2. Eustace Harewood – Business Plan October 2012
TABLE OF CONTENTS
Confidentiality Agreement .......................................................................................................................................................... 6
1.0 Executive Summary............................................................................................................................................................... 1
1.1 Objectives..................................................................................................................................................................... 2
1.2 Mission......................................................................................................................................................................... 2
1.3 Keys to Success............................................................................................................................................................. 2
2.0 Company Summary................................................................................................................................................................ 3
2.1 Company Ownership......................................................................................................................................................... 3
2.2 Marketing opportunity ..................................................................................................................................................... 3
2.3 Competitive Advantages................................................................................................................................................... 3
2.4 Marketing Summary ......................................................................................................................................................... 4
2.5 Start-up Summary............................................................................................................................................................. 4
3.0 services .................................................................................................................................................................................. 5
3.1 Guard Services .................................................................................................................................................................. 5
3.2 Training Services ............................................................................................................................................................... 6
3.3 Specialty services .............................................................................................................................................................. 6
3.3.1 Alarm response and key holding...............................................................................................................................6
3.3.2. Security surveys and consultancy: ...........................................................................................................................7
3.3.3. Security management:............................................................................................................................................. 7
3.3.4 Close Protection:....................................................................................................................................................... 7
3.3.5 Crisis Management: .................................................................................................................................................. 7
3.3.6 Security safety audits/compliance monitoring: ........................................................................................................7
4.0 Research ................................................................................................................................................................................ 8
4.1 public law enforcement.................................................................................................................................................... 8
4.2 Caribbean Security Industry statistics...............................................................................................................................9
4.2.1 TABLE: Profile of Security Industries in the Caribbean.............................................................................................9
4.2.2 TABLE: Legislative Landscape for selected regional countries (Source: OAS).........................................................10
3. Eustace Harewood – Business Plan October 2012
4.2.3 TABLE: Regulatory authority in selected states (Source: OAS) ...............................................................................11
4.2.4 TABLE: What is regulated in selected States:..........................................................................................................12
5.0 Industry Overview................................................................................................................................................................ 13
5.1 Description of Industry Participants...........................................................................................................................13
5.2 Description of Key Competitors......................................................................................................................................14
5.2.1 G4S Security Solutions ............................................................................................................................................14
5.2.2 The Guardsman Group............................................................................................................................................14
5.2.3 Amalgamated Security Services Limited (ASSL) ......................................................................................................14
5.2.4 AC Security.............................................................................................................................................................. 15
5.2.5 Pinnacle Safety Solutions.......................................................................................................................................15
5.3 Key industry trends.............................................................................................................................................................. 15
6.0 Marketing ............................................................................................................................................................................ 16
6.1 Market Analysis............................................................................................................................................................... 16
6.2 Market Segmentation..................................................................................................................................................... 16
6.2.1 Government offices and institutions:....................................................................................................................16
6.2.2 Hotels:..................................................................................................................................................................... 16
6.2.3 Building management companies .........................................................................................................................17
6.2.4 Large retail businesses ...........................................................................................................................................17
6.2.5 Educational institutions .........................................................................................................................................17
6.2.6 Event venues .......................................................................................................................................................... 17
6.3 Target Market Segment Strategy....................................................................................................................................17
6.4 Service Business Analysis................................................................................................................................................ 17
6.6 Buying Patterns............................................................................................................................................................... 18
7.0 Strategy and Implementation.............................................................................................................................................. 19
7.1 Competitive Edge............................................................................................................................................................ 19
7.2 Marketing Strategy ......................................................................................................................................................... 20
7.2.1 Lead Generation Plan.............................................................................................................................................. 20
7.2.2. Lead Conversion Plan............................................................................................................................................. 20
4. Eustace Harewood – Business Plan October 2012
7.2.3 Build Loyalty Plan.................................................................................................................................................... 20
7.2.4 Web Strategy........................................................................................................................................................... 20
7.3 Sales Strategy.................................................................................................................................................................. 21
7.4 Pricing ............................................................................................................................................................................. 21
7.6 Sales Forecast ................................................................................................................................................................. 21
7.8 Strategic Alliances........................................................................................................................................................... 23
7.9 Growth............................................................................................................................................................................ 24
8.0 Management ....................................................................................................................................................................... 25
8.1 Personnel Plan ................................................................................................................................................................ 25
Table: Personnel.............................................................................................................................................................. 25
9.0 Financial Plan....................................................................................................................................................................... 26
9.1 Projected Profit and Loss ................................................................................................................................................ 26
9.2. Income Statement ......................................................................................................................................................... 27
9.3. Projected Cash Flow....................................................................................................................................................... 28
9.4. Yearly Cash Flow Statement ..........................................................................................................................................28
9.5. Projected Balance Sheet ...........................................................................................................................................30
9.6. Balance Sheet Statement............................................................................................................................................... 30
9.8. APPENDIX A. - FINANCIAL ASSUMPTIONS......................................................................................................................32
9.8.1 Revenue Assumptions............................................................................................................................................. 32
9.8.2 Assumptions Regarding the Collection of Sales......................................................................................................32
9.8.3 Cost of Sales Assumptions....................................................................................................................................... 32
9.8.4 Expense Assumptions.............................................................................................................................................. 32
9.8.4 Sources of Funding.................................................................................................................................................. 34
9.8.5 Uses of Funding....................................................................................................................................................... 34
5. Eustace Harewood – Business Plan October 2012
As with all business plans; this is a
work in progress
6. Eustace Harewood – Business Plan October 2012
Legal Page
CONFIDENTIALITY AGREEMENT
The undersigned reader acknowledges that the information provided by ___________________________. in this business plan is
confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________.
It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other
than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause
serious harm or damage to _______________________________.
Upon request, this document is to be immediately returned to ____________________________________.
___________________
Signature
___________________
Name (typed or printed)
___________________
Date
This is a business plan. It does not imply an offering of securities.
7. Page 1
1.0 EXECUTIVE SUMMARY
Centre for Security Training and Management (CSTM) is a startup full-service security company founded by Eustace
Harewood, an experienced former military officer and security company manager. Located in Barbados at its launch, the
business will provide security guards, integrated security plans, and security guard training to government institutions,
hotel properties, commercial buildings, retail businesses, and, eventually special event venues and other clients.
This company is seeking to compete in a Barbadian private security market that is dominated by foreign based companies
that also have a footprint across the Caribbean Region, and CSTM is pursuing a similar profile to be equally competitive.
CSTM is seeking to establish operations in Barbados under a strong foreign brand that is ambitious to establish a footprint
in the Caribbean Region.
The intended start-up funding formula assumes a valuation for the company of US $200.000 at inception, based on the
expectation that the projection provided in this document are reasonable and attainable, and the management team
assembled around this project bring all the necessary knowledge, experiences, and industry connections to achieve all
these results. CSTM is attributing 51% of this value to the execution of this business plan and the other 49% to start-up
funding in the amount of $98,000.
In the current security climate, with increasing fears of crime 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 Company also regards this
launch as timely in relation to the move by the Government of Barbados to institute a workplace health and safety law that
places many requirements on all employers with more than 20 staff to have health and safety programs in place, which
CSTM’s Staff can help them to implement.
The Company aims to meet the highest standard of security best practices, using a pragmatic, military approach. Staff at
CSTM will advise and service both prominent and individual companies from the public and private sector, targeting
government institutions, hotels and building management companies first, in order to establish a strong base of clients in
Barbados.
CSTM 's business activities will include:
• Manned Guarding
• Mobile Patrols
• Security Consultants
• Specialist Services
• Keyholding
• Intergrated Systems
• Training in all Security Disciplines
CSTM 's guarding operations will be managed almost entirely by former Service Officers and Non-Commissioned Officers.
Under the watchful eye of a management team made up mainly of former military senior officers, security guards drawn
mainly from ex military services personnel will provide the highest possible standards of service. At inception CSTM will be
the only exclusively ex military security organization in the Barbados.
8. Page 2
CSTM will grow its employee base of security guards carefully, based on client contracts, and use both full-time and part-
time guards. The business expects respectable sales in the first year, more than doubling by the end of the third year. Gross
margins will be above the industry average, given a product mix that involves a significant percentage of special services,
which provide a higher margin than guarding service. 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 into year three. After the business is proved replicable, the business will expand the brand presence to other
islands in the Eastern Caribbean.
Projected Sales Breakdown Year 1 Year 2 Year 3
Security Training 35,000 49,700 98,000
Guarding Services 312,000 520,000 104,0000
Special Services 387,500 625,000 1000,000
Total Sales 734,500 1194,700 2138,000
Direct Cost of Sales 32,042 52,488 93,931
Security Guard Labor 187,200 312,000 624,000
Total Cost of Sales 219,242 364,488 717,931
Gross Margin 515,258 830,212 1420,069
Gross Margin % 70.2% 69.5% 66.4%
1.1 OBJECTIVES
CSTM Security will base its success on meeting the following objectives:
1. Employ 50 full-time equivalent security guards by the end of the third year of operation
2. Supply security guards to 15 clients on a full-time basis by the end of the third year of operation
3. Earn $2 million in revenue with net profit over $300,000 in its third year of operation
1.2 MISSION
CSTM 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.
1.3 KEYS TO SUCCESS
CSTM Security believes the keys to success in the Barbados Private Security industry include:
1. Listening carefully to client concerns and objectives and having training capabilities to create customized
security guard packages and unique value-adding services
2. Knowing what the client does not know (bringing deep security expertise as well as knowledge of legal
regulations and liability to the table)
3. Training security guards carefully and maintaining their training and certifications
4. Monitoring the quality of security guard service to offer quality assurance
9. Page 3
2.0 COMPANY SUMMARY
Eustace Harewood is pursuing a role as founding member for this project. Mr. Harewood is an expert in the security field
and brings excellent qualifications and experience in the hotel industry as well. On completion of 15 years of military service
Mr. Harewood has committed to contributing his security experience to the development of Security best practices in the
private security industry in Barbados. CSTM is the company Mr. Harewood is setting up to pursue this commitment.
Mr. Harewood’s experience as a teacher at the post secondary level and years of experience in the security field will
contribute to building brand reputation as a training focused private security operation. His training and experience in
business management will contribute to an efficient and effectively run business.
This business is currently in the conception stage and features former military members leveraging their experience and
depth of knowledge in security to improve safety and security in Barbados. The business will provide security guards to
government institutions, hotel properties and commercial buildings.
2.1 COMPANY OWNERSHIP
CSTM will be established as a corporation under Section III of the Barbados Companies Act. The Company will have three
directors at inception. Besides Eustace Harewood, the second and third directors will be Judy Thomas and Alva Holder. Judy
Thomas is currently a senior civil servant who will be retiring in the immediate short term and is looking forward to this
opportunity to participate and help to build this new venture. As the current Director of the Department of Emergency
Management in Barbados, Judy brings exceptional and invaluable expertise that will contribute directly to the success of
this company, especially in the area of special services such crisis management and business recovery. As well she brings
extensive contacts to senior government officials, which can help the Company in its marketing efforts.
The third director is Alva Holder, a major in the Barbados Defence Force with a specialty as a military police. Major Holder
brings exceptional skills and experience that would be particularly valuable directing and controlling our guarding services
and training programs.
2.2 MARKETING OPPORTUNITY
The private security industry (PSI) in Barbados lacks training. At present the local industry has not embraced the level of
organization and training that is consistent with international best practices. There is no similar basic education or training
requirements that must be met by all security guards. Although some security companies have established their own
training programs, the curricula do not constitute what might be regarded as international best practices in private security
operations. The industry does not have consistent training requirements and it is an all too common occurrence in the
industry for applicants to be hired on one day and be in uniform on patrol the next day with no training whatsoever, except
cursory introduction to the site. This lack of training results in unprofessional execution of duties, a false sense of security
and no value for money. By providing guards that are trained to the highest level of international best practices in private
security operations, bringing deep security expertise and delivery systems that pursue customer satisfaction, CSTM will
build a reputation as a value contributing service provider and quickly capture market share.
2.3 COMPETITIVE ADVANTAGES
10. Page 4
CSTM’s competitive edge is simply expertise. Guarding operations will be managed entirely by former Service Officers and
Non-Commissioned Officers. CSTM officers will be drawn from disciplined backgrounds with 90% being ex-Service or Police.
The experience and service of these members will speak for itself. After building a history with client companies the results
they achieve will serve as testimony for the company, which will attract more clients.
2.4 MARKETING SUMMARY
The CSTM Marketing Team will utilize a four-prong strategy to establish the company on the road to profitability. The first
prong is the use of direct sales techniques. The second prong is internet marketing using social media strategies. The third
prong is the dissemination of printed material and the promotion literature. The last prong is the use of networking and
word of mouth advertising. CSTM’s management brings valuable connections in Government, business and the hotel
sectors in Barbados and will leverage these contacts to generate contracts and sales.
2.5 START-UP SUMMARY
Eustace Harewood will launch CSTM as a home-based business by setting up a home office at his residence. Initially, this
will reduce the cost of rent and equipment. Training for security guards will be provided in temporarily rented office space
as needed. Other start-up costs include the costs of incorporation and permits, such as business license, and police
clearances, legal and other professional services to support start up, the initial website and brochure design and printing,
and the first insurance premium for the business, including liability insurance for the guard's work.
Long-term assets include mobile phones and headsets for all guards and employees, as well as two-way radios for guards
working as teams.
11. Page 5
3.0 SERVICES
The product mix of CSTM will feature guard services, security training, alarm and key holding services and special security
services.
3.1 GUARD SERVICES
The CSTM Brand reputation will be built on experience, maturity and pride in performance. We will provide well trained
guards for one or more of the following purposes:
• To guard entrances and screen guests/employees
• To monitor clients' premises with video surveillance equipment
• To protect clients' assets, employees and guests
• To deter crime with visual presence
• To organize response in the case of fire, evacuation, or other emergency
• To respond to customer and employee health emergencies and accidents
• To eject unwanted customers or trespassers
• To liaison with police and city emergency responders
Our initial Security Guarding services will include:
1. Permanent Guarding (fulltime and part-time)
2. Temporary Guarding (When clients only need the services of a specialist security team for a few days or weeks)
3. Mobile Patrols (used to provide a cost effective security service to sites which may not require a full guarding
service but would benefit from an occasional surveillance)
CSTM will be a licensed, insured, and bonded business and will offer mainly unarmed guards, based on client needs and
budgets. All guards will be certified for security work and some to carry firearms.
Whenever possible, the same guards will be sent consistently to the same clients. However, substitutes will be necessary
from time to time and the business will ensure that detailed data about the job is transmitted to substitute guards on those
occasions. The CSTM Team will ensure that clients build trust in the Company as a partner, rather than simply in the specific
guard or guards they grow comfortable with.
Guards will keep in constant communication with their team via portable two-way radios and with the CSTM office, as
necessary through mobile phones. The CSTM office will not be staffed full-time at launch, but the management will be
within reach by phone wherever they work. Guards who encounter criminal activity will alert the authorities immediately
rather than going through a communications center. Once the CSTM office is established outside of the home of Eustace
Harewood, it will be staffed full-time with a rotation of three call center personnel who will cover the dispatches.
Guards will either be stationed at desks or patrol on foot at all facilities. Clients must provide vehicles if their jobs require
vehicle patrol (i.e., a facility with several buildings), but this will not be a focus of CSTM Security.
12. Page 6
3.2 TRAINING SERVICES
A core principle of CSTM is that as security officers are at the core of the services we provide, it is of great importance to
provide them with the necessary security training in order for them to leverage their capabilities to the utmost of their
potential, so they will project the Company well through excellent service delivery. Another key principal is that the security
needs of each client are unique and security guard training needs to be customized to meet unique demands. Additionally,
the security field is broadening as the security guard’s role and duties evolve to provide the new value-adding services
demanded by clients. In support of these principles CSTM will maintain an in-house training department headed by Eustace
Harewood, which will provide a comprehensive range of security related courses to our staff.
In addition to teaching international best practices for security guard duties and a full range of Health and Safety training,
the Company will develop capabilities to provide Security Guards with whatever training the market generally, and our
clients specifically are demanding. In some cases this capability will be available within the Company and in other cases it
may be necessary to engage outside trainers on a course specific basis. We will invest heavily in providing thorough training
to our security officers, working closely to develop each individual to their optimum efficiency. While most of our guards
will come with military training, those staff drawn directly from the services will follow a further program, to ensure they
are thoroughly prepared for the different requirements of operating in a civilian environment.
Our full range of security courses will be available to non-employees, companies operating ‘in-house’ security teams, or
individuals seeking qualifications to enter the security field, on a paid basis. This will provide an additional revenue source
to the Company.
A variety of security awareness and safety awareness courses will be provided to clients seeking this training to help them
meet compliance and operate in accordance with the requirements of the New Workplace Safety legislation to be institutes
in January 2013.
The basic security training curriculum the Company will adopt is the same credited by the United Nations (UN) as an
example of international best practices for training of security guards and guard supervisors and is being adopted by
countries across the globe as the standard for training in their private security industries.
The 40-hour security guard basic training program covers best practices related to legal authority (arrest, search, seizure
and use of force), duties and responsibilities, emergency situations, professional and public relations, patrol procedures,
report writing, as well as customer service. In Ontario and other Canadian Provinces the program constitutes basis of
mandatory training and testing under new legislation implemented by the Provinces to govern the private security industry.
Relevant modifications will be made to this curriculum to make it suited to the legal environment of Barbados. The subjects
will be taught in training program format using multi-media PowerPoint presentations that focus on a specific topic and
allows the attendees to participate and practice the principles in scenario situations.
3.3 SPECIALTY SERVICES
3.3.1 ALARM RESPONSE AND KEY HOLDING
CSTM will provide a full alarm response service, including holding keys to the property, so that upon alarm
activation we can send a trained Response Officer to check the premises, reset alarms and, if necessary, remain in
the premises until company staff or alarm engineer arrive. We will also produce a detailed report of the incident
for client reference.
13. Page 7
3.3.2. SECURITY SURVEYS AND CONSULTANCY:
CSTM will offer a world class consultancy which draws on the expertise of our management team. This includes
threat risk assessments, integrated physical security design and referrals to systems and equipment providers.
3.3.3. SECURITY MANAGEMENT:
This service will help companies that maintain in-house security teams to improve the efficiency of their security
program. This includes developing standing orders, reporting systems, data analysis methodology, achieving and
retrieval systems and staff training.
3.3.4 CLOSE PROTECTION:
CSTM will leverage the abilities of highly trained former service military police to develop an effective and capable
close protection team to provide tailored Bodyguard Services, to corporate, high net worth and celebrity clients,
government departments, diplomatic and consular agencies and any legitimate persons requiring protective
services.
The approach CSTM will take is to not just provide a body guard but staff with management skills and foresight,
able to assess, consult and implement international close protection best practices.
Key features of this approach:
• Understanding the client’s requirements
• Developing a security plan
• Implementing the security plan
• Managing client exposure in public spaces
• Managing client vehicle movements
• Working with hotel management and staff
• Managing client exposure when entertaining or being entertained
3.3.5 CRISIS MANAGEMENT:
CSTM will offer Crisis Management consulting activities that include helping clients to forecasting potential crises
and plan how to deal with them. Many organisations do not have the time or resources to complete a crisis
management plan – what to do in the event of an emergency – before they experience a crisis. Hotels especially
need crisis management. Most hotels in Barbados do not have a crisis management plan and even fewer have
integrated physical security plans to protect the property and the people who work in it. In reality the majority of
hotels have only the most basic security configuration that only meets the minimum standards: security cameras in
the lobby or other public areas and coded access control cards for elevators and rooms. This basic security is not
enough to reduce the number of security breaches occurring in hotels around the world. This leads to increased
risks, higher cost and potential negative impact on market share of the hotel. CSTM will help clients to identify
potential threats and make the necessary provisions to minimize damage and enable speedy recovery.
3.3.6 SECURITY SAFETY AUDITS/COMPLIANCE MONITORING:
Barbados is instituting a new workplace safety and security act, with provisions concerning building safety
requirements, safe work practices, toxic substances and workplace violence. With the experience of similar
requirements in Canadian Federal and Provincial legislations our staff is well positions to contribute to helping
companies meet compliance with these new requirements.
14. Page 8
4.0 RESEARCH
Momentum in the private security industry in Barbados and the rest of the Caribbean is significantly influenced by the
prevailing environment of crime. Crime has become one of the main challenges threatening economies and livelihoods in
Caribbean countries, according to the Caribbean Human Development Report 2012. The report, Human Development and
the Shift to Better Citizen Security, says that with the exception of Barbados and Suriname, homicide rates including gang-
related killings have increased substantially in the last 12 years across the Caribbean, while they have been falling or
stabilizing in other parts of the world. Latin America and the Caribbean are home to 8.5 percent of the world population,
yet the region accounts for some 27 percent of the world's homicides. One regional nation, Jamaica, is ranked number
three in the world on the index of most murders per 100,000 of the population.
Rising gang violence is another concern, with many gang-related murders recorded in T&T, Jamaica, Guyana and St. Kitts
Nevis. The report states that gang-related homicides in Jamaica and Trinidad and Tobago are “substantial and increasing”:
The number almost doubled in both countries from 2006-2009. In 2006, Jamaica experienced 1,303 homicides, of which
32.5 percent were gang-related. By 2009, the number of homicides had increased by 377; 48.1 percent were gang-related.
In 2006, Trinidad and Tobago experienced 371 homicides, 26.4 percent gang-related; by 2009 the country reported 506
homicides, 34.8 percent gang-related.
Although murder rates are exceedingly high by world standards, the report says that Caribbean governments can reverse
the trend, calling for regional governments to beef up public institutions to tackle crime and violence while boosting
preventive measures. The report stresses the need to rethink approaches to tackling crime and violence and providing
security on the ground.
4.1 PUBLIC LAW ENFORCEMENT
The United States Department of State’s Barbados 2012 Crime and Safety Report, reports the following about public
security forces in Barbados:
In comparison to large metropolitan police departments in the United States, the Royal Barbados Police Force
(RBPF) response times are slower, and resources are fewer. Generally, uniformed police are adequate to have an
influence on crime deterrence, but uniformed police response to alarms or emergency calls are sometimes below
U.S. standard. Police performance and conduct varies from poor to acceptable in professionalism and training, and
regional police organizations have definite resource/manpower limitations that inhibit their deterrence and
response effectiveness.
The level of protection is directly proportional to its impact on the tourist trade. Residential and business areas
frequented by tourists command a more visible uniformed police presence than other parts of the islands. Police
stations and police outposts are strategically located in those areas. The RBPF response in these areas is usually
timely and efficient, but response delays to the non-tourist, less populated and rural areas of the islands can be
significant.
A likely consequence of all the preceding, the private security industry is a growth industry in most jurisdictions in the
region, according to data from the Organization of American States (OAS). In non-OECS territories the number of private
security personnel outnumbers public security personnel. Private security is being used increasingly to assists public law
enforcement, both in the Public sector and Private sector and as a part of national crime plans.
18. Page 12
4.2.4 TABLE: WHAT IS REGULATED IN SELECTED STATES:
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According to the OAS report, some of the key challenges identifies with the regional Private Security Industry include:
• No training guidelines
• Disregard for recruiting guidelines
• Unprofessional/poor training-provides false sense of security
• No quality control/no value for money
• Lack of research (including credible statistics) on Caribbean Private Security Industry
19. Page 13
5.0 INDUSTRY OVERVIEW
5.1 DESCRIPTION OF INDUSTRY PARTICIPANTS
The private security “industry” in the Region is not some clearly defined homogenous group, but rather a multitude of
industries, large and small, all related to the provision of security services, such as:
1. Security personnel, The sub-segments under security personnel include security guards, private investigators, body
guards, bouncers
2. Security Software, Security Software segment include Identity & Access Management, Intrusion
Detection/Prevention, Security & Vulnerability Management, and Other Security Software.
3. Security Hardware, The sub-segments under the Security Hardware segment include; Access Control Systems
(perimeter protection devices), Audio/Video Surveillance, Fire Alarm and Fire Fighting Equipment, Traffic
Monitoring, Biometrics devices.
4. Security Services. The sub-product segments under Security Services segment include Implementation Services,
Consulting Services, Management Services, Education & Training, and Response Services.
The variety of private security occupations and the way the industry flows into a large variety of markets make accurate
classification and counting very difficult, creating a problem when it comes to measuring “how big” the regional industry is.
Additionally, the quality of available official statistical sources is limited. Further, most private firms do not like to advertise
their market share, revenues or personnel numbers and are therefore unlikely to divulge information to researchers.
Nonetheless, there is consensus among observers about the mounting pervasiveness of private security in Barbados and
the rest of the Region.
Clearly, a number of sectors show strong growth, particularly guarding, electronic security and monitoring. Guarding
services appear to be the most competitive. While there are 33 companies listed as security providers, most of these are
not full service, with many limiting service to installation, monitoring and other non-guarding services. The guarding
segment is dominated by overseas based companies (one international and two regional) commanding most of the market
share.
Both security hardware and software shows vibrancy, but these are subject to leakages as overseas based businesses
compete remotely for market share and end-users import products directly.
There is little indication of significant activity in the security (consulting) services sub-sector. Companies listed in the local
yellow pages under this category are mainly technical, offering security assessment, design and installation of security
equipment. There are a few international companies listed under this category, offering services such as corporate security
assessment. There is no indication of services such as emergency management, crisis management, disaster recovery, risk
mitigation, etc., being promoted.
20. Page 14
5.2 DESCRIPTION OF KEY COMPETITORS
The Barbados private security guarding industry is comprised of approximately 33 companies, employing about 1500
guards. Most of these are small local companies that have been in business for 10 or more years and many are not full
security services providers. The three full-service companies that control the majority of market share are regional or
international brands.
5.2.1 G4S SECURITY SOLUTIONS
One of the world's biggest private employers, which is reported to have 657,000 staff operating in more than 125 countries
is the premier security services provider in Barbados. Although actual statistics for market share is not available, anecdotal
evidence suggest that this company controls significantly the largest slice of market share. G4S operates some of the largest
and most significant contracts in Barbados, including the Grantley Adams International Airport passenger screening services
and other Government contracts.
G4S Security Services (Barbados) Limited was established in 1988 as a subsidiary of G4S (Trinidad &Tobago). The latter
Company is jointly owned by Securicor International Limited (51 Percent), Republic Bank Limited (24.5 percent) and Neal
and Massy Holdings Limited (24.5 percent). The Neal & Massy Group is one of the most significant corporate entities in the
Region, a conglomerate operating in the majority of the English speaking countries of the Caribbean.
G4S offers a full complement of private security services, including: manned security, electronic security, monitoring &
patrol, cash in transit, passenger screening and document storage.
5.2.2 THE GUARDSMAN GROUP
This is a Caribbean's security services provider established in Jamaica in 1977. Guardsman initial activities centered on the
training and rental of guard dogs to various security companies in need of canine protection services. The company soon
expanded its service offering with the addition of armed and unarmed guards for corporate and residential clients. Today,
the Guardsman Group of Companies has grown to a total of 12 companies and engages over 6000 persons.
The establishment of three subsidiaries in the Eastern Caribbean islands of St. Vincent & the Grenadines, St. Lucia and
Barbados marked the beginning of the Group's entry into the regional market. The Company also has its sights set on
launching operations in Trinidad & Tobago and Guyana.
5.2.3 AMALGAMATED SECURITY SERVICES LIMITED (ASSL)
This is a Trinidad and Tobago based company established in 1983. Amalgamated’s activities include armed and unarmed
guards, payroll, and courier services, central monitoring, marine patrols, security consultancy services, training,
investigations, supply and installation of electronic security devices and the transportation of prisoners.
As the company’s customer base has expanded regionally over the past two decades, the organization has grown in size to
become one of the leading security organizations in the region with more than 2,500 employees, supported by a fleet of
over 250 vehicles, and offices in Barbados, Grenada, St. Lucia, in addition to the home base in Trinidad and Tobago (T&T).
Amalgamated Security Services (Barbados) limited is a wholly owned subsidiary of Amalgamated Security Services Limited
that provides a complete range of security services in Barbados.
21. Page 15
In T&T GMRTT is a joint venture limited liability company owned by Amalgamated Security Services Limited and Global
Emergency Medical Services Limited a subsidiary of Global Medical Response Inc. GMRTT has a contract with the
Government of the Republic of Trinidad and Tobago for the provision of emergency ambulance service to the nation.
GMRTT operates a fleet of 36 ambulances and a staff of EMT'S throughout Trinidad.
5.2.4 AC SECURITY
This is one of the primary full-service local based companies. AC Security has been in business since 1988 and has a
reported employee count of about 300.
5.2.5 PINNACLE SAFETY SOLUTIONS
Another Company that bears mention is Pinnacle Safety Solutions. Pinnacle is a Barbadian service company that has been
in business for about ten years providing workplace safety training and consulting to local and regional employers. Though
this company is not listed under the security category it is relevant to this proposal because much of what CSTM Security
will be doing in the special services product category will mirror this Company’s operation, methods and hopefully, its
success. While this Company focuses exclusively on safety, CSTM Security will provide services that address both safety and
security.
5.3 KEY INDUSTRY TRENDS
The private security industry in the Caribbean has been witnessing some of the same trends common in the developed
world, with a variety of services typically exclusive to public security forces being outsources to private security contractors.
Prison security, transportation of prisoners, protection of government installations and protection of officials and
dignitaries are all services that individual governments in the region have outsourced to private security firms. In Barbados
the awarding of a contract to G4S to perform passenger screening at the Grantley Adams International Airport (GAIA) is
another example of this trend, and yet another is the awarding of a contract to Amalgamated Security in T&T to operate
the national ambulance service.
While data is not available for predicting sector opportunities in the Caribbean, data on trends in the US do offer some
indications of opportunities that remain to be exploited in this Region. One study by the The Freedonia Group (Private
Security Services to 2014 - Demand and Sales Forecasts, Market Share, Market Size, Market Leaders) identifies the sectors
where most sales are expected to occur through 2014, as follows: “Guarding and alarm monitoring will remain the largest
segments while pre-employment screening, systems integration and management, and consulting will grow the fastest. The
residential market will outpace nonresidential uses.” Since the private security industry in the developing world is lagging
that in the developed world on a similar pattern, CSTM will take this as an indication of where it should target services
development.
22. Page 16
6.0 MARKETING
6.1 MARKET ANALYSIS
International statistic for the private security industry indicates that demand for private contracted security services is
forecast to advance. Growth is expected to be strongest in the developing world. Growth will be spurred by a high
perceived risk of crime (from conventional violent and property crimes to white collar crimes and terrorism) and a belief
that public safety officials are overburdened. Gains will also be fuelled by an ongoing trend in the privatization of some
public safety operations such as guarding government facilities and managing correctional facilities.
The statistics suggest security consulting revenue is expected to achieve the best growth. The trend toward more
sophisticated and automated security electronics, including access controls and surveillance equipment, which are
increasingly integrated with other building operations, will boost growth for security consultants and systems integrators.
Demand for guarding service providers will advance as they continue to promote more value-added services and features.
6.2 MARKET SEGMENTATION
The market analysis table below shows the major market segments for security guard services in Barbados.
6.2.1 GOVERNMENT OFFICES AND INSTITUTIONS:
Have need for various security services. Besides access control and patrolling duties they also have the need for
crowd control (in offices that serve the general public), customer screening, alarm monitoring, safety monitoring,
CCTV monitoring and more. There is an in-house private security force within the Government that performs many
of these duties but increasingly private security contractors are being retained to provide critical security services.
The Grantly Adams International Airport contract G4S was awarded to provide passenger screening services is one
such example.
6.2.2 HOTELS:
Private security guards are important to the hotel industry of Barbados because they are the first line of protection
for this industry that is the foundation of the Barbados economy. Hotels need to show concern for the protection
and safety of their guests, since safety is among the main decision motivators for hotel selection. In an age where
hotel security is so important and hotels around the world are subject to so many security threats, most hotels in
Barbados do not have a crisis management plan and even fewer have integrated physical security plans to protect
the property and the people who work in it. In reality the majority of hotels have only the most basic security
configuration that only meets the minimum standards: security cameras in the lobby or other public areas and
coded access control cards for elevators and rooms. This basic security is not enough to reduce the number of
security breaches occurring in hotels around the world. This leads to increased risks, higher cost and potential
negative impact on market share of the hotel.
The risks to the hotel sector also represent risks to the economic viability of the Island. The service sector is the
strongest segment of the Barbados economy, contributing approximately 75% of GDP, with tourism accounting for
most of this. There are currently approximately 90 hotels in Barbados of varying size and class. Each of these hotels
employ security guards in varying capacities. The guards may either be employees on the payroll of the hotel or
employees of security companies under contract to the hotel.
23. Page 17
6.2.3 BUILDING MANAGEMENT COMPANIES
These generally install surveillance equipment and monitoring 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.
6.2.4 LARGE RETAIL BUSINESSES
Use security guards to deter theft and to provide safety. These include department stores and other large retail
stores, 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.
6.2.5 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, either on a part-time or temporary basis. These institutions may require night
and day patrols.
6.2.6 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.
6.3 TARGET MARKET SEGMENT STRATEGY
CSTM will focus the first three of these target markets initially, government institutions, hotel properties and commercial
buildings. These 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.
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 enduring foothold.
6.4 SERVICE BUSINESS ANALYSIS
Data from The Organization of American States (OAS) shows security as a growth industry in Barbados. Data is not available
on the value of the sector or of individual companies, but it is known 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. With unemployment in Barbados in the area of 11% the industry has a good supply of labor.
24. Page 18
There are 33 companies servicing the contract guarding sector with about 1500 guards. The Government of Barbados,
individual government agencies and many companies (Hotel in particular) still maintain in-house security teams as well.
One example is the National Conservation Commission, which has responsibility for security at Barbados’ beaches and
Parks, maintaining a force of over 200 security personnel including lifeguards.
This use of in-house teams is one of the potential areas for contract security market expansion as the Island eventually
follows the trend common in the developed world of privatizing these services. Another potential source of market
expansion as the economy gets stronger is the new clients that will come into the market. Use of private security guards in
the business sector is widespread but not universal, and it can be expected that as the trend towards a stronger economy
continues many more businesses will add security to the services they provide to their customers.
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.
6.6 BUYING PATTERNS
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.
While Government institutions and larger businesses may recruit security contractors through an open tendering process,
smaller businesses are more likely to search for security guard providers on the Internet or through referrals from other
companies they trust.
Larger institutions and governments may receive several bids for security contracts, while smaller businesses 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.
25. Page 19
7.0 STRATEGY AND IMPLEMENTATION
The key strategy of CSTM Security will be to avoid the trap of submitting the lowest bids possible to win contracts from
clients. This strategy is incompatible with CSTM’s training focus because it reflects negatively on the salaries of the guards,
lowers profits and provides less money for training. Poorly trained staff will rob the Company of its main competitive
advantage. Instead the Company will focus on training and development of a broad range of resources, as means of
continuing to promote more value-added services and features that benefit the market.
CSTM will build its operations and marketing around hotel and Government and commercial building clients. These
segments more consistently have a higher threat risk assessment that demands permanent, on-site security presence and
more enhanced security protection. In an age where hotels around the world are subject to numerous security threats and
travelers regard safety and security as the number one destination and hotel selection criteria, most hotels in Barbados are
abiding by a false sense of security since their security guards do not have the security capabilities to protect guest, staff,
assets and information, even when they are using contract security companies.
Government also has a need for enhanced security to protect its installations, people and information. Another emerging
need of the Barbados Government is related to the services around its new Workplace Safety and Security Law. This Law
was passed in 2005 but has not been implemented to-date because Government itself is not in compliance with the
requirements of the Law. The move to implement the Law starting in January 2013 despite not being in compliance offers
opportunities to CSTM to provide compliance auditing services and training around fire protection, emergency response,
critical incident management, first-aid and CPR, workplace hazardous materials, workplace violence and other issues that
are mandated in the Law.
To effect this strategy, CSTM will:
• Develop exceptional training capabilities
• Maintain expertise and access to professionals in a broad range of security disciplines.
• Implement a policy of continuous security education and opportunities for all management and staff
• Maintain active community involvement in the private security community in Barbados and online
7.1 COMPETITIVE EDGE
CSTM Security will build a competitive advantage on training and professional experience through leveraging the security
expertise of former military members. The Company is the only exclusively ex military security organization in the Barbados.
The experience and professionalism of our guards, further enhanced with programs to ensure they are thoroughly prepared
for the different requirements of operating in a civilian environment, will distinguish the Company’s service from its
competitors.
Judy Thomas who is a working member of the Board is well recognized and highly regarded as the former Managing
Director of the national Office of Emergency Management and her involvement with CSTM Security will provide the
Company with very favorable access to her vast network of Government and Private Sector connections, and give the
Company credibility to sell its emergency planning services.
26. Page 20
Major Holder is a senior military officer with experience in military police tactics, who has been responsible for planning
and controlling military operations in support of local law enforcement, including support to protect and control major
national events such as Cropover and other local festivals.
High levels of customer service and assurance will also contribute additional competitive advantage. 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, people and information with security guards as a major
tool in that protection. This strategy will require CSTM’s management to carefully audit a client's security situation and to
work with the client on plans to upgrade and maintain that security. CSTM’s management will continually check in with
clients and with the guards sent to client sites to learn about the challenges they are facing.
7.2 MARKETING STRATEGY
To reach its target markets of government agencies and hotel properties, CSTM will use the following tactics:
7.2.1 LEAD GENERATION PLAN
CSTM will use a number of tactics to generate leads in these sectors. These include advertising in local newspapers, trade
magazines, yellow pages, internet marketing, list building, direct calls to list, and direct mail to list. The Company will
develop a consistent package of promotional documents, including, business cards, brochures, proposals and letterheads,
that are professionally designed to reflect the brand image in the most positive way. This is the package that the Directors
will distribute on appointments and while networking with local business and networking groups and through direct mail of
brochures, sales letters and proposals to target lists of potential clients. CSTM will also sponsor industry seminars on an
invitation only or paid attendance basic. Seminars are not expected to be money makers, in fact they may fail to break
even. But they can be effective in attracting attendees who are also decision makers we may need to deal with, and in
attracting a great deal of publicity for the company.
7.2.2. LEAD CONVERSION PLAN
Direct selling is the most significant tactic we will employ to convert leads. From our research direct selling appears to be
the most significant factor contributing to a buy or no-buy decision. Our selling team will meet face-to-face with client
contacts and engage with them to determine what their needs are. We will then be able to develop security solutions that
conform to client needs.
7.2.3 BUILD LOYALTY PLAN
In order to build loyalty among our customers we will, first and foremost, deliver customer satisfaction. In order to make
sure that clients are satisfied with the results of our services and programs we will implement surveys that will provide us
with feedback, which we will diligently assess and utilize to improve customer satisfaction.
7.2.4 WEB STRATEGY
We will develop a website that is simple for our customers to navigate, choosing ways to segregate the information on the
Web that facilitates our customers’ needs. We will aim for a website that is very attractive from a SEO perspective and
found in most areas on the Web that we choose to be. Our web plan will integrate social media strategies that will include
blogging, integration with social media sites such as Facebook, Twitter and LinkedIn, and actively commenting on the Web.
27. Page 21
We will blog information that is highly relevant to visitors, such as international security alerts, and embassy notices and
other information from official websites such as the CIA, which will attract hoteliers to our site as a source of information
for their visitors. We see this as a distinct advantage for us in the future and a clear separation from other competitors.
7.3 SALES STRATEGY
Our sales message will focus on emphasizing the superior training that CSTM guards bring to the client’s security plan and
the benefits that client companies will achieve from their investment in the security contract. CSTM will outsource to an
advertising agency to help the Company craft a conversion message that will be applied consistently across all platforms.
Eustace Harewood and Judy Thomas will work together selling CSTM message. Judy will access her vast network of contacts
in Government and the Island in general to set up Eustace as the salesman that will meet with clients at their buildings to
perform an initial consultation and create proposals for security services based on the identified needs. Eustace will utilize a
client management database system to track sales prospects and clients.
Eustace'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. Mr. Harewood’s sales strategy will not be target to
tendering the lowest cost bids a potential client receives, but rather to emphasize the value of having better trained guards
that are more effective in carrying out their duties, as well as better supervision and personal attention, which all leads to
better efficiency of man-hours applied, possibly reduced need for man-hours applied and overall better security.
7.4 PRICING
The projections contained in this document are calculated on the assumption of the base bidding fee of $10 per
guard/hour. Of this amount approximately 55% goes to direct wages. The minimum wage in Barbados is $5.00 an hour. G4S
starts their guards at $5.25 an hour for their probation period of six months.
Beyond these base amounts some contracts pay over twenty dollars per guard/hour on the expectation of superior service.
While the contracted amount is not available this can be assumed from the pay rate of guards who work on these
contracts. Anecdotal evidence indicate that guards working for G4S at the Sandy Lane Hotel property get $18.65 per hour
and those on the Grantly Adams Airport contract start at more than $10/hr basic wage.
It is anticipated that with success in promoting the Company as a premier security company based on superior training and
service delivery, CSTM will be able to secure many of the premium contracts and achieve per/hour average billing rates in
the area of $15 to $18 into the second year of operation.
7.6 SALES FORECAST
CSTM expects to capture market share from the overall expansion of the private security industry as new clients come into
the market, by picking up contracts from existing providers that have fallen in disfavor with their client and by picking up
clients that are moving from maintaining in-house security to contracting independent providers.
Security guard sales will be recurring. Assuming a client retention rate of 90% annually, based on the Company’s success in
delivering a high quality service, total sales will escalate quickly. Sales will be a combination of clients requiring 24/7
coverage and those with only daytime coverage. Forty percent of sales in dollars are expected from 24/7 clients. Sales are
expected to meet the objective of exceeding $2 million in the third year.
28. Page 22
Direct costs of sales consist of supplies specific to each job, such as uniforms which must be purchased. Uniform may be a
branded CSTM uniform, or contain the customer's branding to provide the visible presence of security at the job site.
Additional sets of uniforms must be purchased by the guards (at a discount) from the designated uniform provider and
laundry and cleaning of uniforms is the responsibility of the guards as well. Job supplies will include materials related to
security audits and specific equipment purchases for a job as well.
TABLE: SALES FORECAST
CHART: SALES MONTHLY
Sales Forecast
Sales by Service Year 1 Year 2 Year 3
Security Guards 312,000.00 520,000.00 1,040,000.00
Training 35,000.00 50,000.00 70,000.00
Special Services 375,000.00 625,000.00 1,000,000.00
Total Sales 722,000.00 1,195,000.00 2,110,000.00
Direct Cost of Sales
Job Supplies 40,701.00 61,051.00 88,524.00
Other 0 0 0
Subtotal Direct Cost of Sales 40,701.00 61,051.00 88,524.00
29. Page 23
Growth trend by services
7.8 STRATEGIC ALLIANCES
CSTM plans to establish and build relationships with all elements of the security establishment in Barbados. The Directors
already have well established relationships with the Barbados Defence Force and with the Barbados Police Force. The intent
is to continue to grow these relationships and work on making them stronger. CSTM also intends to work co-operatively
with contract private security firms in Barbados to promote the development of the industry. In addition Mr. Harewood will
build and maintain his relationships with the security establishment in Canada, including his contacts to the Canadian
Forces and relationships with security companies such as Commissionaires.
30. Page 24
Eustace maintains an active presence on Linkedin, and is a member of many security groups hosted on that platform
including; ASIS International, Physical Security Managers, Private Security Contractors, Security Industry Group and Security
Managers Group
7.9 GROWTH
To foster organization growth CSTM’s management intends to continue to build brand image on expertise in the security
field by maintaining a commitment to continuous education through subscriptions to industry magazines, engagement in
security forums online, attend security seminars and conferences abroad and growing a network of contacts in the security
industry. The company will also seek to draw others experts to the company for full-time or part-time engagements. In this
way CSTM will be able to provide leading edge knowledge, current information and tools to stay ahead of the competitors.
Plans for growth also include introduction of more programs to the current market. CSTM will decide on programs to be
added by staying abreast of the local and international security environment and then developing and introducing
programs that address the major concerns. The goal is to deepen loyalty by building trust in the brand image as a leading
edge security firm. The point where CSTM will consider adding new programs is when the brand is firmly established as a
quality provider in the minds of consumers. CSTM expects that when clients recognize its security services is adding value to
their companies; complementary programs will be well received.
CSTM also anticipates extending the brand reach outside of Barbados and into other Eastern Caribbean nations. If the
company has succeeded in meeting its performance objectives by year 3 it will be time to pursue regional expansion of the
brand by seeking out and forming strategic and financial alliances with local entrepreneurs in the target destination. By year
three the CSTM brand will be established in one other EC Nation and by year 10 in three EC countries, in addition to
Barbados.
31. Page 25
8.0 MANAGEMENT
Eustace Harewood, CEO, creates the vision and strategy of CSTM. He brings with him knowledge of the industry and sales
skill. Eustace will be personally responsible for marketing, sales, and ongoing client service. He will manage
finances/accounting.
Major Holder, COO, will run the operations of the company, training for guards, hiring and human resources. Holder has ten
years of experience as assistant director of operations for a security systems company and therefore has familiarity with
operations management and the security industry as well.
Judy Thomas will perform public relations and be involved with delivering consulting and some training.
Harewood and Holder will be the only full-time employees at the launch of the company. Security guards will be employed
as client engagements are set and will be accounted for as a cost of sales. In the second year, three administrative/call
center assistants will be hired to work under the COO and to staff the office at all times for the purposes of dispatches and
maintaining communications with guards on-site. Some recurring duties such as accounting will be outsourced to
independent providers.
8.1 PERSONNEL PLAN
The personnel table reflects the full-time office personnel of the business. Security guards will be a combination of full-time
and part-time guards and will be hired as sales increase. Guards will be hired either as daytime guards, night-shift guards,
and part-time guards who take a part-time load of either evening or daytime work. A business office must be rented
starting in year 2 when the administrative/call center assistants are brought on to provide 24 hour dispatch support. These
3 assistants are paid $10 per hour.
Guards are hired after an independent background check is completed and interviews with both managers of the business
as well as checks with three references. Guards are eligible for health insurance and disability pay through the business to
protect them in the case of injury on the job or other problems.
TABLE: PERSONNEL
Personnel Plan
Year 1 Year 2 Year 3
Eustace Harewood $36,000 $50,000 $60,000
Judy Thomas $36,000 $50,000 $60,000
Alva Holder $36,000 $50,000 $60,000
Administrative/Call Center Assistants $0 $62,400 $62,400
Total People 2 5 5
Total Payroll $108,000 $212,400 $2462,400
32. Page 26
9.0 FINANCIAL PLAN
CSTM expects to produce excess cash after a lean first year of operation which can finance its expansion to an office space
along with a 5 year home equity loan to support significant growth of its employee base in its second and third years to 50
FTE security guards (which can be estimated as 10 full-time guards and 30 part-time guards). Future growth will be financed
by the business and will include launching operations in other Regional Countries and launching a line of security products.
9.1 PROJECTED PROFIT AND LOSS
Guarding revenue is based on average estimates of 15 full-time equivalent guards hours at the base rate of $10 an hour in
the first year, 25 in the second and 50 in the third. Training projections are based on estimates of 100, 142 and 200 paid
students per year respectively, at $350 per 40 hour course. Special services projections are based on estimates of 1500,
2500 and 4000 client contact hours respectively, at $250 an hour. Note that each contact hour typically equates to 6 – 10
hours of input when all the servicing on an project is accounted for.
Security guard labor is estimated at 55% of sales in the first year, dropping slightly to 53% by the third year as prices
increase and cheaper labor becomes available due to the range of employees.
Marketing includes ongoing Web hosting and maintenance fees, continued revisions and reprinting of the brochure and
stationery, additional direct mail campaigns, ongoing advertising in trade publications, and online advertising for the
website.
Rent, utilities, and depreciation will be less in the first year as the Business shares accommodations in the home of Eustace
Harewood. Beginning in the second year single use office space will be required. Training requires the use of larger meeting
rooms for groups of guards which will have to be rented separately in the first year of operations. Training cost will be
reduced once an office is rented, as the business will choose a space with a conference room or table to hold employee
training at the office. Training will be an ongoing expense both due to turnover and due to continued training, check-ins
with employees and paid training to the public.
Licenses and permits will include licenses for new guards to operate, and continued renewals of licensing and permits for
the business each year.
33. Page 27
9.2. INCOME STATEMENT
YEAR 1 YEAR 2 YEAR 3
Revenues 677568 1215000 2138000
Cost of Goods Sold 188471 308828 617655
Gross Margin 489097 906172 1520345
Marketing Assumptions 36400 30000 28800
Property Assumptions 50400 76800 76800
Operating Assumptions 14812 11000 25000
Administrative Assumptions 15340 2940 2940
Wages Assumptions 169749 400652 596640
Depreciation 1599.96 1599.96 1599.96
Total Expenses 288300.96 522991.96 731779.96
Net Income Before Taxes 200796.04 383180.04 788565.04
Tax Amount 0 0 0
Net Profit 200796.04 383180.04 788565.04
34. Page 28
9.3. PROJECTED CASH FLOW
Cash flow is expected to positive in the first year of operation due to the low fixed costs and launching without a full-time
call center/office. Excess cash from the first year of operation will be used to finance the expansion to a rented office space
in the second year, which will require the purchase of furniture, additional computer and phone equipment, and some
improvements to the space.
Continued investments in communications equipment will be needed throughout the first year as additional guards join the
business. In the second year, assets must be purchased for the office, including computers and equipment, furniture, and a
phone system. Communications equipment purchases will continue to grow in the second year.
It is estimated that 70% of sales will be made on credit for payment within one month and 30% will be paid at or before the
time of service.
9.4. YEARLY CASH FLOW STATEMENT
Cash Inflows YEAR 1 YEAR 2 YEAR 3
Cash Receipts 599814.1 1207003.9 2051200
Investment by Owners 140000 0 0
Other Assets 0 0 0
Total Cash Inflows 739814.1 1207003.9 2051200
Cash Outflows
Direct Cost of Sales 188471 308828 617655
Marketing Assumptions 36400 30000 28800
Property Assumptions 50400 76800 76800
Operating Assumptions 14812 11000 25000
Administ. Assumptions 15340 2940 2940
Wages Assumptions 169749 400652 596640
Fixed Assets Purchases 8000 0 0
Assets/Liabilities Pymnt 0 0 0
Income Tax Pymnts 0 0 0
Total Cash Outflows 483172 830220 1347835
Cash Flow YEAR 1 YEAR 2 YEAR 3
Cash Increase/Decrease 256642.1 376783.9 703365
Beginning Cash Balance 82000 338642.1 715426
Closing Cash Balance 338642.1 715426 1418791
36. Page 30
9.5. PROJECTED BALANCE SHEET
The balance sheet demonstrates growth in net worth from retained earnings and cash held in the company for a future
expansion effort.
9.6. BALANCE SHEET STATEMENT
Assets Starting Balance YEAR 1 YEAR 2 YEAR 3
Total Current Assets 82000 416396.1 801176 1591341
Cash 82000 338642.1 715426 1418791
Accounts Receivable 0 77754 85750 172550
Inventory 0 0 0 0
Other Assets 0 0 0 0
Total Fixed Assets 0 6400 4800 3200
Fixed Assets 0 8000 8000 8000
Acummulated Depreciation 0 1600 3200 4800
Total Capital Assets 82000 422796.1 805976 1594541
Liabilities Starting Balance YEAR 1 YEAR 2 YEAR 3
Total Current Liabilities 0 0 0 0
Accounts Payable 0 0 0 0
Taxes Payable 0 0 0 0
Due to Shareholders 0 0 0 0
Operating Loans Payable 0 0 0 0
Total Long-Term Liabilities 0 0 0 0
Terms Loans and Mortgages 0 0 0 0
Owners' Equity Starting Balance YEAR 1 YEAR 2 YEAR 3
Total Owners' Equity 82000 422796 805976 1594541
Paid-In Capital 155400 295400 295400 295400
Retained Earnings -73400 127396 510576 1299141
Liabilities + Equity 82000 422796 805976 1594541
37. Page 31
9.7. Financial Ratios
The ratio table compares the business over its three years of projections to the average for Security Guard and Patrol
Services, US SIC code 7381, NAIC code 561612, of $1 - $5 million in annual revenues.
Percentage of Total Assets YEAR 1 YEAR 2 YEAR 3
Current Assets 98.49% 99.40% 99.80%
Fixed Assets 1.51% 0.60% 0.20%
Long Term Liabilities 0.00% 0.00% 0.00%
Current Liabilities 0.00% 0.00% 0.00%
Net Worth 100.00% 100.00% 100.00%
Percentage of Total Sales YEAR 1 YEAR 2 YEAR 3
Gross Margin 27.82% 25.42% 28.89%
Marketing Assumptions 5.37% 2.47% 1.35%
Property Assumptions 7.44% 6.32% 3.59%
Operations Assumptions 2.19% 0.91% 1.17%
Administrative Assumptions 2.26% 0.24% 0.14%
Wages Assumptions 25.05% 32.98% 27.91%
Net Income Before Taxes 29.64% 31.54% 36.88%
Net Income 29.64% 31.54% 36.88%
Financial Ratios YEAR 1 YEAR 2 YEAR 3
Working Capital Turnover 1.63 1.52 1.34
Current 0.00 0.00 0.00
Quick 0.00 0.00 0.00
Return On Equity 1.63 1.52 1.34
Current Asset Turnover 0.00 0.00 0.00
Debt to Net Worth 0.00 0.00 0.00
Total Asset Turnover 1.60 1.51 1.34
Interest Coverage 0.00 0.00 0.00
Average Collection Days 41.89 25.76 29.46
Inventory Turnover 0.00 0.00 0.00
38. Page 32
9.8. APPENDIX A. - FINANCIAL ASSUMPTIONS
9.8.1 REVENUE ASSUMPTIONS
Revenue Stream Description YEAR 1 YEAR 2 YEAR 3
Guarding Services 292800 520000 1040000
Security Training 32844 70000 98000
Specialty Services 351924 625000 1000000
Total 677568 1215000 2138000
9.8.2 ASSUMPTIONS REGARDING THE COLLECTION OF SALES
Current Month Net 30 Net 60 Net 90
30% 70% 0 0
9.8.3 COST OF SALES ASSUMPTIONS
Cost of Sales Description YEAR 1 YEAR 2 YEAR 3
Inventory Used 0 0 0
Labour 158400 286000 572000
Consumables 0 0 0
Other Direct Costs 30071 22828 45655
Other Direct Costs 0 0 0
9.8.4 EXPENSE ASSUMPTIONS
Marketing Assumptions YEAR 1 YEAR 2 YEAR 3
Website Development 9400 4800 4800
Brochures 4500 4800 6000
Radio/Newspaper 9500 14400 12000
Grand Opening 7000 0 0
Online Advertising 6000 6000 6000
Total 36400 30000 28800
Property Assumptions YEAR 1 YEAR 2 YEAR 3
39. Page 33
Rent 24000 48000 48000
Phone/Internet 12000 14400 14400
Hydro 14400 14400 14400
Gas 0 0 0
Security Alarm 0 0 0
Total 50400 76800 76800
Operating Assumptions YEAR 1 YEAR 2 YEAR 3
Insurances 6112 8000 10000
License/Permits 5000 0 12000
Repairs/Maintenance 0 0 0
Office Supplies 3700 3000 3000
Other Expenses 0 0 0
Total 14812 11000 25000
Administrative Assumptions YEAR 1 YEAR 2 YEAR 3
Banking Fees 1440 1440 1440
Payment Processing 0 0 0
Accounting 1500 1500 1500
Legal 4000 0 0
Bookkeeping 2400 0 0
Training 0 0 0
Total 9340 2940 2940
Wages Assumptions YEAR 1 YEAR 2 YEAR 3
Harewood 36000 50004 60000
Thomas 36000 50004 60000
Holder 36000 50004 60000
Employer NIS 6834 60084 118076
Employee benefits 54915 128156 236164
Three Assistance 0 62400 62400
Total 169749 400652 596640
40. Page 34
9.8.4 SOURCES OF FUNDING
Sources of Funding YEAR 1 YEAR 2 YEAR 3
Investment by Owners 140000 0 0
Shareholders Loan Advances 0 0 0
Operating Loan Advances 0 0 0
Term Loan Advances 0 0 0
Grant Advances 0 0 0
Sale of Fixed Assets 0 0 0
Other Assets 0 0 0
9.8.5 USES OF FUNDING
Uses of Funding YEAR 1 YEAR 2 YEAR 3
Capital to Shareholders 0 0 0
Dividends / Earnings Shareholders 0 0 0
Shareholders Loan Repayments 0 0 0
Operating Loans Interest and Principal 0 0 0
Term Loan Interest and Principal 0 0 0
Purchase of Fixed Assets 8000 0 0
Payments for Other Assets; Other Liabilities 0 0 0
Payment for Income Taxes 0 0 0
