Do’s & Don’ts of DIY Security Alarm Business
Legal Briefing columnist Ken Kirchenbaum considers caveats to the lure of the DIY alarm business.
If you’re thinking about getting into the do-it-yourself (DIY) alarm market, you’re not alone. Most of the inquiries I get ask: Do we need any local licensing for out of state since we are not installing? Is there a contract we can use to limit liability? Anything else I should consider?
The first thing you should consider is that many in the alarm industry and outside the alarm industry are thinking about giving alarm DIY business a shot. All you need is a good marketing program, a call center, a vendor willing to dropship, a phone, a computer and a central station willing to monitor. And money. Money to do the marketing and deliver the DIY product, cover overhead for insurance, usual business expenses and legal – don’t forget that expense.
There are plenty of equipment manufacturers to choose from and even more central stations. Getting insurance shouldn’t be a problem. You will have competition so marketing is going to be something you need to give some thought to. Options include a top website presence, call centers for telephone solicitations and print advertising.
You are not going to need a license to sell the DIY equipment. You are most definitely going to need a proper contract. You’ll need a form agreement that covers the entire country. If you’ve mass marketed any other types of items, bracelets, toys, whatever, and think that marketing security equipment is the same thing, you’re wrong. You will leave yourself open to many of the same claims the local alarm installers face. So don’t get into this business without a proper contract.
You are going to require a license in those jurisdictions that require licensing for alarm monitoring. Those looking to get into this line of work pay me “big” bucks for advice, so I can’t give away too much here. In addition to licensing there may be registration issues in a number of jurisdictions. Why do you need the licenses if you’re subcontracting out the monitoring to a central station (which you hope has the necessary licenses)? Because you’re entering into the monitoring agreement, not the central station. If you don’t intend to use your own monitoring contract then don’t bother getting into this business. It’s not for you. Try something a little less complex and risky, like staying home and watching TV. Your monitoring contract will have to be a nationwide form.
DIY is here to stay but I doubt that it will affect the traditional alarm businesses in a meaningful way. The DIY systems are not going in the 15% or so of alarmed residences; they are going into those where the end user is too cheap, can’t afford or is too dumb to get a professional alarm system installed. If your professionally installed alarm system isn’t better than the DIY systems then you don’t belong in business, not this business anyway. So someone who actually needs (fire or commercial premises) or wants an alarm system is not going to try DIY.
However, 85% of the marketplace is a pretty good pool of prospective customers and I think great money can be made selling DIY and getting the monitoring. But don’t confuse yourself with a professional alarm installer, though you can certainly have both businesses going at the same time.
NOTE: The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.
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