It’s essential to continually assess what’s working and what isn't to make changes that improve profitability. This is especially true for physical security businesses because of their unique needs and challenges. You must continuously make operational changes to remain profitable.
This can mean altering your services offered, how you market them, or even the way you run your business. Making these changes can be daunting, but can lead to increased profitability (and even more success) if done right.
Here are 10 operational changes that can help private security firms improve their profit margins:
1. Review Security Procedures
One of the easiest and most effective ways to improve profitability is by reviewing security procedures and making changes where necessary. Security procedures are protocols designed to protect businesses and organizations from internal and external threats.
They can include physical security measures such as alarm systems and surveillance cameras, as well as digital security measures such as firewalls, anti-virus software, and encryption. Security procedures also often involve implementing policies and procedures related to corporate data and systems employee access.
You must look to improve and evaluate your company's information security management design. Businesses frequently adopt strategies that are no longer effective or efficient. For example, you could redesign workflows and systems for greater efficiency. If multiple people perform the same activity using the same steps, you can find ways to optimize, reorder, or eliminate those steps.
If multiple people perform the same activity with different steps, there might not be a process in place. Start by establishing a consistent process before seeking improvement. Consider project management tools to keep stakeholders accountable and tasks moving.
Assessing your security policy and procedures helps ensure that your company's security measures are operational and in line with industry standards. Reviewing your security procedures allows you to identify any inefficiencies and make changes that can improve your bottom line.
2. Institute New Policy Planning
Many businesses find that instituting new policy planning procedures can improve profitability. Policy planning is the process of creating new policies to improve efficiency and effectiveness.
It involves analyzing current policies, researching best practices, setting goals and objectives, developing strategies, and evaluating the potential impact of the policy. The goal of policy planning is to create policies that achieve cost-effective desired outcomes.
Ensure all policies are well thought out and meet the needs of your business by creating a formal policy process. This can help with successful implementation. An essential first step is to ensure your entire team is on board with implementing new policies. Launch an awareness campaign that empowers everyone to do their part to boost the bottom line. It's a great way to improve company culture and instill a sense of ownership in everyone.
This also helps reduce miscommunication or problems that arise when policies are quickly created. A formal policy planning procedure also helps make sure that all policies are implemented in a timely and effective manner. This is a great way to improve profitability and increase efficiency across your business.
3. Evaluate Your Staffing Levels
Another way to improve profitability is by evaluating staff levels and making changes. You’re wasting money on salaries and benefits that could be put toward increasing profits if you have too many employees. Conversely, if you don’t have enough employees, you can lose opportunities and sales.
It’s essential to regularly assess staffing levels and confirm your company operates as efficiently as possible. This may mean increasing or decreasing staff depending on current needs. By evaluating staff levels and making necessary changes, your business can improve its profitability.
4. Reduce Excessive Overtime
Overtime offers your guards schedule flexibility and the opportunity to earn more. But overtime is reckless and costly when it isn't controlled, regulated, or measured. Preventing excessive overtime can optimize costs and increase profitability in several ways.
- When employees are overworked, they can become less productive and reduce the overall output of a business. This can lead to higher costs as more resources are needed to complete tasks.
- Overtime wages often cost significantly more than regular wages. This results in increased labor costs.
- Overworked employees are more likely to make mistakes and errors. This can lead to decreased quality and negatively impact customer satisfaction and reputation. Preventing excessive overtime means that businesses can ensure their workers remain productive and efficient while avoiding unnecessary labor costs.
Use technology such as workforce management software to identify excessive overtime. Leverage the analytics to better inform your scheduling decisions. You'll also improve performance, reduce the risk of fraud or employee lawsuits, and foster a better work experience.
5. Upgrade Your Security Tools
By investing in new, more effective security tools, you help guarantee the safety of your employees and customers while protecting your assets. Your business can improve your security while also reducing costs when using the latest technology. It allows companies to stay ahead of the curve and stay competitive.
When deciding to upgrade your security tools, it’s vital to consider the needs of your business and find solutions that meet those needs. This helps improve your security posture while also providing cost savings for your business. Your business can potentially take on more complex security projects as a result.
6. Build System for Tracking Listing
It’s essential to institute a system for tracking listings when owning a private security company and optimizing profit margins. This helps you to keep better track of sales and make more informed decisions about allocating resources and scaling your business.
A system for tracking listings can also help identify areas where you’re losing money. You can better understand what customer services are most popular by tracking sales. This information can be used to help make future business decisions.
7. Offer Price Bundling
Who doesn't love a deal? Price bundling allows you to sell more higher-margin items or services by offering customers a discount. For example, packaging video monitoring with patrol services increases customer satisfaction. Customers will likely spend more on bundles than they would if making à la carte purchases. You can also move low-selling or less popular services by adding them to the bundle.
8. Prioritize Profitable Efforts
Prioritizing the most profitable efforts is important when making operational changes. It helps ensure that resources are allocated in the most efficient and effective manner possible.
By focusing on the activities that yield the highest returns, you can maximize profits while freeing up resources for other initiatives. Prioritizing the most profitable efforts can also help you stay ahead of competitors. Feel empowered to quickly adapt to changing market conditions and capture new opportunities as they arise.
Focus your best efforts, talent, and attention on selling your most profitable services to the right customers, niches, or channels. At the same time, maintain the right balance of short- and long-term projects to ensure both quick wins and a fruitful future.
9. Develop a Retention Strategy
Developing a client retention strategy offers many benefits. Here’s why:
- Ensures customer loyalty and satisfaction, a must for any successful physical security business.
- Allows you to build stronger client relationships through improved communication and more personalized service.
- Increases repeat business and provides an opportunity to upsell additional services or products.
Establishing yourself as the trusted security resource for your clients while offering exceptional service makes you the prime candidate when it comes time to expand manned security services or branch out into other avenues like remote surveillance. You can optimize your marketing efforts to maximize your customers’ return on investment by understanding them better.
10. Lower Overhead Costs
Operational initiatives require strict budgeting and financial planning. One way to streamline operations is by reducing your overhead costs associated with running your day-to-day security business. Overhead costs refer to anything not related to the production, marketing, and selling of your services. This includes rent, insurance, software, networking infrastructure, and accounting.
Adjustments like finding a lower interest rate line of credit may be easier than others, like moving your business to a lower rent space. Consider negotiating service contracts, outsourcing specific tasks rather than having them performed by full-time employees, or hiring an accountant or advisor to identify other ways to reduce overhead costs.
Better Profit Margins Start and End with Continued Improvement
Much like the physical security landscape, businesses are always changing and growing. As a business owner, operational changes should be a strong priority. They help make sure your company continues developing and remains competitive in the marketplace. When thinking about increasing profitability with strategic operational changes, it’s important to remember that these changes aren’t one-and-done.
Continual improvement of processes can lead to new service offerings, greater profitability, and improved client retention. Take the time to invest in these 10 operational improvements. Monitor their results and efficacy. You just might see your profit margins rise and the cost of doing business decrease, opening you up to new opportunities!
To have a successful and profitable business, it's essential to keep making changes and improvements to your operations. As a physical security business owner, keep in mind that it's essential to make sure that the changes you make will have a positive impact on your bottom line.
There are more ways to positively impact your bottom line. That includes winning more security contracts. Learn how to do it by watching our on-demand webinar, “Selling on Target: How to Focus Your Audience to Win More Security Contracts.”