Do you want to start a bail bonds business? If YES, here is a complete guide to starting a virtual assistant business with NO money and no experience.
Okay, so we have provided you an in-depth sample bail bonds business plan template. We also took it further by analyzing and drafting a sample bail bonds marketing plan backed up by actionable guerrilla marketing ideas for bail bonds businesses. In this article, we will be considering all the requirements for starting a bail bonds business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Bail Bonds Business?
If you are a savvy entrepreneur thinking of what business to start in order to get the most returns, then you may need to consider the bail bond business. As the owner of a bail bond business, your objective is to provide collateral for individuals that have been incarcerated so that they can be freed from jail.
Asides from providing collateral, you will also need to give the bondsman 10 percent of the bail money. Once this has been done, you then help secure the release of the incarcerated individual as they await trial. The pitfall with this business is that if the defendant fails to show up in court, you are required to track him down and turn him in or pay for the entire bail. This is why you need to be very smart before starting this business.
Just like any other business, it is essential that you study the business thoroughly before going into it so that you do not end up being overwhelmed when you encounter challenges or threats.
Depending on the state you will be operating from, you might be required to become a private detective or have experience in law enforcement. Some states might require a background check or fingerprinting. All these and many more might be required before you are able to get the license to become a bail bondsman.
Starting a Bail Bonds Business – A Complete Guide
- Industry Overview
The bail bond service industry is a fragmented industry as there are no companies that have a dominant market share. According to IBISWorld, the industry generates $2 billion annually with a 2.7 percent growth from the period of 2011 to 2016. There are more than 24,000 bail bond businesses in the United States of America employing more than 29,000 people.
It has been estimated that the future revenue of the industry will be largely hinged on how regulated the industry will have been by that time. One of the factors that has led to a growth of revenue in this industry is a decline in personal savings. Likewise, a decline in crime rate is likely to stunt the industry’s growth.
According to research from IBISWorld, the bail bonds service industry has experienced a stable growth for five years (2011 – 2016). Even though, the business can be pretty unstable, industry operators have had few losses as they have been permitted by law to use whatever means to get defendants who have skipped bail or their court hearings and this has led to bail bondsmen making use of bounty hunters to ensure that defaulters are tracked and produced in court. There are many that have misgivings about the business and view it as one that favors the wealthy as well as high-risk criminals over others.
The industry is one that is largely fragmented with a low level of concentration as there is no operator that is regarded as significant enough to hold sway or have a dominant market share in the industry. This has led to there being a large number of small and independent players in the industry. The barrier to entry for new entrants is quite moderate as not only must operators get a mandatory license before they can operate, it is also required that they comply with the regulatory requirements of the state they are operating in.
Bail bond services have had a pretty good time in the past two decades as out of the 750,000 Americans that have been in jail, 80 percent cannot afford bail and have no hope, while only a few will be able to meet the bail conditions via a bail bond service.
This has caused the industry to come under attack from media organizations, public officials and criminal justice advocacy groups for catering to the wealthy only as those that are left behind bars to await trial are those who were offered bail conditions but cannot meet it. According to the Bureau of Justice Statistics (BJS), only 38 percent of defendants in 2009 were released because they could meet the bail conditions, about 30 percent secured a bail bond.
According to Prweb, the bail bond service industry has had a rough time from the periods of 2007 to 2012 and things began to be bad for the industry as the economy improved. The losses experienced by the industry amounted to over 5.2 percent annually due to the fact that more people started saving their money and using this to pay their own bail.
As at 2008, personal savings for consumers rose to more than 125 percent, allowing the revenue of the industry to fall by more than 22 percent. Another thing that also caused industry revenue to decline is the decline in the number of crimes committed which led to less people seeking the services of a bail bond company.
The industry’s fortune changed in 2011 as personal savings by clients began to fall which stimulated a demand for bail bonds and caused a 1.4 percent increase that generated over $698 million for that year alone. The industry according to Prweb, has a low market share concentration as there is only one significant player that is holding a significant share of the revenue of the industry. The periods between 2007 and 2012 saw concentration increasing as many bail bonds companies left the industry due to low profit margins from falling crime rates and high overhead costs.
Another reason why many companies left the industry is due to the fact that the five year period from 2012 to 2017, saw less crimes being committed thereby reducing the number of bails that were to be paid. Also, regulation by certain states where industry operators are being prohibited from selling bonds is responsible for more companies exiting the industry.
Also, some states have eliminated the payment plan option, enabling clients to make a down payment on bail bond and then make monthly payments, which has seriously reduced the effectiveness of the bail bond company.
Starting a Bail Bonds Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that require the services of a bail bond company are usually not restricted to those who are criminals but cuts across those who might have been arrested for crimes they were not guilty of or have no sufficient evidence against them and have no personal savings to bail themselves.
These include fathers, mothers, single people, business executives, crime war lords, low level celebrities and others who wish to use the services of a bail bonds man. These shows that those who require the services of a bail bond company are not limited but diverse.
List of niche ideas within this particular business that one can specialize in
A bail bond company is one which provides the required bail for a suspect and then ensures that the defendant shows up in court for a hearing in exchange for a percentage usually between 8 and 10. The industry is one that is filled with a lot of operators and so most of the operators are looking out for ways to stand out.
Even though the industry isn’t one that provides a lot of niches for operators, several small scale operators due to a strict budget prefer to focus on offering just one service, while those that are operating on a large scale can afford to offer all the services. Below therefore are some of the niche areas that a bail bond company can decide to major in;
- Deposit Bond
- Collateral Bond
- Surety Bond
The Level of Competition in Bail Bond Service Industry
The level of competition in the bail bond service industry depends on the location of the business as to be able to compete effectively against another competitor; you would need to be operating in the same state, region or county.
While this is a business that can be run from home, it is usually best to restrict your activities to your locality especially as there are different requirements from states as regards starting or running a bail bond business in the United States of America.
If you therefore decide to run your bail bond business in the United States of America, you will be meeting stiff competition from others all over the country and it is best you focus on giving the best service.
List of Well – Known Brands in the Bail Bonds Industry
The bail bond business is a fragmented one with low market concentration and as a result, there aren’t many outstanding or well-known bail bond businesses nationally except within the state, region or locality they might be operating from.
What makes these bail bond businesses outstanding is the fact that they have a well-structured business, put a lot into advertising and promoting their businesses and have fair terms for their clients. Below are the well-known bail bond businesses in the United States of America;
- Aladdin Bail Bonds
- Mitchell Bail Bond Services
- David Chapman Agency
According to a 2015 report from the Bureau of Justice Statistics (BJS), most of the growing population in jail was due to an increase in inmates that were not convicted. The reason why this is so is due to the fact most of American households have limited savings. This is why bailing themselves through personal savings is such a problem.
According to a survey in New York City, 15 percent of defendants whose bail was pegged at $500 or less were not able to come up with bail money, while 47 percent of defendants could not afford their bail.
Not being able to afford bail would mean that a defendant would have to plead guilty so as not to spend a long time in jail till the case is resolved which could take years, this is why people who do not want to plead guilty, will prefer to get in touch with a bail bond company so that they could get out of jail.
The taxpayer usually ends up paying for those that have to stay in jail till their trial comes up and according to the United States Department of Justice; more than $22.2 billion in 2011 was spent on jails.
Starting Your Bail Bond Company from Scratch vs Buying a Franchise
Both options has its pros and cons and so it is necessary that you outline your business goals and objectives so that what you want aligns with your decision. The bail bond business is however not one that has started franchising yet and so this means starting from the scratch is the only option available.
In starting from the scratch, it is important that you understand the business you intend going into, this is so you would make as few mistakes as possible. This is why it is vital that you write out a business plan that will map out how your business will run.
Possible Threats and Challenges You Will Face When Starting a Bail Bond Company
As with any other business, there are several threats and challenges that you might encounter during the course of starting and running your bail bond business. If you have conducted a thorough research on this business, then facing challenges and threats are not likely to faze you as you would have been prepared for it.
Therefore, some of the threats and challenges that you are likely to face during the course of starting or running the bail bond business are; strict regulations from the government (state or local), high savings by the target market, intense competition from already existing and new entrants, high start-up costs, losses incurred from defaulting defendants either due to them skipping their court hearing, death or any other circumstances.
Starting a Bail Bonds Business – Legal Matters
- Best legal entity to use for this type of business
There are several factors that you would need to consider when choosing your legal entity such as liabilities, flexibility, ease of set-up and taxation. If you are confused on what legal entity to go for, then it is advisable to engage the services of an attorney or an accountant.
In the United States of America, there are basically four business structures that an entrepreneur can go for and these are; sole proprietorship, partnership, corporation (S Corporation and C Corporation) and Limited Liability Company.
Most entrepreneurs starting this business usually prefer to use the corporation form of entity in starting the business. In a corporation, the business is regarded as a separate entity from the owners. This means that should anything go wrong during the process of running the business, the liability are limited strictly to what they put in the business. Also, a corporation is not an easy legal entity to set up as it it usually involves a lot of paperwork.
There are two types of corporation – the S and C Corporation and entrepreneurs looking to start the bail bond business must seek the services of an attorney who understands the industry well and also the states regulations regarding the industry in order to be able to help them make the right choice.
Catchy Business Name Ideas Suitable for a Bail Bond Company
Choosing a business name for your bail bond business is very important as the name you should choose for your business should be one that is unique, creative, easily memorable and linked to the industry which you are in. The name you choose will have an impact on your business in the near or far future, so you need to be careful with what you pick.
Before picking a name, make sure you have back-ups so that you can easily pick another name if your intended name is already in use. If you are therefore considering starting your own bail bond business, here are some names that you can choose from;
- Dan Bail Bond Agency
- Snappy Bail Bond Services
- Dermot Bail Bonds
- Big Joe Bail Bonds
- Chris Bail Bonds
Having insurance policies is very important for individuals and especially businesses in the United States of America. The bail bond business is one that cannot be run without being backed by insurance; therefore, it is in your businesses’ best interest to purchase certain basic insurance policies.
If you are confused as regards what insurance policies you would need for your business, it is essential that you consult an insurance agent or broker who would help you choose what is best for your bail bond business. Below therefore are some of the basic insurance policies that you would need to consider purchasing in order to start your own bail bond business in the United States of America
- Auto Insurance
- General Insurance
- Workers’ Compensation Insurance
- Payment Protection Insurance
- Errors and Omission Insurance
- Business Owner’s Policy Group Insurance
Intellectual Property Protection/Trademark
Running a bail bond service business is basically standing as surety for a suspect till they appear in court and have their case closed by the judge. The bail bondsman provides a certain service to the suspect in exchange for 8 to 10 percent of the total bail amount. This is therefore a service oriented business and there is no need applying for an intellectual property protection as there are no ideas or patents that can be created or stolen during the course of starting or running the business.
Is Professional Certification Needed to Run a Bail Bonds Business?
Even though there are several strict requirements before one can start a bail bond business, having professional certification is not one of them. This is because this is a business that requires your services to the state and to defendants and you are expected to conduct thorough research before standing in for any defendant.
Depending on the state where you will be operating from, it is important that you know what the requirements are as some states expect you to have had an experience in law enforcement or become a private detective before you can apply for license to become a bail bondsman.
List of Legal Documents You Need to Run a Bail Bond Company
Once you intend starting your bail bond business, you must ensure that you have carried out all the necessary research about the business so that you will know what documents are required from you from the authorities of the region or city where you intend operating from. Having the right legal documents in place before starting a business is very necessary as authorities take the issue of legal documentation very seriously.
Below therefore are some of the basic legal documents that you are expected to have if you intend to run your own bail bond company in the United States of America;
- Certificate of Incorporation
- Operating Agreement
- Business License
- Business Plan
- Contractual Agreement
- Insurance Policies
- Driver’s License
- Bail Bond’s License
- Employment Agreement
- Non-Disclosure Agreement
- Employer Identification Number (EIN)
- Federal Tax Identification Number
Financing Your Bail Bond Company
Most entrepreneurs do not always have the necessary finance they need to start their business and so they always have to source for funds from other options. Sourcing for funds might not be easy but it is one of the tasks that an entrepreneur has to face. This is why having a good business plan is very important as with a comprehensive business plan, you can easily convince investors to invest in your business.
Below therefore are some of the options available to you to source for start-up capital for your bail bond business;
- Raising part of the start-up capital from personal savings and sale of properties
- Sourcing for soft loan from friends and family members
- Applying for loan from the bank
- Sourcing for funds from private investors
Choosing a Suitable Location for your Bail Bonds Business
If you intend starting your bail bond business from home, then you would certainly be spending less than those that intend to start the business from a commercially leased facility. While you might however be spending less when starting your business from home, there are prices that you might have to pay such as advertising and promoting your business, where you will need to put in more and engage in more networking than someone who is operating from a commercially leased facility.
However, once your business starts to grow and you have been running it from home, it is important that you move to a commercially leased or rented property where you will be in close proximity to either a courthouse or jail. This will then allow more people to know about your business without you having to put in too much effort in marketing and promoting your business.
It is important to note that a good location where you will be in close proximity to a jail or courthouse will not come cheap, therefore you should ensure that you have set aside enough to rent the property for a period of time. If you are uncertain or are a little green as regards getting a suitable location, then engaging the services of a real estate agent or consultant is very vital so that they can help you choose the right location within your budget for your business.
Therefore to get a suitable location for your bail bond company, it is essential that you get a place that is close to your target market, and ensure that your office is conspicuous and highly visible. It is also important that you have set aside a budget before getting the location and try to stick to that budget so as not to cause a strain on your overall budget.
Starting a Bail Bonds Business – Technical & Manpower Details
The bail bond company business is a business that can be run from home especially if you are starting your business on a strained budget. There are equipment that you must have in your home if you want your business to run smoothly. Some of the equipment can be gotten for fairly used and it is important that you check out the fairly used equipment before getting them so that you don’t spend money repairing them.
The equipment and tools you would therefore need to start and run your bail bond business efficiently are; cell phone, fax line, computer, scanner, printer, land line phone and answering service. It is vital that you also get a website and the 800 # code.
Regarding the number of employees that you would need to be able to run your bail bond company, you should consider hiring the following; Chief Executive Officer (owner), admin and human resources manager, business development and marketing executive, front desk officer, accountant and cleaner.
Therefore from the above breakdown, you will need at least 6 key staff in order to run your bail bond company effectively.
The Service Delivery Process of a Bail Bond Company
The service process involved in a bail bond usually starts after a suspect has been arrested, booked, fingerprinted, have their mug shot taken and a statement written. After being processed and taken to a cell, the suspect is given a phone to request for bail which can either come from their friends and family members or from a bail bond agency.
Once the suspect goes before the judge, his or her criminal history, flight risk as well as level of crime is looked into before bail terms and release conditions are established. After the bail has been determined and the defendant is unable to pay, then a bail bond service is called in to help pay the whole bail.
Where the bail bond company makes its profit from is in the percentage of the total bail which is usually set between 8 to 10 percent. The bail bond company not only pays the bail but has to ensure that the defendant appears in court when due. Once the defendant’s case has been handled and closed, bail money is then released back to bail bond agency. Should the defendant fail to appear in court, the bail bond agency has the right to use whatever means to get the defendant to attend or lose the bail money.
Starting a Bail Bonds Business – The Marketing Plan
- Marketing ideas and strategies
Marketing your bail bond company is very important if you intend to prove how credible you are to the authorities as well as your clients. However to ensure that you have effective marketing ideas and strategies that will give your bail bond business the recognition it deserves, you will need to conduct a market survey first.
The purpose of conducting a market research before drafting your intended marketing strategies is so that you can understand the industry you intend going into, identify your target market and understand what they would be expecting from you and what you should expect from them as well.
Once you have assembled all the necessary data and facts from your market research, you can then start to draft your marketing ideas and strategies for your bail bond business in accordance with your corporate goals and objectives. You will also be able to know what exactly to set aside – in terms of marketing budget – in order to have the most effective marketing campaigns.
There are a number of channels that you can use to market your bail bond business and you might need to study your competitors to see what marketing strategies best work for them and if that could work for you as well. Be that as it may, the internet has become one of the commonest forms for businesses to market their products and services. Not only does the internet have a wide reach, it is also less costly than others.
Below therefore are some of the platforms that you can make use of to market your bail bond business;
- Introduce your bail bond business by sending a letter and business cards to journalists, law enforcement, workers in the judiciary and other stakeholders in the industry
- Ensure that your bail bond business is listed in the local phone books, in yellow pages as well as on online directories
- Install billboards in strategic locations all around the city where you are operating from
- Ensure that you place adverts in local newspapers and specific magazines as well as on radio and television stations
- Empower your marketing executives to carry out direct marketing
- Use your website and social media platforms such as Facebook, Twitter, Google Plus and Linkedin to vigorously promote and market your bail bond company
Strategies to Boost Your Bail Bonds Brand Awareness and Create Your Corporate Identity
Due to how competitive the bail bond service industry is, it is vital that you seek for ways to promote and boost your brand awareness, while also creating a corporate identity for your business. Publicity is very important for a business because it not only generates revenue for the business but also helps the intended target market to perceive the business in a positive light, which is why already established and successful businesses do not mind spending a lot of money regularly to publicize and promote their business.
Even though the bail bond service industry is fragmented and has low concentration, there are still bail bond companies that stand out and this is due to the fact that they want their business to grow beyond the locality in which they are operating from, so if this is your desire for your business, then you are better off promoting your business.
Most entrepreneurs when starting this business usually engage the services of a publicity consultant to help them create the right strategies that would enable them promote their businesses effectively. These publicity consultants are usually very experienced and have thorough understanding of how the industry works, and are always able to help draft the right strategies that align with the goals and objectives of the business.
Some of the platforms that you can leverage on to boost the awareness of your brand as well as to promote and advertise your business are;
- Encourage loyal clients to help spread the word about your business
- Distribute handbills and business cards as well as paste fliers in strategic locations
- Locate your bail bond business in a strategic and conspicuous location
- Place adverts in local newspapers and magazines as well as on radio and television stations
- Install billboards in strategic locations all around the city where you are operating from
- Use social media platforms such as Facebook, Twitter, Linkedin and Google Plus to promote your business