 $145,763

Projected Balance Sheet

Starting Balances 2020 2021 2022
Cash $44,000 $169,832 $240,705 $379,875
Accounts Receivable $160,926 $108,630 $125,400
Inventory
Other Current Assets
Total Current Assets $44,000 $330,758 $349,335 $505,275
Long-Term Assets $1,000 $1,000 $1,000 $1,000
Accumulated Depreciation $0 $0 $0
Total Long-Term Assets $1,000 $1,000 $1,000 $1,000
Accounts Payable $100,614 $68,377 $74,992
Income Taxes Payable $17,039 $2,867 $6,429
Sales Taxes Payable $0 $0 $0
Short-Term Debt $5,000
Prepaid Revenue
Total Current Liabilities $5,000 $117,653 $71,244 $81,421
Long-Term Debt $0 $0 $0 $0
Long-Term Liabilities $0 $0 $0 $0
Paid-In Capital $76,700 $76,700 $76,700 $76,700
Retained Earnings ($36,700) ($36,700) $137,406 $202,391
Earnings $174,106 $64,985 $145,763

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $174,106 $64,985 $145,763
Depreciation & Amortization $0 $0 $0
Change in Accounts Receivable ($160,926) $52,296 ($16,770)
Change in Inventory
Change in Accounts Payable $100,614 ($32,236) $6,615
Change in Income Tax Payable $17,039 ($14,172) $3,562
Change in Sales Tax Payable $0 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions
Change in Short-Term Debt ($5,000)
Change in Long-Term Debt $0 $0 $0
Cash at Beginning of Period $44,000 $169,832 $240,705
Net Change in Cash $125,832 $70,873 $139,170
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