How To Cut It As A Key Cutter
Chances are that, at one time or another, we’ve all needed to get a new set of keys cut. Whether we’ve lost a set or need some spare keys for our partner, friend or family member, this service is essential, meaning the key cutting industry will always be in demand. Consequently, those wanting to set up a business could certainly do worse than going into this sector. According to THM, a key cutting business can make up to £173,000 a year.
That said, you might want to follow the lead of other businesses in this industry and offer a wider range of locksmith services to further increase your profit margins. From lock fitting and repairing, to providing door opening services and selling safes, there are many potential avenues to revenue.
But how exactly do you start a locksmith business? What are the keys to success (pun intended) and are there any stumbling blocks to avoid? Allow us to give you some tips on starting a key cutting company to help ensure your venture is one that succeeds.
- RESEARCH, RESEARCH, RESEARCH
- CONSIDER YOUR FINANCING OPTIONS
- SORT OUT REGISTRATION AND LEGALITIES
- GET THE RIGHT INSURANCE
- MARKET YOUR BUSINESS
1. Research, research, research
As with any new company, the first step to opening a key cutting business is to research your target market. This allows you to ascertain what kind of business you want to set up (for example, a domestic locksmith versus an auto locksmith), where you should be located and how you can surpass your competitors. All of this gives you the best chance of success.
We advise collecting information in two main fields: the key cutting/locksmith industry as a whole and your direct competitors. You can do this in multiple ways, including conducting surveys and checking out industry reports. Among the main questions you need answering are:
- What are the sector’s major trends? For instance, the rise of smart locks has led to many locksmiths altering their services.
- What products or services are most in demand?
- How much do customers spend on products or services, and how regularly do they do so?
- How many key cutters/locksmiths are there in your region?
- What products and services do they offer, and at what prices?
- Who are your competitors targeting, and how are they doing so?
2. Consider your financing options
You now need to consider how much setting up a key cutting business will cost, and how you’ll finance everything.
The main costs involved with running a key cutting/locksmith company include:
Rent for commercial premises
The cost of renting a commercial premises depends on how large the shop is and where you’re located. For example, retail space in London costs over twice the amount it does in Bristol on average.
How much your employees will cost you depends on how many you hire, where you’re located and what exactly you employ them to do. According to Glassdoor, the national average salary for a locksmith in the UK is £25,944.
Stock and equipment
What you spend on stock and equipment again highly depends on your exact situation. The more products and services you sell and offer, the more you’ll spend.
According to WebStrategies, businesses should spend between 6 and 14% of their total revenue on marketing, though you might want to aim towards the higher end of the scale at the start in order to get your name out there. The marketing methods you employ will also affect the costs involved — for example, print advertising is typically a lot costlier than social media advertising.
Other costs to consider include accreditation (though you technically don’t need any training to become a locksmith), shop signage and insurance — more on the last point soon.
How to finance your business
Some of the main ways to finance your business include:
Traditional bank loans are a common way for locksmiths to secure funding, with many banks offering low interest rates. That said, obtaining money this way can be a long-winded process.
You could secure funding from business angels in exchange for a share in your locksmith business. This path is unsuitable for those who want 100% control over their business.
Incubators and accelerators
Incubators and accelerators offer funding specifically for startups in exchange for equity in the business. Again, if you want full equity, this may not be the best choice.
Other funding options include asking family or friends, crowdfunding, and short term loans.
3. Sort out registration and legalities
Once your finances are in order, you now need to register your business and make sure you’re complying with any relevant laws.
Your business structure
Your locksmith business’s structure is dependent on the business structure you choose, with each involving different reporting, management and accounting duties:
A sole trader is completely responsible for their business. While you’d legally keep all of the profits you make after tax, you’d be personally liable for its finances, including repaying any debts.
Limited company owners trade as if they’re self-employed, yet aren’t personally liable for any debts they run up. However, the set up costs can be prohibitive.
A general partnership involves multiple individuals sharing responsibility for the organisation. Profits are usually distributed equally, with each partner accountable for their tax own liabilities but equally liable for any debts.
A limited partnership is like a general partnership, but only one partner needs to be personally liable. The ‘limited’ partner’s liability is financial only, and they’ll just be responsible for the amount they’ve invested.
In addition to registering your business structure, you also must register for VAT if your VAT taxable turnover is forecasted to be over £85,000.
Although the locksmith industry is unregulated, meaning you don’t need any specific licenses, you will have to follow certain laws, including:
There are numerous regulations you must abide by if you sell any products, like clearly displaying the price of goods and making sure these are of good quality.
Waste carrier registration
If you carry waste away during the course of your business, you’ll need to register as a lower tier waste carrier in England, Wales and Northern Ireland, or a professional collector or transporter of waste in Scotland.
Businesses that employ people need to abide by a range of employment laws, which cover issues like holiday pay, employment contracts and discrimination.
Other legal considerations include meeting health and safety laws, not falling foul of data regulations, and having the right insurance.
4. Get the right insurance
Running a key cutting business involves a unique set of risks that might not necessarily be covered by a standard insurance package, making a shop insurance policy essential. This covers everything from the cost of replacing lost, damaged or stolen stock and contents, to any legal fees you’re subject to due to being sued.
With Brisco Business Insurance, you’re able to compare shop insurance packages from the UK’s leading providers, helping you find the best policy for your requirements. These packages usually include the following covers:
Public liability insurance
Public liability insurance safeguards locksmiths that cause injury or property damage to a third party, including customers or members of the public. It’s therefore a critical cover to have, as it keeps your head above water financially if legal action is brought against you.
Employer’s liability insurance
Employers are legally required to have employer’s liability insurance. This protects them if an employee hurts themselves at work and sues the company as a result, such as by covering medical expenses or legal costs.
Your locksmith shop could have contents worth thousands — if not tens of thousands — of pounds, making contents insurance crucial. This will help you financially if these items are lost, damaged or stolen.
Products liability insurance
Although you’ll do everything you can to ensure your products are totally safe, accidents do happen. This can lead to claims against you, making products liability insurance a vital cover for your business.
Other covers worth considering include business equipment insurance, goods in transit insurance and business interruption insurance. If you’re considering shop insurance for your locksmith store, then don’t hesitate to get a quote from us today.
5. Market your business
Marketing your business is essential for getting your name out there and attracting clients. Some of the main strategies you should employ are:
Launch a website
With most people searching for businesses online these days, having a website is essential. This gives you a hub where prospective customers can find you, learn about your business, and even purchase products or book services.
Use SEO strategies
SEO is short for search engine optimisation, which is the process of optimising your website to bolster its visibility in search engine results pages. A successful SEO strategy involves a range of aspects, including a user-friendly website, keyword optimisation and quality onsite content.
Make the most of social media
Marketing your business on social media can help you attract even more customers. You can harness the power of social media marketing in many ways, from publishing top notch content to directly interacting with your clientele.
Use offline methods
Although so much of marketing is done online these days, there’s still plenty of value in offline practices as well. Tactics like giving out business cards, hosting events and attending community engagement projects can all help you attract business.
Hopefully you feel much more confident about launching your key cutting business having read this article! We wish you the best of luck in your venture and please don’t hesitate to get in touch if you need advice on insurance for your new business.