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Starting Security Company in South Africa – Business Plan (PDF, Word & Excel)

Posted by BizBolts | All Articles , Business Ideas , Business Plans

As the security landscape continues to evolve in South Africa, the demand for professional and reliable security services has never been higher. In an era marked by uncertainty and a growing need for safety and protection, starting a security company in this dynamic environment is not only a viable venture but also a remarkably profitable one. With attractive profit margins and an ever-increasing demand for top-tier security solutions, the security industry in South Africa presents a unique opportunity for entrepreneurs looking to make a substantial impact and reap the rewards.

Due to the increasing crime rates and general insecurity of many people in South Africa there has been an increase in the demand for security products and services. Property related crimes, car hijacks, and other serious crime reports result in the increase the country’s insecurity especially in the major cities. As such, there is a need for more security service providers. In addition, the country’s police force is usually overwhelmed by the number of criminal activities that take place in the country, so the need for more security services cannot be understated. This article will outline how to start a security business in South Africa, and the security company business plan – PDF, Word and Excel.

MARKET RESEARCH

Market research is a crucial step when contemplating the establishment of a security company in South Africa. It forms the bedrock upon which a solid business strategy can be constructed, encompassing a comprehensive understanding of the local security industry, its current state, and its growth trends. In South Africa, this industry encompasses diverse services such as physical security, electronic surveillance, and cybersecurity. Additionally, it’s essential to identify your target market, the specific industries, and regions you aim to serve, as South Africa’s security needs can vary widely, from residential clients to government agencies and private institutions. Furthermore, a keen assessment of the competitive landscape is imperative. An analysis of existing security companies within your chosen niche, their offerings, pricing strategies, and customer feedback, will enable you to differentiate your venture and identify market gaps. Complying with the stringent regulatory requirements in South Africa is another key aspect. Understanding and adhering to the legalities and licensing processes is essential for operating within the bounds of the law and building trust with potential clients. In addition, staying attuned to market trends, emerging technologies, and the evolving preferences of your target audience is pivotal. Embracing the latest advancements in surveillance systems, access control, and alarm monitoring ensures your company remains competitive. A thorough understanding of your clients’ security needs and a well-structured pricing strategy are equally critical.

LOCATION & PREMISES

The location and premises of your security company is an important decision to make before you start your business. It’s also important that you choose the right location if you want to set up a successful security company business. Also, your offices should be close to your target market. In particular, it is important to consider who your potential customers are and how they can help drive your business. When selecting a location for your security services company there are many factors you need to keep in mind. For example, you should consider the demographics of the people and companies who you intend to serve as well as their communities. A slightly older or upscale population with a higher-than-average income  is more likely to make use of your security services. When locating your offices there are several possible locations, including shopping centres, malls, and the CBD. Setting up your office close to places that typically have potential for traffic will be ideal. It is important to be strategic about your neighbouring businesses as well because you are more than likely going to feed into each other instead of competing. If you set up your business in an overly saturated area, the likelihood that your business will succeed will be very low. Your security company business plan should include the costs of renting or leasing the premises.

PRODUCTS AND SERVICES

Your target niche will determine the kind of products and services you will offer. Also, these products and services will be determined by the type of security company you set up. As a new security services’ company it may be best to start by providing specialized services in one area that you know well to ensure that you can provide excellent services. From then on, you can build your reputation in one niche and then grow across other disciplines. You can start by providing VIP protection services to high profile clients, offer guarding services to schools, homes or you can offer CCTV installation and monitoring. Your security company business plan should outline the various security services and packages you can provide as well as the costs associated with them. Services offered by security companies in South Africa include security guards, mobile patrol, executive protection, K9 Security, armed escort services among others. Security companies in South Africa also offer a variety of products including security alarms, CCTV Systems, access control systems among others. If you offer security services, your business will have to be registered with the Private Security Industry Regulatory Authority   (PSIRA) as this a legal requirement for security companies in South Africa.

PRIVATE SECURITY INDUSTRY REGULATORY AUTHORITY (PSIRA) REGISTRATION

Any entity or person/company wishing to provide security services or work as a security officer in South Africa must be registered with PSIRA. To register with the Private Security Industry Regulatory Authority (PSIRA) in South Africa, you will have to fill an application form, accompanied by several key requirements. These include submitting a comprehensive business plan outlining your security company’s operations and objectives and providing company registration documents. Each director of the company must also provide their ID document, CV, and a PSIRA registration certificate. Additionally, a tax clearance certificate demonstrating compliance with tax regulations is mandatory. Furthermore, having a physical office with basic equipment and a registered business phone number is necessary to ensure operational legitimacy and accountability. You must also pay PSIRA business registration fees of R7500.  Meeting these requirements is essential to obtain PSIRA registration and operate lawfully within the sector.

STAFF & MANAGEMENT

As a client-focused security services company it’s important that you hire employees that are competent and efficient. Your employees should be passionate about their jobs and taking care of your clients. If you want to hit the ground running it’s better to hire a team of people who already have experience in the security services business. Your employees should be able to provide quality services and serve customers efficiently on a regular basis.  Inexperienced staff members may need to go under extensive training before they can be given critical or high risk jobs. Dealing with crime and enforcing order can be dangerous. It is important to ensure that you take the proper precautions when hiring out potential staff members. Depending on the size of your business, the actual number of your staff will vary however, you will need a reasonable number of sales representatives, security officers, office staff, as well as management. Your security services business plan should cater for the salaries and day to day operational expenses of your business. The operations of your security business will depend on the specific services you choose to offer.

Some of the average day-to-day activities of a security company involve:

• Communicating with customers
• Guarding premises and controlling access,
• Inspecting the property and doing security checks at a given client location
• Managing Staff
• Marketing and advertising

When it comes to running a security company you should always remain aware and alert at all times. The security industry is a very sensitive field. Criminal activities are high in South Africa so you should ensure that your staff is well trained to avoid or reduce injuries or even death. Also, make sure you verify and do a background check for every person you hire. It is easy for your company to get infiltrated by the wrong crowd. Take extra care when assigning security officers for different jobs. Injuries or death on duty can be detrimental to your business. As a security company it is important to prioritise the safety of your workers as well as the safety of your clients. In addition, you must adhere to the industry related laws and safety regulations in order for your security business to succeed.

BUDGETING AND FINANCIAL PLANNING

Budgeting and financial planning are cornerstone elements in the successful launch and operation of a security company in South Africa. These financial strategies are pivotal for not only managing startup costs but also maintaining a healthy cash flow and ensuring long-term profitability. To begin, it’s imperative to meticulously identify the startup costs, encompassing licensing fees, legal expenses, equipment investments, vehicles, office space rentals, insurance, marketing expenditures, and initial employee salaries. This comprehensive list serves as a fundamental guide for estimating the initial financial requirements.

In tandem with startup costs, it’s essential to develop a detailed budget that encompasses ongoing operational expenses. These monthly outlays include rent, utilities, insurance premiums, employee payroll, marketing initiatives, and equipment maintenance. By meticulously forecasting these expenses, you can establish a clear understanding of your security company’s day-to-day financial obligations. Moreover, revenue projections are a key facet of financial planning. These forecasts are based on your target market, pricing strategies, contract sizes, client volume, and potential seasonal fluctuations in demand. Realistic revenue projections allow you to set achievable financial goals for your business.

Effective cash flow management is paramount to ensure your security company’s financial stability. It’s imperative to track incoming revenue and outgoing expenses through a comprehensive cash flow statement. This proactive approach aids in identifying potential cash flow gaps and implementing strategies to mitigate them. Additionally, you should consider funding sources, whether through personal savings, loans, investments, or external funding options. Careful evaluation of loan terms and interest rates is essential to align these financial resources with your business goals. Furthermore, budgeting for financial contingencies provides a safety net for unexpected expenses or disruptions, such as equipment breakdowns or economic downturns. Regular financial analysis, tax planning, profitability goals, and investments in growth round out the key components of a robust budgeting and financial planning strategy for your security company in South Africa.

MARKETING PLAN

Effective marketing strategies are pivotal to the success of your security company in South Africa. In a competitive industry where trust and credibility are paramount, it’s essential to create a strong presence and reach your target audience effectively. Networking is a vital part of marketing. Forge partnerships with complementary businesses like property management companies or event organizers, attend industry events, and join local business associations to expand your network and gain referrals. In a competitive industry like security, establishing a robust online presence is paramount. This begins with creating a professional website and maintaining active social media profiles, which serve as key platforms for showcasing your services, certifications, and client testimonials. Additionally, optimizing your website for search engines through effective Search Engine Optimization (SEO) techniques will ensure your company ranks well in relevant search results, driving organic traffic from individuals actively seeking security services. Online advertising through platforms like Google Ads and social media can rapidly increase your visibility. Targeting ads to specific demographics, locations, and interests ensures you reach a relevant audience.

Community involvement is another strategy to consider, as it shows your commitment to the local community and enhances your company’s reputation. Implement a referral program that rewards clients or partners who refer new business to your security company. Word-of-mouth referrals remain a potent marketing tool, and flyers can supplement these efforts by distributing them strategically in your target areas.  Approaching individuals and companies directly can be a highly personalized and effective marketing strategy. Attend local business networking events and security trade shows to meet potential clients and partners. Establishing face-to-face connections can help you build trust and credibility in the industry. Moreover, reach out to businesses and organizations directly, offering to provide security assessments and consultations. Demonstrating your expertise in person can lead to valuable business relationships and contracts. Site visits can further strengthen relationships with potential clients by providing an opportunity to showcase your services and establish a personal connection.

The need for security products and services is driven by insecurity and a high crime rate. Given that the incidence of crime is high in the country the demand for security services tends to be very high as well. There is a number of individuals, families and various other companies and organisations that are in need of security services. There are a lot of high profile people that require security services too. Also, there are plenty of public events, such as wedding ceremonies, festivals, parties, concerts and other intimate gatherings that will need security services. Thus, there will always be a need for security services.  A proper marketing strategy should be included in the security company business plan.

IS A SECURITY SERVICES BUSINESS A GOOD INVESTMENT?

The security industry is a competitive industry with a number of large and small companies dominating the market. However, it is still possible for you to own your own security services brand. Building your own brand from scratch can be rewarding if done well. Investing in a security company can be a profitable venture, but obviously, this will depend on many factors such as your target market, costs, as well as management. Apart from the obvious advantages of becoming financially independent and becoming your own boss, running a security company business can be a rewarding way of uplifting your community.

The South African market is one of the leading emerging economies on the African continent but the country is riddled with crime. However, the crime rate in the country presents various business opportunities when it comes to the security industry and there is also potential for high growth. Whether you are a young entrepreneur, a professional seeking to start your own business or someone who needs a retirement plan, investing in a security business is something worth considering. One thing that can set you apart before investing in any venture is developing a business plan. A well thought out security company business plan will help you in both the short and long term. Also, there are various risks associated with running a security business, like any other business venture, your security services business plan should clearly outline these risks and the different ways to minimise them. With a business plan you can determine whether or not your business concept is viable or not since it will force you to do thorough research.

KEYS TO PROFITABILITY

Ensuring profitability is paramount for the long-term success of your security company in South Africa. To achieve and sustain profitability, you must adopt a multifaceted approach that covers various aspects of your business operations. Effective cost management is the cornerstone, requiring a thorough examination of your expenses to identify areas where you can trim overhead costs without compromising the quality of your services. This might involve renegotiating supplier contracts, optimizing staffing levels, or making cost-effective technology investments. Pricing strategies are equally pivotal, as you need to strike a balance between competitiveness and profitability. It’s essential to evaluate market rates, monitor your competitors’ pricing, and factor in the unique value your company brings to clients. Additionally, maintaining strong client relationships is instrumental. Client retention is more cost-effective than client acquisition, making it imperative to consistently deliver exceptional service, address concerns promptly, and communicate regularly with your clients to foster loyalty.

Exploring opportunities for upselling and cross-selling additional services to your existing clients can significantly boost revenue. This can be achieved by identifying complementary offerings, such as cybersecurity services alongside physical security, and presenting them as value-added options. Efficiency in your operations is another crucial aspect. Streamlining your processes through training, scheduling optimization, and technology integration can reduce labor costs and enhance overall profitability. Marketing and branding efforts should never be underestimated, as effective promotion can lead to increased business opportunities. Consistently promote your security company through various channels, both online and offline, while enhancing your branding to convey professionalism and trustworthiness. Diversification is also a key strategy, as expanding into related areas like cybersecurity or alarm monitoring can open new revenue streams and make your business more resilient to market fluctuations. Quality assurance, financial analysis, adaptability, and investment in technology complete the arsenal of strategies needed to secure profitability for your security company in the dynamic South African market.

PRE-WRITTEN SECURITY COMPANY BUSINESS PLAN (PDF, WORD AND EXCEL): COMPREHENSIVE VERSION, SHORT FUNDING/BANK LOAN VERSION AND AUTOMATED FINANCIAL STATEMENTS

For an in-depth analysis of the security company business in South Africa, purchase our security company business plan. We decided to introduce the business plans after noting that many South Africans were venturing into the security company business without a full understanding of the industry, market, how to run the business, the risks involved, profitability of the business and the costs involved, leading to a high failure rate of their businesses.

Our business plan will make it easier for you to launch and run a security services business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. It will be easier to plan and budget as the security company business plan will lay out all the costs involved in setting up and running the business. The business plan is designed specifically for the South African market.

USES OF THE SECURITY COMPANY BUSINESS PLAN (PDF, WORD AND EXCEL)

The security company business plan can be used for many purposes including:

• Raising capital from investors/friends/relatives
• Applying for a bank loan
• Start-up guide to launch your security company business
• As a security company project proposal
• Assessing profitability of the security services business
• Finding a business partner
• Assessing the initial start-up costs so that you know how much to save
• Manual for current business owners to help in business and strategy formulation

CONTENTS OF THE SECURITY COMPANY BUSINESS PLAN (PDF, WORD AND EXCEL)

The business plan includes, but not limited to:

• Market Analysis
• Industry Analysis
• 5 Year Automated Financial Statements [ Income statements, cash flow statements, balance sheets, monthly cash flow projections (3 years monthly cash flow projections, the remaining two years annually),break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortisation]
• Marketing Strategy
• Risk Analysis
• SWOT & PEST Analysis
• Operational Requirements
• Operational Strategy
• Why some South Africans in the security business fail, so that you can avoid their mistakes
• Ways to raise capital to start your security services business in South Africa

The Security Company Business Plan package consist of 4 files

• Security Company Business Plan – PDF file (Comprehensive – 81 pages)
• Security Company Business Plan – Editable Word File (Comprehensive – 81 pages)
• Security Company Business Plan Funding Version – Editable Word File (Short version for applying for a loan – 46 pages)
• Security Company Business Plan Automated Financial Statements – (Editable Excel file)

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Many thanks to the BizBolts team for putting together a fantastic business plan, I could not have done this business plan on my own. I managed to get funding from investors to start my butchery business using your business plan.

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The business plan has a highly professional look and feel. The research really helps me look deep into the market that I am targeting, it’s well suited for the South African market. The business plan clearly outlined everything I need to start the business and the costs. It’s now easier to budget and plan. Thank you very much.

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BizBolts (Pty) Ltd is a business research company based in Johannesburg, South Africa. We sell prewritten business plans for various industries including livestock production, crop farming and retail businesses. BizBolts also publishes articles on business ideas, business news, business tips, personal finance, and entrepreneur profiles.

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How to Start a Security Company in South Africa?

Starting a security company in South Africa involves several key steps, including registration, compliance, and operational setup. To begin, prospective business owners need to register their company with the Companies and Intellectual Property Commission (CIPC) and ensure compliance with the Private Security Industry Regulation Act by registering with the Private Security Industry Regulatory Authority (PSIRA) .

Key Highlights for Starting a Security Company in South Africa:

• Legal Compliance : It is crucial to register with PSIRA and comply with all their requirements, which include background checks, training certifications, and other operational standards.
• Business Planning : Developing a comprehensive business plan that outlines your business objectives, market analysis, operational strategy, and financial projections is essential.
• Insurance and Equipment : Securing adequate insurance is mandatory to protect the business and its clients. Additionally, investing in the necessary security equipment and technology is vital for effective operations.
• Marketing and Staffing : Implementing a solid marketing strategy to attract clients and hiring qualified security personnel who are registered and trained as per PSIRA regulations will form the backbone of your operations.

By following these steps, you can establish a robust foundation for your security business, ensuring it operates legally and efficiently in South Africa’s regulated security industry.

Table of Contents

Legal Compliance

Legal compliance is a fundamental requirement for starting a security company in South Africa. The first step in ensuring compliance is to register with the Private Security Industry Regulatory Authority (PSIRA). This registration is crucial as PSIRA oversees the security services industry and ensures that all entities operate within the legal framework. The requirements set by PSIRA include conducting thorough background checks on all employees , which helps maintain industry integrity and public trust. Additionally, there are mandatory training certifications that personnel must complete, which ensure that security staff are well-prepared to handle various security situations effectively. Companies must also adhere to operational standards that govern their day-to-day activities, further ensuring that the services provided are reliable and of high quality.

Business Planning

Business planning is critical when starting a security company. A comprehensive business plan serves as a blueprint for your company’s operations and strategy. This plan should detail your business objectives , clearly stating what the company aims to achieve in the short and long term. It should also include a market analysis , which will help you understand the competitive landscape and identify your target market. The operational strategy should outline how your company will function on a daily basis, detailing everything from staffing and training to client engagement and crisis management. Lastly, the business plan should include financial projections , estimating your initial costs, ongoing expenses, and expected revenue. This financial planning is essential for securing funding, whether it’s through loans, investors, or personal capital, and for ensuring long-term profitability and growth.

Insurance and Equipment

Securing adequate insurance is crucial when starting a security company in South Africa, as it safeguards both the business and its clients against potential liabilities. The types of insurance needed may include general liability, professional liability, and workers’ compensation. This coverage is essential to protect the company’s financial health in case of accidents, injuries, or lawsuits that could arise during operations. Additionally, investing in necessary security equipment and technology is vital for effective operations. This includes high-quality surveillance cameras, alarm systems, motion detectors, and communication devices. Modern security technology not only enhances the ability to monitor and respond to incidents but also increases the efficiency and credibility of the security services offered.

Marketing and Staffing

Implementing a solid marketing strategy is fundamental to attract clients. This strategy could involve digital marketing efforts such as a professional website, social media presence, and online advertising. Traditional marketing techniques such as networking events, partnerships with local businesses, and word-of-mouth recommendations also play a crucial role. Moreover, hiring qualified security personnel is essential. Staff should not only be registered with PSIRA but must also meet training standards that comply with regulatory requirements. Ensuring that your personnel are well-trained and certified underlines the professionalism of your service, enhances client trust, and supports the overall reliability of your operations.

Fact Sheet: Starting a Security Company in South Africa

Starting a security company in South Africa involves navigating a series of legal requirements and operational guidelines to ensure compliance and effectiveness. Here’s a straightforward guide to help you establish your security business legally:

1. Company Registration

• Register with CIPC : Your first step is to register your company with the Companies and Intellectual Property Commission (CIPC). You will need to choose a company name, complete the required forms, and pay a registration fee.

2. PSIRA Registration

• Register with PSIRA : The Private Security Industry Regulatory Authority (PSIRA) is the governing body for security service providers in South Africa. Registration with PSIRA is mandatory and includes submitting various documents, such as proof of company registration, ID documents of directors, and a detailed business plan.
• Background Checks : All security business owners and employees must undergo criminal background checks.
• Training Certifications : Security officers need to complete training programs accredited by PSIRA.

3. Business Infrastructure

• Insurance : Obtain necessary insurance policies, which typically include general liability, professional indemnity, and worker’s compensation.
• Equipment : Invest in essential security equipment like uniforms, firearms (if applicable), communication tools, and surveillance technology.

4. Operational Compliance

• Tax Compliance : Register with the South African Revenue Service (SARS) for tax compliance, including VAT if applicable.
• Labor Compliance : Comply with South African labor laws, including employment contracts, fair labor practices, and health and safety regulations.

5. Marketing and Client Acquisition

• Marketing Plan : Develop a marketing strategy that may include online presence, networking, and traditional advertising.
• Client Engagement : Establish a process for engaging with potential clients, which includes consultations, security assessments, and proposals.

6. Continuous Professional Development

• Ongoing Training : Regular training for staff to keep up with the latest security techniques and compliance requirements.
• PSIRA Updates : Stay updated with any changes in PSIRA regulations or requirements.

7. Legal and Regulatory Adherence

• Adhere to Regulations : Regularly review your compliance with all relevant laws and regulations to ensure that your business operates legally and ethically.
• Consult Legal Experts : Consider consulting with legal experts specializing in security services to ensure all legal bases are covered.

Additional Resources

• PSIRA Website : For detailed guidelines on registration and compliance.
• CIPC Website : For business registration procedures and requirements.

By following these guidelines, you can set up a security company in South Africa that is not only compliant with the necessary regulations but also poised for success in a competitive market.

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The content presented on this website was originally created by the team at Legal Advice . All information related to legal firms and legal matters is based on "User Submitted Data" , and or publicly accessible data available from more than one online sources. Should you have any concerns or disputes about the information provided, please feel free to reach out to us at [email protected].

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Security Business Plan

Need a  Security   Business Plan for your  Security  Business ?  We write PSIRA approved  Security  Business Plans.

Our  Security  Business Plan is for Start-Ups looking to apply for basic PSIRA Applicationss,   Funding &  Tenders.

Our Security  Business Plan is focused on the  Security  and Guarding  Industry in South Africa. Included in this option is a Professional Business Plan layout and a 5-Year Financial Projection.

Business Plan Pro® Accreditations

Business Plan Pro® is a Subsidiary Brand of My SME™, and an IMCSA Accredited Business Coaching institute (My SME™ Accreditation Number: 073PIMC ).

We focus on Business Plan and Feasibility Study services to assist Businesses to grow through Funding . Business Plan Pro® is the first South African Business to create Custom Business Plan Software for South Africans.

Our Security Business Plan is focused on the Security and Guarding Industry in South Africa. Included in this option is a Professional Business Plan layout and a 5-Year Financial Projection.

(7 Working Days)

Our  Security Business Plan  is focused on the Security  and Guarding  Industry in South Africa. Included in this option is a Professional Business Plan layout and a 5-Year Financial Projection.

Service Includes: 

• 40 – 60 Pages.
• Professional Business Plan Layout.
• 5-Year Financial Projection.
• Basic Security and Guarding Market Research.
• Basic Security and Guarding Industry Research.

NOTE that  with the Security Business Plan the market and industry research is very basic . If you need in-depth market & industry research from the Business Plan Pro® team, please select either the  Comprehensive Business Plan  or  Specialised Business Plan .

Start-Up Business Package

(21 Working Days)

Our Start-Up Business Package is for Start-Up’s looking to start their Business on the right foot with a  Security Business Plan  and a Professional Brand .

Package Includes: 

• Security Business Plan (Valued at R4,490).
• Entry Level Brand Package (Valued at R3,490).
• Entry Level 1-Pager Website (Valued at R3,990).

NOTE  that with this package you complete a  brand questionnaire  that tells us all we need to know about your business to create a professional logo. The logo concepts presented are  standard options  that you are required to choose from. No custom amendments are allowed, but  one basic amendment  is allowed.

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How to Start a Security Company in South Africa

If you want to know how to start a security company in South Africa, you are int he right place. In order to be successful, it is important to have a clear understanding of the regulations and requirements that must be met, as well as the market trends and competition. In this article, we will discuss the steps that need to be taken to start a security company in South Africa, including the legal requirements, the types of services that can be offered, and the marketing and financial considerations that must be made.

Related: 12 High Paying Referral Programs in South Africa

Table of Contents

Step 1: Legal Requirements

The first step in starting a security company in South Africa is to ensure that all legal requirements are met. In South Africa, security companies are regulated by the Private Security Industry Regulatory Authority (PSIRA). To register a security company, you will need to submit an application to PSIRA, which includes the company’s registration documents, a business plan, and proof of compliance with other legal requirements.

In addition to registering with PSIRA, security companies in South Africa must also comply with other legal requirements, such as obtaining a business license, registering for VAT, and obtaining liability insurance.

Step 2: Types of Services

The next step in starting a security company in South Africa is to determine the types of services that will be offered. Security companies in South Africa can offer a wide range of services, including:

• Guarding services: This includes providing security guards for commercial, industrial, and residential properties.
• Cash-in-transit services: This includes the transportation of cash and valuables for banks and other financial institutions.
• Alarm monitoring: This includes monitoring and responding to alarm systems for residential and commercial properties.
• Close protection: This includes providing personal security for individuals or groups.

Step 3: Market Research and Competitive Analysis

Once you have determined the types of services that will be offered, it is important to conduct market research and analyze the competition. This will help you to understand the demand for your services and identify potential competitors.

Research the market to understand the demand for security services in your area. Identify the types of clients that are most likely to use your services, such as businesses, residential properties, and government agencies. Research your competitors to understand their strengths and weaknesses and how you can differentiate yourself.

Step 4: Marketing and Advertising

Marketing and advertising are crucial for the success of any business, and security companies are no exception. Develop a marketing plan that includes strategies for reaching potential clients, such as advertising in local newspapers and on social media, networking with other business owners, and participating in community events.

Step 5: Financial Planning

Starting a security company requires significant financial investment, including the cost of registering with PSIRA, obtaining liability insurance, and purchasing equipment and vehicles. In addition, you will need to have enough working capital to cover expenses such as wages, rent, and marketing costs until your business becomes profitable.

It is important to have a solid financial plan in place that includes projected income and expenses, as well as a plan for obtaining financing if needed.

Beneficial Experience for starting a security company

A career history or experience in the security industry can be beneficial for starting a security company, but it is not necessarily required. Here are some examples of experience or career history that may be beneficial for someone looking to start a security business:

• Experience in the security industry: Having experience working in the security industry, such as as a security guard, security manager, or in a related field, can provide a good understanding of the industry and the skills needed to run a security company.
• Military or law enforcement experience: A background in the military or law enforcement can provide a strong foundation in security operations, tactics, and leadership.
• Business management experience: Having experience running or managing a business can provide valuable skills in financial management, marketing, and operations.
• Experience in risk management or safety: Experience in risk management or safety can provide a good understanding of how to assess and mitigate risk, which is an important aspect of running a security company.
• Experience in sales or marketing: Experience in sales or marketing can be beneficial for building relationships with clients and promoting the security company’s services.
• Experience in investigations or intelligence gathering: Experience in investigations or intelligence gathering can be beneficial for understanding how to gather and analyze information that can be used to prevent security breaches.
• Experience in emergency response: Experience in emergency response can be beneficial for understanding how to respond to emergency situations and how to manage security incidents.

Examples of Security Companies in South Africa

Here are a few examples of security companies in South Africa:

• ADT Security: One of the largest security companies in South Africa, ADT offers a wide range of services including alarm monitoring, fire and flood protection, and access control.
• Chubb Security: Chubb Security is a well-known brand in South Africa, offering services such as guarding, cash-in-transit, and alarm monitoring.
• Fidelity ADT: Fidelity ADT is another major player in the South African security industry, offering services such as home security, business security, and remote monitoring.
• Pro Active Risk Management: This company offers specialized security services such as risk assessments, threat management, and close protection for individuals and groups.
• Securitas: Securitas is a multinational security company with a presence in South Africa, offering services such as event security, mobile patrols, and remote monitoring.
• G4S: G4S is another multinational security company with a presence in South Africa, offering services such as cash-in-transit, guarding, and remote monitoring
• Red Security: This company is specialized in providing security services for the mining and construction industry and it offers services such as armed response, access control, and event security

Reasons to start a security company

There are several reasons why someone might choose to start a security company:

• High demand: Security is a vital need for businesses and individuals. As crime rates continue to rise, the demand for security services is increasing. This creates a great opportunity for those looking to start a security company.
• Potential for growth: The security industry is a continuously growing market, providing opportunities for expansion and diversification of services.
• Flexibility: Starting a security company allows for flexibility in terms of the services offered and the types of clients served. This provides the opportunity to specialize in a specific area of security, such as event security or personal protection.
• Independence: Starting a security company allows for the freedom and autonomy of being your own boss, and the ability to make decisions that align with your business vision and goals.
• Helping the community: By providing security services, you can help to keep your community safe and secure, which can be a highly rewarding experience.
• Job creation: Starting a security company can lead to the creation of jobs for security guards, managers, and other employees, which can contribute to the local economy.
• Potential for profitability: With the right approach and a solid business plan, a security company can be highly profitable.
• Potential for scalability: A security company can grow and expand over time, increasing its revenue and market share.

In summary, starting a security company can be a great opportunity for those who want to be their own boss, help their community, and create jobs while also taking advantage of the high demand and potential for profitability in the security industry.

Risk of Starting a Security Company

Starting a security company in South Africa does come with certain risks that must be considered:

• High competition: The security industry in South Africa is highly competitive, with many established companies already operating in the market. This can make it difficult for new companies to gain a foothold and attract clients.
• Legal and regulatory challenges: The security industry in South Africa is heavily regulated by the Private Security Industry Regulatory Authority (PSIRA). Failure to comply with legal and regulatory requirements can result in fines or even the revocation of a company’s registration.
• Liability: Security companies can be held liable for any incidents that occur while providing services to clients. This can be a significant financial risk and may require large investments in liability insurance.
• High operating costs: Operating a security company can be costly, including expenses such as wages, insurance, equipment and vehicles, and marketing costs.
• Reputation: The reputation of a security company is crucial for its success. Negative incidents or poor service can damage a company’s reputation and make it difficult to attract new clients.
• Risk of violence: Security guards and employees may be at risk of violence while on duty, which can be a significant concern for the company and its employees. As a business owner, you are also at risk of violence. The security industry runs parallel with crime and the underworld and it is known as one of the most violent industries in South Africa.
• Economic downturn: During an economic downturn, the demand for security services may decrease, which can have a negative impact on the company’s revenue and profitability.
• Staffing challenges: Finding and retaining qualified, reliable staff can be a challenge for security companies, especially in a competitive job market.

In conclusion, starting a security company in South Africa requires careful planning and attention to detail. By understanding the legal requirements, researching the market and competition, developing a marketing plan, and having a solid financial plan, you can position your security company for success. With the right approach, a security company can be a profitable and rewarding business in South Africa.

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HOW TO START A SECURITY GUARD COMPANY IN SOUTH AFRICA

Table of Contents

Starting a security company in South Africa involves a sequence of well-defined steps.

Entrepreneurs must first engage in comprehensive market research to pinpoint service demands and competition in the region.

This step is paramount to align the company’s services with the specific security challenges faced by prospective customers. Effective market analysis assists in creating a compelling value proposition and a competitive edge in a robust industry.

When establishing a market strategy, the entrepreneur must comply with the legal frameworks within the private security sector.

Registering with the CIPC, securing accreditations from PSIRA , and ensuring the security personnel meet the required standards are all mandatory steps.

These regulatory requirements are integral for lawful operation and serve as a foundation for establishing trust with potential clients.

Compliance solidifies the company’s legitimacy and facilitates a smoother entry into the market.

The security industry in South Africa is not only substantial in terms of its size and diversity but also in its regulatory oversight.

A new security company must be equipped to manoeuvre through these complexities to succeed. Understanding the different types of security services required in various urban and rural settings is crucial.

This knowledge will enable the business to tailor its services and meet the nuanced security demands across South Africa’s varied socioeconomic landscape.

Understanding the Security Industry in South Africa

In South Africa, the security industry is extensive and tightly regulated.

New businesses must be cognisant of the multifaceted environment they are entering.

Current Market Overview

The South African security sector is substantial, employing an estimated 500,000 security officers plus additional administrative personnel.

Factors like urbanisation, elevated crime rates, and increased commercial activities contribute to its ongoing growth.

The environment is competitive, with a significant presence of both local and international firms.

• Market Size : A significant employer in the private sector, the industry’s workforce is a testament to its scale.
• Growth Drivers : The industry’s upward trajectory is propelled by urban expansion, economic development, and a population becoming more security conscious.

Regulatory Framework

South Africa’s security industry is rigorously controlled to ensure the provision of high-quality, reliable services.

Companies must comply with the mandates of the Private Security Industry Regulatory Authority (PSIRA), which enforces standards and practices across the sector.

All security enterprises require registration with both the PSIRA and the Companies and Intellectual Property Commission (CIPC).

• Central Bodies : PSIRA and CIPC are the primary regulatory entities for security companies.
• Legislative Compliance : Strict adherence to the set rules and regulations is imperative for legal operation.

Types of Security Services

The wide range of services offered by security companies in South Africa spans from traditional manned guarding to advanced electronic surveillance systems.

Companies can specialise in various niches like residential, commercial, or VIP protection, or offer a comprehensive suite of security solutions.

• Service Spectrum : Manned guarding, alarm systems, CCTV monitoring, and rapid response units.
• Specialisation : Opportunity for firms to focus on specific sectors or offer integrated security packages.

To Start a Security Guard Company in South Africa You Need Planning and Research

When starting a security company in South Africa , comprehensive planning and research are important.

This preliminary phase is where an entrepreneur assesses the viability of their business concept and begins to understand the intricacies of the industry.

Market Analysis : Who are the potential clients?

It is vital to identify both private and corporate sectors that require security.

One should examine demographics, crime statistics, and economic conditions that affect demand for security services.

Competitive Landscape : Entrepreneurs should evaluate existing competitors. What services do they offer? How do they price their services ?

This information is crucial for identifying market gaps and positioning the new business effectively.

Regulatory Environment : Understanding the legal requirements is non-negotiable.

One must become familiar with the regulations set out by PSIRA, the standard for training, and other legal considerations that impact operations.

• Business Goals : Define clear, measurable objectives for the company.
• Service Portfolio : Decide what type of security services to provide based on current industry trends and personal expertise.

Conducting due diligence in these areas will lay a solid foundation for a security company and contribute to a sound business plan, which is essential for securing funding, attracting clients, and achieving long-term success in South Africa’s security industry.

Legal Requirements

Before one starts a security company in South Africa, several critical legal obligations must be met.

This ensures that the business operates within the legal framework and maintains standards that are required by governing bodies.

Business Registration

The first formal step involves registering the business entity with the Companies and Intellectual Property Commission ( CIPC ).

One must choose a unique company name and submit the necessary documents, which include a registration form, a copy of ID for the directors and incorporators, and a fee.

Companies can be registered as private companies, non-profit companies, or cooperatives, among other types.

Security Service Provider Accreditation

To operate a security company, one requires accreditation from the Private Security Industry Regulatory Authority ( PSIRA ).

This involves the following steps:

• Completing the prescribed PSIRA registration forms.
• Payment of the required registration fees.
• Providing proof of company registration from the CIPC.
• Submitting clearances for all company directors, which include police criminal record checks and clearance from the National Intelligence Agency.
• Illustrating compliance with training standards for security officers set out by the South African Qualifications Authority (SAQA).

It’s crucial for the company to remain compliant with varied regulations that include Firearms Control Act for companies that will provide armed security services and adherence to minimum wage standards as set for the security sector.

Setting up Your Business Structure

When establishing a security company in South Africa , deciding on the appropriate business structure is crucial.

It shapes aspects of your operation from liability to tax obligations.

Company Types

In South Africa, there are mainly three types of business structures relevant to a security company:

• Sole Proprietorship : One individual owns and runs the business, bearing all the risks and rewards.
• Partnership : Two or more individuals or entities share ownership and management responsibilities.
• (Pty) Ltd : A private company where the liability of shareholders is limited to their shares; considered a separate legal entity.

Registration Process

To register:

• Reserve a Name : Reserve your company name through the CIPC, ensuring it’s unique and reflects your business.
• File Documentation : Submit incorporation documents, including the Memorandum of Incorporation (MOI) and registration forms, to the CIPC.
• Acquire a Registration Number : Upon successful registration, your company is assigned a registration number; this is your official company identity.

Tax Registration

Companies must register with the South African Revenue Service (SARS) for income tax purposes, VAT if applicable, and employee-related taxes.

Considerations for Structure Choice

• Liability : A (Pty) Ltd limits personal liability, while sole proprietorships and partnerships expose owners to more personal risk.
• Tax Implications : Different structures have varied taxation rules; consult with a tax advisor to understand implications.
• Growth Potential : Private companies may find it easier to access funding and scale, whereas sole traders could face limitations.

Selecting the right structure is important for legal compliance, financial management, and future scaling of your security company.

Security Personnel Training

To be B Graded, you need to pass the requirements of grades C – E. See the grading requirements here

Becoming a security officer in South Africa requires completing formal training.

The training is regulated by the Private Security Industry Regulatory Authority (PSIRA) to ensure that all security personnel meet the national standards.

Entry-level Requirements :

• Certification in Grade E (basic level): Focuses on the foundations of security services.
• Training duration varies depending on the grade, with each level building upon the previous one.

Advanced Grades :

• Grades D to A represent advanced levels: Cover specialised areas such as access control, surveillance, and emergency procedures.

Content of Training : Courses encompass a mixture of theory and practical skills, including:

• Law : Understanding legal aspects relevant to security work.
• Patrolling : Effective area patrolling techniques.
• Communication : Clear and efficient communication skills.
• Emergency Response : Procedure for various emergency situations.
• Weapon Handling : For armed positions, handling and safe usage of firearms.

Training Institutions : Providers must be accredited by PSIRA, and courses are offered by various accredited training centres across the country.

Continuous Professional Development :

• Security officers should be encouraged to pursue continuous training .
• Refresher courses and further certifications are necessary for career advancement and maintaining a high standard of service.

By keeping to these training protocols, security companies ensure their personnel are prepared to handle the range of tasks required in the field with proficiency and professionalism.

Marketing Strategies

Successful marketing is a cornerstone for the growth of any security company in South Africa.

A robust strategy must be in place to reach potential clients and communicate the benefits of the company’s services.

Target Audience Identification : It is imperative to identify and understand the target market. Businesses, gated communities, and high-net-worth individuals may all require specialised security solutions.

Define the demographics, understand their needs, and tailor marketing messages accordingly.

Branding : Create a strong brand identity that conveys reliability and professionalism.

The company logo, uniform, and web presence should all reflect the company’s quality and attention to detail.

Online Marketing : Develop an online presence with a professional website optimised for search engines.

Utilising social media platforms to engage with the community and share relevant content can establish the company’s expertise in the security field.

Direct Outreach : Employ direct outreach initiatives such as networking at industry events, cold calling, and email marketing.

Providing educational content and security insights positions the company as a thought leader.

Partnerships and Referrals : Build relationships with local businesses and communities.

Partnerships with property management firms or business associations can generate referrals and increase credibility.

Customer Testimonials : Encourage satisfied clients to share their experiences.

Positive reviews and testimonials from credible sources can be influential for potential clients considering the company’s services.

By integrating these marketing tactics, a security company can develop a strong client base and grow its presence within the South African security industry.

Operations Management

Managing operations in a security company is a critical element that entails the coordination of daily business activities to ensure efficiency and effectiveness.

Effective operations management can enhance client satisfaction and increase profitability.

Staff Rostering : A key challenge is the scheduling of security personnel.

Companies must ensure that they have an adequate number of guards available for each shift, matching skills and qualifications to the demands of the assigned tasks.

• Regular training sessions keep the staff updated on the latest security protocols and technologies.
• The deployment of security resources should align with client needs and company strategy.
• Companies must employ strategies to maintain compliance with PSIRA regulations and local laws.

Quality Control : Conducting periodic audits and reviews helps maintain service standards. Client feedback should be used to drive improvements in service delivery.

• Procedures : Standard Operating Procedures (SOPs) must be established and updated regularly to guide staff actions and ensure a uniform service quality.

Technology Integration : Utilising modern technology, such as surveillance systems and alarm monitoring, enhances operational capabilities.

It is crucial to stay abreast of technological advancements to provide state-of-the-art security solutions.

By focusing on these aspects of operations management, security companies in South Africa can aspire to deliver outstanding services in a highly competitive market.

Client Acquisition and Retention

Acquiring and retaining clients are critical functions for the longevity of a security company in South Africa.

A multifaceted approach ensures that a security firm can not only attract new clients but also maintain a loyal client base.

Strategies for Client Acquisition:

• Networking : Engage with local businesses and attend industry events to establish connections.
• Marketing : Utilise both traditional (flyers, newspapers) and digital (social media, SEO) platforms to increase visibility.
• Referrals : Encourage existing clients to refer new clients by offering incentives.

Key Methods for Client Retention:

• Quality Service Delivery : Maintain high standard of service to ensure client satisfaction.
• Regular Communication : Keep in touch with clients through newsletters, emails and calls to address their concerns timely.
• Client Feedback : Regularly seek client feedback and adapt services accordingly.

Client Acquisition Channels

Retention Techniques:

• Hold regular service review meetings.
• Personalise client interactions.
• Offer customised service packages tailored to client needs.

Implementing these client acquisition and retention strategies with a consistent and professional approach will aid a security company in building a sustainable client base in South Africa.

Financial Management

Efficient financial management is of utmost importance for the success of a security company in South Africa .

The ability to manage capital, control expenses, and maximise profits underpins the operational stability of the firm.

Budgeting : Initial and operational budgets must be meticulously planned.

Start-up capital should cover licensing fees, insurance costs, training expenses, and the acquisition of equipment and vehicles.

Ongoing expenses, such as salaries, marketing, and maintenance, should be estimated conservatively to ensure financial resilience.

Cash Flow Management : Maintaining a healthy cash flow is critical.

This involves monitoring accounts receivable closely, setting up favourable payment terms, and managing supplier expenses effectively.

Security firms should aim for consistent revenue streams through contracts to mitigate periods of low cash flow.

Pricing Strategy : Establish competitive yet sustainable pricing to appeal to the market while ensuring profitability.

Security companies should analyse costs thoroughly to set prices that cover all operational expenses and generate a fair profit margin.

Financial Reporting : Regular, accurate financial reporting provides insights into the company’s performance.

Balance sheets, income statements, and cash flow statements should be prepared regularly to track financial health and make informed business decisions.

Funding and Investment : Securing capital through loans, investors or grants can facilitate growth.

Prudent investment in technology and staff training can distinguish the company and drive long-term profitability.

Cost Control : Tight control over operating costs without compromising service quality helps sustain the business.

Cost-saving strategies should be pursued, such as investing in energy-efficient technologies and automating administrative tasks.

In summary, robust financial management practices allow a security company in South Africa to navigate the competitive landscape confidently while sustaining long-term growth and stability.

Growth and Scaling Strategies

Fostering growth and scaling a security company in South Africa demands strategic planning and the implementation of robust expansion methods.

Here are pivotal strategies for scaling a security firm:

• Diversification of Services : Expansion into different types of security services can attract a wider client base. For instance, branching into cybersecurity or offering personal bodyguard services alongside traditional property patrols.
• Geographic Expansion : Extending services to new regions requires careful analysis of market demand and competition. It might involve setting up branches or franchises in different provinces.
• Strategic Partnerships : Forming alliances with businesses in related industries, such as insurance companies or property management firms, can provide referral opportunities and expand client reach.
• Investment in Technology : Keeping up-to-date with the latest security technologies, like biometric access systems or AI-based surveillance, can improve service quality and operational efficiency.
• Enhancing Training Programs : Regular training ensures that staff are skilled and knowledgeable, leading to better service delivery and increased trust from clients.
• Marketing Campaigns : A strong marketing strategy, including online presence and targeted advertising, can increase brand recognition and market share.
• Customer Retention Efforts : Focusing on providing exceptional service and customer satisfaction helps in retaining clients and encourages word-of-mouth referrals.
• Acquisitions : Buying out smaller competitors can be a quick way to increase market share and client base.

The integration of these strategies requires careful planning and execution to ensure sustainable growth and market position strengthening.

Challenges and Risks

Starting a security guard company in South Africa, while potentially profitable, carries inherent challenges and risks that must be carefully managed.

Regulatory Compliance : The South African private security industry is heavily regulated.

Companies must obtain accreditation with PSIRA and ensure all employees meet stringent training and qualification criteria.

Failure to comply with regulations can result in significant legal and financial penalties.

Economic Uncertainties : Economic fluctuations can affect client budgets and demand for security services.

Security firms need to be financially resilient to withstand periods of economic downturn.

Crime and Safety : Security companies operate in environments with potential for violence and crime.

The safety risk for security personnel is substantial, requiring comprehensive insurance and safety protocols.

Labour Relations : The sector often faces workforce challenges, such as strikes or labour disputes.

Companies must maintain good employee relations and fair labour practices to avoid business disruptions.

Crime Trends : Security firms must continuously adapt to changing crime patterns and threats, tailoring services to be efficient and effective.

Navigating these challenges and risks is crucial for the success and sustainability of a security company in South Africa.

Through strategic management and a robust understanding of the industry, these hurdles can be overcome.

Future Trends and Innovations in the Security Industry

The South African security industry is on the cusp of significant technological innovation, driven by a need for more sophisticated security solutions.

Security companies are increasingly investing in artificial intelligence (AI) , machine learning , and big data analytics to enhance their capabilities and offer predictive security solutions.

These technologies enable a proactive approach, allowing security firms to anticipate and mitigate potential threats before they occur.

Integration of IoT : The Internet of Things (IoT) is revolutionising the industry, with connected security devices becoming increasingly prevalent.

Expect to see more integrated systems that combine sensors, cameras, and alarms, all controlled through a central platform.

Cybersecurity Services : As cyber threats become more intense, there is an ongoing convergence between physical security and cybersecurity.

Security companies are expanding their offerings to include cybersecurity measures, protecting both tangible and digital assets.

Biometric Authentication : The use of biometric authentication methods, such as fingerprint, facial recognition, and iris scanning, is growing.

These provide enhanced security measures for access control and identity verification.

Remote Monitoring : Advances in remote monitoring technologies are enabling security firms to provide 24/7 surveillance services from centralised locations, reducing the need for on-site personnel and increasing efficiency.

Drones for Surveillance : Unmanned aerial vehicles, or drones, are gaining traction for their ability to provide aerial surveillance over large areas, delivering real-time data to security teams.

These innovations represent the forefront of the security industry’s evolution in South Africa and indicate a continuous shift towards more integrated, intelligent, and comprehensive security solutions.

This article provides a broad view of how to start a security guard company in South Africa , but eventually it boils down to how effective and well-prepared the entrepreneur is and how good his or her business skills are.

Non-compulsory voluntary security associations

Membership of these organisations is not compulsory, but membership has many benefits and lends credibility to your business.

• SASA  – Security Association of South Africa
• SASSETA  – Safety & Security Sector Education & Training Authority
• SANSEA  – South African National Security Employers Association
• SAIDSA  – South African Intruder Detection Services Association (specifically for alarm monitoring and armed response services)
• ESDA  – Electronic Security Distributors Association (This specifically for electronic security equipment)

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How To Start A Security Company in South Africa (2024)

Security services are becoming more and more important. Security is no longer the preserve of rich and wealthy people trying to protect their lives and property. These days criminals are less selective, and so they will steal from, and threaten even ordinary people as well. This makes the security services industry more in demand than ever before, and this means that there is so much potential in the security industry, not just now but also in the future.

While other industries are busy replacing their workers with robots and computers, the security industry continues to need more hands-on deck. Yes, crime is not going away; and so people will always need security services, especially in countries like South Africa.

This post is going to be your guide on how to start a security company in South Africa,  from here you will gain tips on how to go about opening your own security company, including necessary documentation, and tips on how to successfully operate it.  Yes, opening a security company can be a very rewarding venture; aside from the financial reward, you can get to provide employment opportunities and provide real value to society.

How To Start A Security Company in South Africa

Get business Premises suitable for your business. 

Register your business with the CIPC (it will only cost you R175)

Go to the PSIRA to register Yourself as a Grade B security provider.

Get a Tax Clearance Certificate

Go back to the PSIRA to register your business with the Authority.

Train your workforce

How To Register With Private Security Regulator Authority (PSIRA)

Your first step is to register with the PSIRA before starting your security company. The PSIRA stands for the Private Security Regulatory Authority. The company is located at 420 Witch-Hazel Ave, Highveld, Centurion, 0157, South Africa. You can contact them by phone via: +27 86 107 7472.

The primary objective of the Authority is to regulate the private security industry and to ensure that the companies that are involved in the industry are stable, and viable, and operated by trustworthy people. The requirements that the PSIRA have are not insurmountable, but they are rigid. This is a good thing because if the security industry was unregulated it would soon become fraudulent, and then new entrants such as yourself would not find it attractive.

Requirements To Start A Security Companies In South Africa

Documents supporting Company registration with the Companies and Intellectual Property Commission (CIPC)

Member’s (Director(s), Partner(s), Trustee(s), and Managers of your company must show that they are registered as security service providers (Grade B)

Tax Clearance Certificate, VAT Registration Number, PAYE Number (From SARS) are also required in order to register. 

U.I.F documents to ensure that you have the welfare of your employees in mind.

You have to present your Business Plan for 1 year.

You must provide a declaration of your business’s capability to operate for the next year.

You should also have office premises.

How much Does it Cost to Start a Security Company in South Africa?

You Need to Lease a Premises. That may cost around R180 per square metre for stand-alone premises.

You will need to apply to the CIPC with R125.

You will apply to the PSIRA with a fee of R2,280 and then sit a written exam. 

You will pay an assessment fee of R1,710 to PSIRA. 

When you have been duly certified then you can go about the business of bidding for contracts to provide security services to residences and office complexes. With the registration and documentation that you have, you need not worry about any harassment from any quarter.

That is how you register a security business in South Africa. However, in order to successfully operate the business, you need more than just papers. For one thing, you will need workers. No successful security company just hires untrained persons and puts them on clients’ property. 

You need to train your workforce.

Requirements for training centre

In order to have a training center, you need a couple of certifications. These include safety certifications, as well as evidence of association with the regulatory authority. The requirements are not difficult to meet. The following are the requirements for opening a training center.

PSIRA Accreditation Application form (PSiRA 47 A).

Proof of registration with PSiRA. Please also attach a copy of your CIPC Registration Certificate.

Proof of Payment of the prescribed accreditation fee to the PSIRA. (Please attach receipt you were issued.)

Evidence of settlement of Annual fees. (Please add receipt of settlement for annual fees)

Copy of the lease agreement of the facility you want to use for training. The Lease agreement should be at least for a six (6) month period.

A letter from the Fire Department, or an affidavit. 

Signed confirmation letter, or a signed employment contract engaging a contractor. 

The policy of the management and administration of training, as well as enrolment policy, assessment, and certification policy.

 Proof of telephone line, and Proof of fax line.

Please note:  You need a registration fee of R2 280. Furthermore, it usually takes around 12 days for your application to be approved. You will also need to renew your business certificate every 12 months.

Important Factors that can determine your Success Of Security Companies in South Africa

Branding is all about building an identity for your business; it is all about creating an image that will come to mind immediately anybody thinks of your business. Therefore, you need to spend some money creating a logo (including an emblem for your uniform) and a catchphrase that will go along with your logo. Your logo should be something attractive and mature. Make sure that you engage the services of a professional.

Marketing is an essential part of running any business. It is all about getting more people to see your business. You need to get the word out about your security company because that is the only way to get clients. The best way to market a security company is by using most of the traditional marketing platforms; you need to make flyers; which you would now distribute to offices, residences, and even on cars.

Another form of marketing is billboards. You can use billboards in prominent places to advertise your security services. This is a good use of available funds because every eye passing that route will see the Billboards, and then it would be a good way to get a strong foothold in the market share of a particular area. If you can do this, you will likely get a lot of business in a particular area.

Another trick that you could consider is putting adverts in the newspapers. This will get a lot of eyes on your brand, however, it may not be very localized. Your business may be located in Johannesburg, but you may receive enquires from Durban or other distant parts of the country.

Build a website

A website for your company could be a great investment because people are getting more and more of the information they use online. It is not too expensive; you can get a quality website in South Africa for just R1 200.

When you build a website, the next thing is to drive attention to the website. You will do that by running digital ads on places like Facebook, Google, and Twitter. This will give you an edge over your competition. It will make people see you as a modern security company with modern features. 

Of course, you may need a consultant to help you carry out these digital marketing activities successfully.

Networking is very important and will get you most of your first clients. This also involves getting yourself and your company familiarized with the security architecture of the city. Go to police stations and familiarize yourself with the top officers. Network with businesspeople, get them to use your security services to safeguard their operating premises.

Go out to high-profile events and take the opportunity to tell people about your business. Distribute your business cards wherever you go, and reach out to speak and lecture on security events. That is how you can network and position your business to be in the top spot to get security contracts in your area. 

• How To Start A Construction Company In South Africa
• How To Start A Cleaning Company In South Africa

Hopefully, you are ready for what it takes on how to start a Security Company in South Africa. We chose to leave out the fact that you need branded uniforms and vehicles. We have seen that some security outfits choose not to wear military-style clothing, perhaps for the reason that they do not want to attract too much attention to themselves, or for whatever reason.

Branded vehicles for your security company will also help you to seem more professional, besides, a vehicle or two will help you respond to any challenges or emergency developments. 

You also need to draw up a business plan that involves recruitment, training, and the day-to-day running of the business for at least one year, even in unfavorable business conditions.

Security Company Business Plan Template

Written by Dave Lavinsky

Security Company Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their security companies.

If you’re unfamiliar with creating a security company business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a security company business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Security Company Business Plan?

A business plan provides a snapshot of your security company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Security Company

If you’re looking to start a security company or grow your existing security company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your security company to improve your chances of success. Your security company business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Security Companies

With regards to funding, the main sources of funding for a security company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for security companies.

Finish Your Business Plan Today!

How to write a business plan for a security company.

If you want to start a security company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your security company business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of security company you are running and the status. For example, are you a startup, do you have a security company that you would like to grow, or are you operating a chain of security companies?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the security company industry.
• Discuss the type of security company you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of security company you are operating.

For example, you might specialize in one of the following types of security companies::

• Crisis management: This type of security business depoys security officers trained in crisis situations such as natural disasters, terrorist attacks, or other emergencies.
• Security guards: This type of security business provides security guards to government or private clients to provide protection against theft or harm to personal or public property.
• Surveillance company: This type of security business provides surveillance equipment and monitoring services that can include security alarms, cameras, and on-call security officers.
• Security patrol: This type of security company deploys security officers who drive around the designated area, patrolling from car, motorcycle, or other vehicle.

In addition to explaining the type of security company you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of security cameras sold, or reaching $X amount in revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the security company industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the security company industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your security guard business plan:

• How big is the security company industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your security company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your security company business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of security company you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other security companies..

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of security service providers, in-house security personnel, and do-it-yourself security equipment. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of security company are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for clients to acquire your services?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a security guard business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of security company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide on-call security guard services, crisis management, or surveillance equipment?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your security company. Document where your company is situated and mention how the site will impact your success. For example, is your security company located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your security company marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your security company, including answering calls, scheduling security personnel, billing clients and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your security company to a new city.  

Management Team

To demonstrate your security company’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing security businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a security company.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you employ a staff of 10 security officers, and will you charge an hourly fee of $150 for each security officer deployed ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your security company, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a security company:

• Cost of equipment and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of your security guards and their credentials.  

Writing a business plan for your security company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the security company industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful security company.  

Security Company Business Plan FAQs

What is the easiest way to complete my security company business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your security company business plan.

How Do You Start a Security Company?

Starting a security company business is easy with these 14 steps:

• Choose the Name for Your Security Company
• Create Your Security Company Business Plan
• Choose the Legal Structure for Your Security Company
• Secure Startup Funding for Security Company (If Needed)
• Secure a Location for Your Business
• Register Your Security Company with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Security Company
• Buy or Lease the Right Security Company Equipment
• Develop Your Security Company Marketing Materials
• Purchase and Setup the Software Needed to Run Your Security Company
• Open for Business

Learn more about   how to start your own security company .

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He has enabled more than 50 Security Companies in South Africa to have a Security Business Plan which can be taken straight to any Financial Institution.

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Security Company Business Plan Template

Document description.

This security company business plan template has 31 pages and is a MS Word file type listed under our business plan kit documents.

Sample of our security company business plan template:

Security Company Business Plan [YOUR NAME] [YOUR TITLE] Phone: [YOUR PHONE NUMBER] Email: [[email protected]] [YOUR WEBSITE ADDRESS] Confidentiality Agreement The undersigned reader acknowledges that the information provided by [YOUR COMPANY NAME] in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of [YOUR COMPANY NAME]. 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 [YOUR COMPANY NAME]. Upon request, this document is to be immediately returned to [YOUR COMPANY NAME].

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3,000+ templates & tools to help you start, run & grow your business, all the templates you need to plan, start, organize, manage, finance & grow your business, in one place., templates and tools to manage every aspect of your business., 8 business management modules, in 1 place., document types included.

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What is the purpose of a business plan.

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In simple terms, yes. Not considering the compliance aspect and funding opportunities. The process of the business plan will allow you to have a better understanding of exactly how you are going to start and grow your company to be successful.

What are the Advantages of a Business Plan?

1) A game plan . A business plan can be considered to be a roadmap for the company. It will allow for focus and direction towards one goal, although things may change in the first few months – the end goal will be known.

2) Compliance . Depending on what your company will be supplying, be it service or product, many governmental regulating bodies will request a formal business plan for the specific industry. You can read more about various Company Compliance – here

3) Financing & Funding . To be eligible for funding, investors will want to know all about your company. They will look for things such as who your target market is and, ultimately, whether your business is profitable. A business plan outlines all these points.

Is a Plan necessary if I'm not looking for funding?

Many entrepreneurs are under the impression that a professional plan is purely for financial funding, this is however not the case. At the onset of your venture, a comprehensive plan will help you get a realistic picture of your capabilities and viable strategies. Once your business is off the ground and thriving the way in which you intended it to, your business plan will allow for direction and guidance to continue to thrive.

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We do not guarantee funding. We provide you with a business plan document which is one of the documents required to apply for funding. You can learn more about becoming funding ready in our informative article which was published on Bizcommunity.

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Are business plans highly visual?

They are by no means filled with graphics and images, however at certain sections or parts of the plan displaying graphics is highly beneficial to convey a message. At Company Partners, we understand that a visually appealing business plan can be more engaging. Including graphs, charts, and relevant images can help in effectively communicating key data and strategies, making your business plan stand out.

How much does a business plan cost?

The cost varies depending on whether you’re doing it yourself or hiring a professional like Company Partners. We offer tailored services that can accommodate different budgets, ensuring quality and strategic insight. A professionally created plan for a Small Business of approximately 20+ pages will cost R3490.

How can I write a business plan?

Start by defining your business idea, conducting thorough market research, and detailing your marketing and operational strategies. If you have trouble organizing all these different elements into one single document, don’t be afraid to look for quality free templates online. You can also view the Company Partners example to act as a guide you through this process, ensuring that your plan is comprehensive and tailored to the South African market.

What makes a good business plan?

A good plan is clear, concise, and detailed, with a strong emphasis on market analysis and financial projections. The professionals which view your business plan to make a decision whether to invest or fund you needs to have a clear picture of your trajectory and if their investment/money will be well spent. Company Partners ensures that your plan is adaptable and strategically aligned with your business goals.

What is a business plan consultant?

A consultant, like those at Company Partners, specializes in assisting businesses to create strategic and effective business plans. The specialist consultants have years of experience through working in companies to give them an in-depth understanding of how it works. Our experts bring this in-depth knowledge of market trends and financial modelling into the writing process.

Can I hire someone to write my plan?

Yes, and Company Partners offers this service. Our experienced consultants can craft a plan that aligns with your vision and market requirements, providing valuable insights and expertise. The best of all is that we can help anywhere in South Africa.

Should a business plan include a SWOT analysis?

Including a SWOT (strengths, weaknesses, opportunities, and threats) analysis is crucial as it provides insights into your business’s competitive position. A SWOT analysis remains a very effective tool to analyse your company. Company Partners can help you identify these key factors, ensuring a well-rounded and strategic business plan.

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Cash-strapped middle-class crisis in africa spells doom for savings and retirement security.

A 2023 study by the UN University World Institute for Development Economics Research on “The domestic savings shortfall in developing countries — what can be done about it?” found that only 19.8% of people above statutory retirement age receive a pension in sub-Saharan Africa and just 8.9% of the labour force is covered by pension schemes. 

This is much lower than the global average where 77.5% of people above statutory age and 53.7% of workers have pension coverage. The middle class in Africa is at the centre of this crisis, with a decline in disposable income, limited savings and little to no fixed capital formations.

Across the African continent, unemployment is sky high and real wage growth has remained stagnant over the last two decades, showing little sign of recovery, based on prevailing macroeconomic trends. Taxation rates, over time, have increased and further reduced the income of the middle class. 

Inflationary pressures have also been on the rise, driven by rising global energy and commodity prices. Climate shocks caused by global warming are wreaking havoc on public infrastructure and changing weather patterns are causing droughts in parts of Africa and heavy rains are submerging farmlands in other parts. 

Along with climate change, we have also seen disruptions from the pandemic and geopolitical instability in Ukraine, Gaza and elsewhere, affecting supply chains, placing upward pressures on prices and accelerating the erosion of disposable income.

These factors have combined in an insidious manner that has made it much harder for middle-class families to balance their budgets. Many have turned to credit cards and other short-term borrowing instruments, leading to spiralling debt and rampant default. 

Take the case of South Africa, where many people are at risk of not maintaining their standard of living during their retirement years . According to a 2023 study by the Association for Savings and Investment, only 6% of economically active South Africans are going to retire comfortably — that is just six people out of every 100. Half of the adult population has no retirement plan at all. 

These are alarming statistics, requiring significant policy interventions. This brings into question recent policy directions taken to allow drawdowns on the savings component of retirement funds in the “two-pot system”. In essence, from 1 September 2024, retirement funds in South Africa will be split into two parts, a savings component and a retirement component. The proportion in the savings component can be withdrawn as cash preretirement, while the retirement portion is preserved till retirement age. 

In a political economy shaped by stagnant wages, rising food costs, high energy prices, climate change and geopolitical instability, the future appears grim for middle-class families. These factors mean disposable incomes will be under increasing pressure, insufficient to cover current requirements with little left for saving and, importantly, securing retirement needs. 

So, what is disposable income and why does it matter?

Disposable income refers to the proportion of an individual’s or household’s income remaining after deductions for tax and other mandatory payments required by law. There is discretion on what that remaining income can be spent on, hence it being called “disposable”. The challenge faced by the middle class relates to the fact that this disposable income is insufficient to cover their lifestyle requirements, short-term savings needs and retirement investments. 

Servicing basics, such as mortgages, healthcare, educational costs, credit card debt, transport and food takes up, in some cases, 90% to 100% of this disposable income and has pushed millions of middle-class families around the world into a debt spiral.

What about the impacts on marginal propensity to consume?

Marginal propensity to consume (MPC) measures the portion of disposable income spent after it has increased. As an example, should an individual receive an increase and their disposable income grows by, say, R1 000, then what proportion of this increase is consumed, and how much is saved or invested for future needs? In an environment where all disposable income is spent paycheck to paycheck, the MPC is 100%.

The pay rises received by most workers around the world have not kept up with inflation, suggesting the long-term trend lines are upward facing for the MPC ratios and downward trending for the disposable income factor. 

What is the way forward?

The 2023 International Monetary Fund Annual Report refers to a cost-of-living crisis as countries battle high inflation and high commodity prices and seek more IMF intervention. The report contends that governments are struggling to manage rising food and energy prices while dealing with core inflation because of the reduced policy spaces and depleted sovereign reserves caused by pandemic relief expenditure. 

Sub-Saharan African countries need access to lines of credit to finance sound policy interventions that will place their economies on sustainable paths to recovery. A constrained macro-economic environment will only serve to exacerbate the economic situation of the middle class. 

Faced with stubborn inflation, stagnant incomes and rising costs of living, the middle class has to make critical decisions about conserving disposable income and increasing retirement savings. Families should evaluate lifestyle choices, explore income diversification, reduce debt levels and consider delaying big-purchase items, such as new cars. 

More importantly, they need to speak to an experienced and licensed investment advisor and design an investment and retirement plan which balances both current and future retirement needs. 

Dr Mthandazo Ngwenya is an international development consultant and business executive.

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Register with Retina SA if you are suffering retinal vision loss

Retina south africa is the sole registered patient advocacy and support organisation..

The world commemorated May 20 as the date of the first controlled testing of a life-saving intervention, which took place in 1747 when British naval physician Dr James Lind experimented with various potions to try and cure scurvy, a disease that killed many sailors during long sea voyages.

His tests showed that including citrus fruit in sailors’ diets did save lives, and we now know Vitamin C prevents scurvy.

This method of testing and observation paid dividends during Covid-19 when the tests were conducted, with thousands of participants permitting the health authorities to test vaccines and identify an effective tool against the virus.

Clinical studies often include relatively small participant numbers and can take several years to finish.

There are three stages, all under the careful supervision of regulatory agencies like the European Medicines Association and the US Federal Drug Agency. In SA, the Department of National Health is in charge of clinical trials.

Retina South Africa participated in an international clinical trial to test a drug to slow vision loss in the rare Stargardt Disease, which affects some people.

This genetic condition usually starts in children and young adults, robbing them of their central vision, and most often occurs in families with no recorded history of blindness.

The intervention used was a drug called Emixustat that showed some effect in very young trial participants but not enough overall to justify registration and commercialisation of the drug.

Retina South Africa maintains a comprehensive database of individuals suffering from various types of vision loss, including retinitis pigmentosa, age-related macular degeneration, diabetic retinopathy, and deafblindness caused by Stargardt disease and Usher syndrome.

Retina South Africa’s national secretary, Claudette Medefindt, advises all South Africans suffering retinal vision loss to register with the organisation.“

“Many international clinical trials are underway, and we are collaborating with experts to expand the number of these exciting investigations to include South Africa.”

To ascertain if they qualify for gene-specific studies and upcoming treatments, individuals with genetic retinal diseases must undergo a genetic test, stated Medefindt.

Retina South Africa offers all the guidance and details required regarding therapies, coping mechanisms, and technology easily available for those suffering from retinal vision loss. Reach them via their website, www.retinasa.org.za

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Can BRICS+ make a difference?

Thursday, 27 Jun 2024

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It is expected that the clout of BRICS will likely grow, solidifying its voice to speak up for its member countries’ interests and development rights, especially for the developing economies. — Bloomberg

Fifteen years since its founding on 16 June 2009, what started as a loose and informal grouping has been expanding gradually into a collective platform and networking, placing the BRICS+ bloc comprising 10 countries – Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates or UAE – as an economic and political force.

The BRICS+ grouping has attracted the Global South as a voice in economic, trade, financial and investment matters.

BRICS+ by the numbers

The intergovernmental grouping carries significant demographic and economic weight. It is home to 45% of the world’s population, substantially higher than almost 10% for the G7 comprising the United States, Canada, Japan, Britain, Germany, France and Italy.

It claims 35.2% of global gross domestic product (GDP) based on purchasing power parity versus the G7’s 29.3% share.

It is also the destination of 27.4% of global foreign direct investment (FDI) inflows while also accounting for around 40% of both crude oil production and exports.

China, with a population of 1.4 billion, is the largest economy in the BRICS+ grouping, with GDP of US$18 trillion or 65.4% of the group. This is followed by India, with its population of 1.4 billion, at U$3.4 trillion or 12.4% of the total. Russia comes next, with its population of 144.2 million, at US$2.2 trillion or 8.2% of the total.

Malaysia, together with Thailand, are among the first countries in Asean expressing interest in joining the BRICS+ club. It was reported that more than 30 countries have signalled their intent for BRICS+ membership.

Malaysia’s total trade with BRICS+ accounted for 23.2% (RM611.3bil) of Malaysia’s total external trade in 2023 (23.7% in 2019). Exports to BRICS+ made up 18.9% of the country’s total exports.

China remains our largest trading partner (17.1% of Malaysia’s total trade) with an export share of 13.5% in 2023. Exports to India stood at 3.2% and the UAE at 1% while the rest of members’ share was negligible or marginal at between 0.1% and 0.4%.

In 2023, the Malaysian Investment Development Authority’s approved investment of BRICS+ totalled RM15.2bil or 2.3% of total FDI approvals. China has the highest amount at RM14.5bil or 7.7% of the total, while other BRICS+ members’ share was negligible.

In terms of total approved investment projects in the manufacturing sector, BRICS+ accounted for 9.4% of total approvals at a value of RM12.1bil in 2023.

What is BRICS+ buying into?

An understanding of the nature of BRICS+ would allow us to assess how the grouping can function effectively in aligning on global topics and issues of their common interests as well as to forge mutually collaborative in economic, financial, trade and investment opportunities.

We have to reckon that BRICS+ countries are very diverse in terms of political systems, institutional frameworks, economic management, financial systems, social and cultural backgrounds. Some countries are political rivals.

Yet, the expansion of BRICS+ challenges the strong dominance and influences of the West, G20 and G7 as evidenced in their representation in the World Bank and International Monetary Fund.

Ironically, within the G20 countries, the seven most-advanced members are strengthening their ties through the G7, while six large developing economies are asserting their own voices within BRICS+.

How can BRICS+ cause a shift in the global economic and financial order, albeit facing hurdles ahead?

Firstly, BRICS+ member countries are the world’s biggest producers and exporters of energy, food and minerals, giving them the sustainability and stable supply of industrial feedstocks.

Based on a Bulletin report published by Banque de France, in 2021, BRICS+ accounted for 36% of global exports of crude oil, 34% of refined oil, 51% of soybeans, 42% of rice, 29% of iron ore, 51% of magnesium, 53% of graphite, and 47% of diamonds.

The abundant resources would ensure supply chain security in a profoundly complex geo-economic landscape and international trade system.

Secondly, it could promote a deepening of economic and trade integration.

BRICS+ made up 19.2% of total world trade; and 27.4% of total FDI inflows. Some members of BRICS+ have free-trade agreements (FTAs) with each other through blocs such as the Gulf Cooperation Council and Pan-Arab Free Trade Area.

China has been a dominant driver of economic integration in the bloc given its role as a supplier of consumer and industrial goods as well as an importer of commodities.

China is a major exporter of electric vehicles, solar panels, and heavy machinery. India is a leading producer of bauxite, iron ore, and zinc ore. Brazil’s major exports are soybeans, crude petroleum, refined petroleum and iron ore.

Currently, there is no FTA covering the entire BRICS+.

Prior to the expansion of BRICS+, China has proposed a BRICS FTA to boost wider trade ties in the grouping through binding commitments on tariff elimination. But, India, Brazil, Russia and South Africa have cold-shouldered China’s attempt.

Thirdly, project and development financing through the New Development Bank (NDB), which is capitalised at US$100bil, and the China-led Asian Infrastructure Investment Bank (AIIB), to complement China’s Belt and Road Initiative.

The AIIB is the world’s second-largest multilateral development bank, in which Egypt, India, Russia, Saudi Arabia, and UAE are shareholders.

It was reported that by 2023, both NBD and AIIB combined had committed more than US$71bil in credit in infrastructure, public health, and clean energy.

Fourthly, it would deepen cooperation in science, technology and innovation. China has become a powerhouse in new technologies, digitalisation and artificial intelligence (AI) and can share its wealth of knowledge and know-how with countries in need.

The BRICS+ countries contributed a sixth of worldwide research and development spending and a quarter of all science and technology research papers. They share broad collaboration potential in bio-tech, climate change, new-energy development, and space technologies.

China’s National Space Administration (NSA) is working with BRICS+ countries on a remote-sensing satellite programme as part of a data-sharing deal signed in 2021 that helps member countries to better monitor environmental changes and natural disasters using satellites data.

Fifthly, it deepens financial cooperation and payment to reduce reliance on the US dollar as a reserve currency through the development and multilateralisation of payment agreements. Over-reliance on the US dollar and euro not only render BRICS+ countries vulnerable to the US dollar’s fluctuations but also exposes them to US and European economic sanctions. Hence, BRICS+ countries should accelerate the de-dollarisation efforts amid not a smooth journey ahead.

What economic benefits can Malaysia see from joining BRICS+?

Malaysia is expected to benefit from the expansion of trade and investment deriving from the economic expansion of BRICS+, particularly China, India, South Africa and Saudi Arabia. China has been Malaysia’s largest trading partner for 15 consecutive years since 2009 and India was Malaysia’s 12th largest global trading partner in 2023. China and Malaysia are members of the Regional Comprehensive Economic Partnership and Asean–China Free Trade Area.

Malaysia can expand its export market goods and services in BRICS+ member countries through exploring the signing of FTAs and also the facilitation of trade.

As Russia, China and Brazil possess high technological capabilities in aerospace, AI and defence technology, Malaysia can collaborate on research and development and innovation, access the latest technologies and knowledge transfer that help to enhance our domestic industries’ technical capabilities in space exploration, aircraft development, satellite technology, AI applications, and defence technology.

Additionally, Malaysia can tap financing from the NDB and AIIB to finance projects in these technology, aerospace and AI sectors as well as green projects. We can work in promoting exchanges and cooperation with BRICS+ countries in the fields of education, knowledge and technical exchange programmes at people-to-people level.

As Malaysia will be the chair of Asean in 2025, it is in the driver’s seat to revive the Asian Monetary Fund and dedollarisation agenda, starting with Asean and in BRICS+. Malaysia has won the backing of China to revive the plan for an Asia-centred multilateral finance institution, which was mooted 26 years ago in the aftermath of 1997-1998 Asian Financial Crisis.

Amid facing the hurdles, Malaysia’s campaigning for the de-dollarisation also aligns with China, Russia, Brazil and the European Union as they are already trying to shift away from a reliance on the US dollar.

In conclusion, It is expected that the clout of BRICS+ will likely grow, solidifying its voice to speak up for its member countries’ interests and development rights, especially for the developing economies. The BRICS+ grouping has to manage the disparate priorities of its member nations based on mutual trust, respect and understanding.

Lee Heng Guie is Socio-Economic Research Centre executive director. The views expressed here are the writer’s own.

Tags / Keywords: BRICSPlus , GlobalTrade , EconomicPartnership , EmergingMarkets , FDIInflows , TechCollaboration , GreenProjects , DeDollarisation

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Ukraine war latest: Russia ponders nuclear shift and change in relations with West - as US leads drills after North Korea warhead test

A Russian navy missile cruiser has carried out drills in the Mediterranean Sea. Meanwhile, footage of David Cameron being tricked into thinking he was speaking to a former Ukrainian president has been released. Listen to a Sky News podcast on Putin and North Korea while you scroll.

Thursday 27 June 2024 12:45, UK

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Vladimir Putin says Russia's navy will be boosted by at least 40 new ships in 2024.

In a report by state-run news agency TASS, the Russian leader is quoted as saying that one of the country's main objectives is to "comprehensively upgrade" its naval capabilities. 

This includes "ship, aircraft and coastal components", while there are also plans to improve the infrastructure of naval bases to  "strengthen its positions in the strategically crucial areas of the world ocean, and to drastically improve its combat potential".

Mr Putin said that, compared to previous years where numbers were lower, 2024 would see more than 40 ships and boats received.

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Russia's defence ministry says it has carried out missile strikes on Ukrainian airfields which it believes have been designated to host Western military aircraft.

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Ukrainian president Volodymyr Zelenskyy has arrived in Brussels today, where he plans to sign three security agreements.

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"The return and success of H&M was an important signal for the head office of IKEA, and they also closely followed the recovery of Inditex," a source told Forbes Ukraine.

A chemical plant in Russia was targeted in an overnight drone attack, according to state-run RIA news agency.

The Redkinsky Experimental Plant, located in the Tver region to the northwest of Moscow, produces a number of chemicals used in the aviation industry.

The plant was previously struck by Ukrainian drones in September 2023. At the time, Ukraine's intelligence agency claimed the plant produces decalin, an aviation fuel additive.

This morning's attack saw four drones damage the plant's pipeline, roof, and a workshop building, according to independent Russian news outlet SOTA.

The Tver regional government said on Russian social media platform VKontakte that air defence systems thwarted a drone attack, but didn't comment on whether the plant was targeted.

"At around 4 a.m. on June 27, in the Konakovo municipal district of the Tver region, the air defence systems on duty of the Russian ministry of defence repelled another UAV attack," it said. 

"Emergency services specialists continue to work at the site where the UAV debris fell. There were no casualties."

Russia has started the new trial of imprisoned US citizen Robert Gilman on four new charges, the state-run RIA news agency reported.

A former US Marine, Mr Gilman was sentenced to four and a half years in prison in October 2022 for attacking a police officer while drunk.

RIA said that sentence was reduced on appeal to three and a half years in May 2023.

Mr Gilman — from Massachusetts — said he did not remember the incident, but had "apologised to Russia" and to the officer he had kicked.

His lawyers told TASS, the Russian state news agency, that Mr Gilman was in Russia to study and obtain citizenship. 

For context: Mr Gilman is one of at least a dozen US citizens being held in Russian prisons.

Among those, the best known is Evan Gershkovich. The Wall Street Journal reporter was arrested in March 2023 on charges of espionage that carry up to 20 years in prison.

Mr Gershkovich and his newspaper strongly reject the charges.

The US government has designated him as wrongfully detained, meaning it must seek ways to get Mr Gershkovich released, which could include a prisoner swap. 

The Kremlin says Russia is considering a possible downgrading of diplomatic relations with the West due to the hostile approach of the US and its allies towards Moscow.

Speaking to reporters today, Kremlin spokesperson Dmitry Peskov said the move is "standard practice" for states that face "unfriendly or hostile manifestations".

He added: "Due to the growing involvement of the West in the conflict over Ukraine, the Russian Federation cannot but consider various options for responding to such hostile Western intervention in the Ukrainian crisis."

Peskov said that no decision had yet been made on the matter and that Russia was considering different ways to respond to the West. 

North Korea has successfully conducted a test aimed at developing missiles carrying multiple warheads, state media agency KCNA reports.

The country said the test was carried out yesterday using the first-stage, solid-fuel engine of an intermediate-range ballistic missile.

KCNA said the missile succeeded in separating warheads in a test that was aimed at developing multiple independently targetable re-entry vehicle (MIRV) technology.

"The purpose was to secure the capability to destroy individual targets using multiple warheads," it said.

What else happened this week?

The dispatch comes a day after South Korea's military said North Korea had launched what appeared to be a hypersonic missile off its east coast that exploded in mid-air.

South Korea, the US and Japan condemned that launch as a violation of UN Security Council resolutions and a serious threat, and warned against additional provocations in the wake of last week's summit between North Korean leader Kim Jong Un and Vladimir Putin.

Today, the US, Japan and S Korea began large-scale joint military drills involving navy destroyers, fighter jets and the nuclear-powered US aircraft carrier Theodore Roosevelt, aimed at boosting defence against missiles, submarines and air attacks.

During Mr Putin's first visit to North Korea in 24 years, the two leaders signed a mutual defence pact, which Mr Kim lauded as an alliance, but which South Korean President Yoon Suk Yeol called "anachronistic".

A passenger train derailment in northern Russia has killed at least two people and left one other missing, a state-run railway company has said.

The 14-carriage train derailed in Russia's northern republic of Komi last night, Russian Railways said, with nine carriages coming off the tracks.

Up to 50 people were injured, Russia's news agency Interfax reported, citing emergency officials.

The train, carrying 232 passengers, was headed to the southern city of Novorossiysk from Vorkuta, a coal mining town in the north of Komi, Russian Railways said.

It said that heavy rainfall, which washed out parts of the track, was the likely cause of the derailment.

The Ukrainian air force has said it shot down all 23 drones and five out of six missiles launched by Russia this morning.

Serhii Tiurin, the regional governor of Khmelnytskyi, western Ukraine, said the air defences shot down nine aerial targets over his region. 

Local authorities have not received any reports of casualties or property damage, he added.

Meanwhile, governor Vitaliy Kim said the military destroyed six drones and three cruise missiles over the southern region of Mykolaiv.

Ukraine and Russia often send drones across the border but both sides have said they only target military infrastructure.

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