First year in business?

[viking84]

I wanted to find out from those of you that operate your own business, how did your business operate the first year? What were some things you did that helped your business grow and what do you wish you had done differently? Thanks for the feedback!


JC

[MrScruff]

I don't do locksmithing specifically but I do run my own business for supplementary income and imagine the answers can still apply.

The first year, my business cost more than it made. Part of that was simply not having enough presence yet but the bulk of it was getting specialized tools and legal/accounting advice.

Things I did to help my business grow included cold calls to potential customers, attending events that were related to my industry with a pack of business cards and the goal to come back with none of my own, offering referral discounts, and being everywhere potential customers looked. For example, if you're the guy who opens car doors put up some ads on bulletin boards in grocery stores to acquire some mind space. In my particular case, I offered a kickback to local dealers for sending people my way. The biggest thing to remember in all this is that it's better to talk yourself out of work than into it; don't say you can do something if you're not 100% sure you can, that way you build a strong reputation.

As for things I wish I did differently... more research into the market instead of jumping in with nothing more than optimism, bought more equipment second hand, bought less software and equipment because you don't need most of it, and hired a lawyer at the beginning so my contracts were better written.

[gunbunny119]

still in my first year, here. I'm already in positive cash flow and looks like I'll have my personal loan (from me to the business) paid off by the next 4 months. I've been going into the business and asking them if there's any lock related problems I can look at while I'm in the area. Since I'm already in their door, I tell them I'll waive the service fee and that perks them up real quickly. Sometimes a courtesy visit with a $8 can of lock lube goes a long way to business owners. You'll be shocked by how many small business owners don't re-key the locks when they occupy.

I live in a small town and I put out flyers in the local stores, gas stations advertising a $10 full-house (or business) security consult. I usually end up doing it for free, but I advertise $10 because the word "free" draws a customer base I would rather not have.

I've learned many lessons from a handful of failed businesses. Overhead, overhead, overhead. The only way to survive in today's economy is minimizing your overhead. I'm driving a 93 chevy astro van that I paid $1400 for and the vinyl advertising cost me $239 online. As far as equipment, consider leasing. Sure, it's not as good on the bottom line but you will have cash flow and cash flow cures many ailments. $20k in tools and inventory doesn't do you much good if you can't pay your bills. Don't go crazy on up-front inventory. I've never had a customer complain when I told them I would need to order their $500 Corbin commercial panic bar. Customers (especially businesses) are more understanding now when it comes to inventory. I carry many used kwikset and schlage locks that I can install as an emergency temporary measure if needed while I wait for the nice $300 front door entry set to arrive.

[gunbunny119]

Oh yeah.....Price should never be the factor you compete with. If a customer complains to me that he can buy locks at walmart for $8 each, then I invite him to do so and wish him a good day. I learned in the auto body business that the cheap customers are usually the toughest to please. We would paint cars and do repairs at a price we would consider a favor and they're always the onces bringing it back because there's a little overspray inside the front bumper that they somehow found. Make more money on less customers, not the other way around.

[cledry]

Been so long I can't remember.

I would say the main thing that helped our small 5 man shop turn almost a million dollars a year is that we have two major wholesalers in town so we don't need to stock everything, but we still fill 90% of requests the same day. We never put off what can be done today even if a customer says they aren't in a hurry, they will always be impressed with fast service. We also do jobs a lot of work for national maintenance companies. These companies never want to hear "I'll have to order the lock", we find a way. We also provide them guaranteed 2 hour response 24/7 without fail. We give a really good rate to some realtors that do Fanny Mae properties, because they give us a lot of jobs. So we do a house opening and rekey for $125 regardless if it is 2 locks or 10 and no matter the distance in our service area. It is not uncommon to get 3 or 4 in the same neighbourhood on the same day.

[gunbunny119]

Gotta love those maintenance companies. I service one of them out here. I never thought of the flat rate pricing, interesting idea. Maintenance companies are always cheap because banks are cheap. Although I do work for them less than anyone else, the volume makes up for it. I'm not sure I could get my client to pay more than $100 flat rate. They have flat fees for each item, ie $35 service/entry, $10 rekey, $15 knob replacement, $20 deadbolt replacement, etc, etc. If the doors or jams need any work they put in a bid and I get that work as well. Some jobs I don't make much, some I make a bunch. I suppose that would be the same scenerio if I charged a flat fee and went to a house with 4 outside doors, each with security doors, each with double-sided deadbolts. lol. Those jobs make me smile when they pay per lock.

[cledry]

Gotta love those maintenance companies. I service one of them out here. I never thought of the flat rate pricing, interesting idea. Maintenance companies are always cheap because banks are cheap. Although I do work for them less than anyone else, the volume makes up for it. I'm not sure I could get my client to pay more than $100 flat rate. They have flat fees for each item, ie $35 service/entry, $10 rekey, $15 knob replacement, $20 deadbolt replacement, etc, etc. If the doors or jams need any work they put in a bid and I get that work as well. Some jobs I don't make much, some I make a bunch. I suppose that would be the same scenerio if I charged a flat fee and went to a house with 4 outside doors, each with security doors, each with double-sided padlocks. lol. Those jobs make me smile when they pay per lock.

The ones we deal with don't generally set the prices. When we enter a vendor contract they as what our standard and overtime service call is and what our hourly rate is for standard and overtime. Generally they allow us a minimum of $110 to $115 for every job. Most of the time they prefer to supply the parts unless it is an emergency.

The way these companies work is key to understanding how to make money from the partnership. They work on commission, the person you are dealing with has a list of stores that he/she handles. They make points by getting the job done fast, they don't want to hear we'll take care of it tomorrow, they want it now. They make more when they sell a part, so thinking you are saving them money and thus making points with them by repairing a lock is not the best way. Firstly they don't make as much commission, secondly you are opening yourself up for a return trip. So if a Securitech Trident could be repaired by replacing something, you are better off generally requesting a new unit. We always take before and after photos and communicate constantly throughout the job. Also don't be afraid to ask for a bump on the NTE.

[gibson]

It takes a while to build up a client base, so have patience. I've gotten calls from people that I had done work for over a year previously. The shop I work in recently started advertising on-line, and the results have been very positive, as opposed to the local paper or the phone book. Have a business card professionally done, and then never be without them. Whenever we complete a job, we leave at least two card. I have a TOOOL pickcase that has a pocket on the back for the emergency pickset they sell, but it also makes a very convenient place to put business cards.

[Nismo-san]

Oh yeah.....Price should never be the factor you compete with. If a customer complains to me that he can buy locks at walmart for $8 each, then I invite him to do so and wish him a good day. I learned in the auto body business that the cheap customers are usually the toughest to please. We would paint cars and do repairs at a price we would consider a favor and they're always the onces bringing it back because there's a little overspray inside the front bumper that they somehow found. Make more money on less customers, not the other way around.

hahaha i know exactly how you feel there...im a body tech that decided to get out of the dust of the body shop and start a lock shop. the cheapo customers are far to often a pain in the ass....

[Hollywoodpick]

I am still in my first year and doing well.

Best thing did was start my website way before i was ready so the site aged some and i worked hard on getting it to # 1 in my area.

The most calls i get are lockout calls for cars and some homes and a few business. They have been 100% from my website everyone has a call phone now days and searches for a locksmith on it.
I now have a yellow page ad that is a good size that has just come out and so far i have not had a single call from it.

Fall and winter i was a bit slow but working and as we move more and more into summer i am now getting 4 to 8 calls a day 12 calls was my best day so far on a Friday.
I do get calls for things i can not do so i give out other locksmiths numbers in my area to the caller. But i can do i would say 80% of all the calls i get now.
I charge $50 for lockouts for cars or homes in daytime. After 6pm it is $60 or still $50 if it is super close by and i am in a good mood, after 10pm it is $75 after 1pm it is $100 to $150 based on how far it is from me.
So i am doing very well i think better then i was expecting.

I think at this point if i could change something i would of not spent the money on the yellow page ad.

I have a code cutter and a Dup key cutter but do not use them much but that was a good investment for over time i think.

Things i think i wasted money on are in the door tools i have a large set that is just to big. I think i could get away with only having a small hand full of the in the door tools as the long reach and strap tool works on 90% of everything i have run into so far. I now use the glow tip version that works great at night.

Things on my list to still buy are more car key readers and motorcycle key readers and key blanks and boat and RV keys, And a few other specialty tools.
Maybe at some point a sidewinder code key cutter and remote programer but i want to go to a car key seminar first it is a bit confusing on what i would be able to make and not make

[2octops]

I know this is an old thread, but I'll chime in anyways since the subject comes up often.

My first year was almost 20 years ago, but the same tactics that I used then are still used every day and they still work.

First off, do not go into debt for anything. If you can not pay cash for it, you do not need it yet. Take any profits that you make from every job and save them. Split that money into 2 piles. One pile goes towards reinvesting in your business and the other goes into savings for the future of the business. You're going to need it one day.

If you only have the ability to do residential work but want to get into automotive, do as much residential as you possibly can and save up until you can break into another market. Same goes for safes and commercial work.

Price check your competition. Get your neighbor, wife, sister or cousin to call around and find out what everyone else is charging. Then set your prices in line with the most expensive guy in town. He's probably your only real competition anyways. You never want to be known as the cheap guy. When a service company is cheap it raises a flag to potential customers and they wonder what corners you are cutting and what the expensive guys are doing that you are probably not. We are the most expensive company within 3 counties and run several days backlogged. Cheap customers are usually a pain in the arse anyways. I do not have time to deal with their hassle. There is an old saying "charge what your worth and be worth what you are charging."

Get your name out. You want everyone in town knowing that you are in business. Large, simple lettering on a service vehicle creates a rolling billboard that everyone can see. Drive that vehicle everywhere you go. Always wear a uniform shirt or jacket with your company name when you are in public. Wear that uniform proud and if you have nothing better to do, go walk around Wal-Mart, the grocery store or where ever there are a lot of people. You want them all to see your company name and see it a lot. Be sure to carry plenty of business cards and pass out 3 to every person that you meet. Once can go in their wallet, one can go on their desk and ask them to give the third to someone else that might need your service one day. You will be amazed at how many people will give your cards out for free. Don't forget to leave a stack of about 10 on every counter that has a cash register.

We sponsor local ball teams and every jersey has our name on it. We have t-shirts printed up with our name and number and started up a t-shirt swap several years ago with a lot of other small business owners. I give each of their employees a t-shirt in return they give all of my employees a t-shirt with their name on it. We all advertise for each other. Of course, dang near every one of my family members and neighbors get shirts to wear around town. Again, you want everyone to see that name and remember it when they need a locksmith.

Always drive a clean and organized service vehicle. Always show up to a customer in a clean uniform and present yourself in a professional manner. Make sure that your work area is cleaner when you leave than it was when you got there. Wash your hands before arriving at a customer...nobody wants to shake hands with a stranger with dirty fingers. Clean, clean, clean...I can not stress it enough. We all carry spare uniforms in our vans and if that one gets dirty, then you'd better go home and get another one before showing up to your next job.

Answer the phone in a proper manner. Never answer the phone with just "Locksmith." Something along the line of "Thank you for calling XYZ Locksmith, how can I help you?" Always thank your customers for calling before hanging up. If you are talking to a customer and the phone rings, let it go to voice mail. Never put a call on hold to answer another and NEVER stop a conversation with a customer face to face to answer a phone. It's impolite and makes the first person that you are talking to think that they are not important. In todays world, we are all used to getting voicemail and know to either call back or leave a message. Always return missed calls even if they do not leave a message.

Most of these things fall under being clean, professional and polite to people. As long as you do those things, you will have customers calling.

[kuefler]

I'm in Alberta, Canada and it's actually the start of my second month now, about $2600 in sales in my first month and $700 of that went to cover parts, so $1900 to pay bills and what not is actually above expectations. I broke a lot of the rules mentioned above, my Father invested in me using line's of credit and so paying off the debt and breaking even is definitely first on my mind. Luckily he runs a home business that is rather successful so the bills are getting paid regardless, it just goes from line of credit/credit card to being a personal debt I owe my father.

I used to work at one of the biggest shops in the province, where we could do any job or cut any key, even sidewinder/transponder keys. So I wanted to be the lower overhead version of them when I started. We have a 3D Pro XL, MVP pro and an assortment of keys to rival most small shops (I'm mobile only) not to mention all the deadbolts, knobs, cam locks, high security locks and misc stock that covers almost any job twice over. I noticed my previous employer had literally half a warehouse of dead stock that never sold and nobody was motivated to sell it either, so even though I carry almost any lock or key I'd ever need I do only have 1 or 2 jobs worth stocked, and I only stock things I fully believe in quality/cost wise. I was lucky to have been a locksmith for many years before hand so all my power tools and hand tools were already here, so really only had the major purchases to pick up.

To date we've spent money on advertising and done the free stuff, the most effective advertising? The free listing you get with google maps... Anyone searching for a locksmith looks for one close to home, and I'm the only locksmith in this suburb so without paying a dime people search for a locksmith in my area and I pop up every time. $1000 for flyers to canvass the entire town, got 2 jobs from it. $350 for a listing on a "popular" website that's similar to the yellow pages.... not even 1 call from that. Google maps however, I've gotten 10+ jobs from it! Don't confuse it with google ad-words, that's a glorified scam and is 100% ineffective.

I think other than google, the above mentioned cold-calls and surprise showing up/free consultations is a winning idea. That and I'm going to have a stupid amount of business cards made and have them at every business in town. One idea that was missed, and possibly because not every town does this, is your local chamber of commerce. There are over 400 members in my town, and when I join the chamber they send out an "email blast" introducing me to all the other chamber members, they have a group health plan available to chamber members as well. So for a one man show, for about $150... I get access to an affordable health plan AND a huge amount of advertising to all the big money spending commercial clients in town? Definitely worth a try anywhere else, if you do cover commercial locksmithing at least.

The only problem with any form of advertising I've noticed is, the waiting. Put up your listing on google, send out the flyers and visit businesses to drop off business cards and chat 'em up.... and wait for the calls to trickle in. If I had the money I'd try and do a charity BBQ or something, give all the money to a local youth organization. But again that's not guaranteed to make me money today, so I wait and keep getting my name out there and hope the business rolls in

[soundwave5150]

@2octops There were some fantastic tips there i've made a mental note of.

[wheresmykeys?]

Thanks guys, I'm working on my business right now, lost my job as a locksmith at a local resort after a cut back. So I'm going for it gonna give it a shot hope i can make it happen. Maybe I can get an idea of things I might need in my first year from you guys.

Here is what I have got so far:
HPC 1200
Silca Delta
flat steel keys machine
a couple sets of hpc picks
2 sets of hpc computer picks
hpc plug spinner
a key extractor set
a cheap dewalt lockset jig
a tool bag of all your standard tools
.005 Pin Kit
Cordless Dremel
Complete set of 19.2 Craftsman cordless tools
Hitachi 12 volt drill
a van for sevice calls
laptop and printer in the van

[2octops]

I'd add a pick gun and automotive lock out kit to your tool list. Even if you do not want to do automotive work, you can still make some nice pocket change during slow times unlocking cars if the calls come in.

I would not invest much more on anything other than inventory and advertising at this point. As you make profit, put part of it aside to facilitate tool purchases as the need arises. You already have most of the normal, everyday tools that we use on a regular basis.