The Business of Locksmithing

“The one example that I like to give is the Cheesecake Factory,” Lingafelt explains. “If you've ever been to the Cheesecake Factory as a restaurant, their menu is incredibly wide-ranging. You can get everything from Italian to steak to whatever they have on the menu. And none of it, in my opinion, is really good; it's kind of a mediocre menu. And it's a place where you can go with a lot of people and just get whatever you want. And a lot of times our industry has fallen into this category where we try to be all things to all people, and we never really excel at any of those particular menu items or a particular service.”

He continues, “And so we've kind of discussed that in terms of going from being a generalist to being more of a specialist and getting really laser focused in in the customer markets that we want to serve. Do we want to be focused on residential, or do we want to be focused on commercial? Do we want to be focused on automotive? Within the commercial realm, do we want to focus on retail versus class A office space? So, how do we get very laser focused on our offerings and then be really good at it?”

One of the challenges with being a generalist for somebody that's trying to scale their business or position it for an exit or for sale, Lingafelt says, is the fact that it is a very difficult thing to replicate or to duplicate.

“When you are pretty good at a lot of things, it's really hard to bolt on additional employees to that team to be able to also be pretty good at a lot of things,” he adds. “But when you get laser focused on a particular category or systems that you offer, now it's easier to train. You can be more effective and more efficient and fall more into that niche category, which then ultimately makes your business more valuable. Because when you post that business up for sale, if somebody like me is coming in for an acquisition, it's very difficult for me to fold a business into our organization that is such a generalist because there are so many things that you must shed off. And so it makes a lot of your revenue and your net profits almost something that you can't really value because you're going to have to kind of trim some of those things down.”

Wayne Winton, Owner, Tri County Locksmith Service, agrees, pointing out how often he hears of locksmiths who end up with much less than they expected, even sometimes not even being able to sell their business and having it auctioned off.

“Make sure that you're setting things up and you're planning for the future because just having a van with some tools in it isn't really that valuable anymore,” says Winton. “Having a shop in an old, condemned building isn't that valuable anymore. You need to have recurring revenue and have a good client base. You must have a flawless, amazing Google business account. And you must have well-trained employees. And that's where the value is these days. If you don't have those components and those ingredients, you're not going to have a successful sale and an acquisition of your company that's going to be able to support you through your retirement years.”

Rob Etmans, Director of Sales, Napco Access Pro, points out that it is equally important to specialize and be great at servicing the products you offer and install.

“The one thing that I learned very quickly working in the field is that if I had a product that I had to go and run a truck for because it kept breaking down, that cost me money,” says Etmans, who has worked as a systems integrator. So, you need to find a product that you can trust, one that you can rely on, one that you can work with, and then get everybody in your team trained on it. The more efficient you are installing that product, the more money you make.”

Etmans says his experience on the installation side taught him that it was best to be the master of a few systems rather than offering so many systems that you never get proficient at any of them.

“I learned the hard way,” he says, noting that he used to have five different access control products, before he narrowed those down to two. “I made more money with two access control products then I did with the five I was offering. So I picked two video surveillance, two access control, two nurse calls, two fire alarms systems and I specialized in those. I made more money on those because my techs were trained on everything and we were more efficient.”

He continues, “Then on top of that, I want to add to what Wayne said about having RMR, as it goes deeper than RMR. Just because they signed a contract with me doesn't mean that contract is transferable. So, what I'm going to recommend is that when you do your RMR contracts, that it is a transferable contract. If I hadn’t done that early on, I would have lost a lot of money on the sales.”

Growth Opportunities 

For locksmiths looking to progress beyond mechanical lock sets, Price points out that the electric strike side of the market leads itself into low voltage, low energy door operators, which “is a very natural progression for locksmiths,” he notes. “And it is very much an emerging market, and we are seeing the requirements for low energy automatic doors being applied in North America on an ever-increasing basis. I'm up here in Toronto, Canada, and the province back in 2015 started mandating automatic doors on a lot more building occupancies than people are used to. For example, in a commercial building, you need a universal restroom with an automatic door every three floors, and that is really creating a kind of ubiquitous installation of automatic doors, which I think locksmiths are uniquely able to do that work.”

Etmans adds, “The quickest and easiest is for locksmiths [to expand their business] is to capitalize on opportunities that they already have. It's always been crazy to me, even when I was an integrator, we had one locksmith that we always called – the same guy every time because he did quality work. The locksmiths in the world today have more opportunities because they are the go-to guys. They're the ones that have customers that are so loyal to them, and they can suggest new products, systems, etc. Locksmiths are in a key position, and many don't even realize it.”

“Look at the door as a whole complete unit,” he says. “I can't tell you how many times a simple lock change that would cost $35 has turned into a $3,500 sale. Either we're adding access control to that door because we're letting the customer know we can come out here and we can keep re-keying these locks and we can do restricted keyways, or we can upgrade you to an access control system. And as soon as they start hearing that, that's the biggest thing that's happening in the industry right now. People want to move away from mechanical keys. People forget them. It's expensive to call a locksmith when you forget your keys. It's expensive to have things rekeyed when people come and you have employee turnover. People want the audit trail. People want to be owners away from the business.”

Winton says he sees it firsthand as more and more customers upgrade from strictly mechanical locks to electronic access control.

“Existing buildings are adding access control to their existing doors,” he explains. “And then we also work with contractors who bring us in as the experts and say, what do we need to do here? And that turns into the hardware sale and more. A building is just a box without doors. And if you control the doors, you control the building. That's all there is to it. And we can capitalize on that right here, right now; it's all for the taking.”

Leveraging AI to Improve Your Business, Save Time

AI continues to grow in significance within security, especially when leveraged to make a business more efficient, saving a locksmith time and money.

“AI is being integrated into everything – security systems themselves … camera systems that we use are using AI to capture license plates, people, certain areas, block off certain areas where you may not be able to record or other restrictions,” says Winton. “You can use AI to go through all your audit trails to pick things out. So, it's allowing us to go through and sift through the data that we have much more efficiently so that we can get to the bits and pieces that we need.”

He continues, “And then on the flip side of that, I'm using it directly with my company as well. I have a system that uses AI to do everything from invoicing to running credit cards to setting up monthly billing for customers that we have service contracts with. AI answers the phone and can put calls through to myself and then through to my technician. We don't have an office person right now, and it's saving me tens of thousands of dollars a year, as it will also put them right into the schedule.”

Winton also has it set up so AI follows up with customers to ask for a review and feedback.

“It'll say, ‘here's our link to our Google review page. If you have had a good experience, reviews really help small businesses, please check us out here.’ And then we go ahead and get that Google review. That's something that I used to spend hours doing – going through and text messaging every single person … ‘Hey, we're on our way’ or ‘Hey, will you write us a review?’ or ‘Hey, will you do this?’ Not to mention it'll automatically start talking any other language that you want it to. It is truly fascinating. and just astonishing how rapidly it's moving. And I think it's only going to continue to compound on itself. And when we have this conversation in a year or two, it's going to be completely different.”

Lingafelt agrees on the power of AI but emphasizes the importance of having guidelines for its use within your company.

“If you are looking to implement AI into your business, you need to really get back into putting some AI protocols in place, some policies and procedures for how you're going to utilize it in your business to create some protective measures around it,” he explains. “Any type of information you put in on a free platform, if it's ChatGPT, Gemini, or any of those platforms that you're not paying for, it is going to create some sensitivity around your data. So that is one thing that you should be very cautious about.”

Once these guidelines and policies for AI use are established, Lingafelt points out that there are many ways to use AI to help improve a locksmith’s business.

“Business analytics are just powerful with it,” he says. “Being able to dump a bunch of data in there from sales and geographic locations and then ask it real life questions. What's my most profitable customer? Because we may think that we know our most profitable customer, but we don't, unless you have raw data, right? And what's our most profitable product? How often do I sell my most profitable product? Which is my least profitable product and how do I make it profitable? Those are questions that you can ask a business analyst that is also an LLM that you can get real actionable items from.”