How to Start a Bail Bonds Business | SkillsAndTech

The US bail bonds market is returning to growth after a few down years, so if you’re looking for an exciting and low-risk business with great potential, a bail bond business may be right for you!

You can do it from the comfort of your own home without having to shell out a big initial investment, making it doable for almost any entrepreneur. Still, getting a piece of the pie will require hard work and informed decisions.

Thankfully, you’ve come to the right place, as this step-by-step guide provides all the information you’ll need to develop and launch your own successful bail bonds business.

Let’s start bonding.

Table of Contents

Decide if the Business Is Right for You

Pros and cons

Because a bail bonds business primarily entails dealing with people and legalities, weighing the pros and cons is essential in measuring its viability. That’s why we’ve listed the information you need to know before setting your business in motion.

Pros

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Minimal investment to get started
High profit margin due to low fixed costs
The right insurance can decrease financial risk

Cons

Dealing with disreputable, criminal clientele
Some clients may not want to involve a third party

Bail bond industry trends

The pandemic has altered the economic landscape by increasing unemployment and financial losses. This has increased poverty and reduced disposable income for many US consumers. As a result, COVID-19 has shifted the bail bonds industry toward recovery.

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Industry size and growth

Industry size and past growth – The US bail bond services market is valued at more than $2 billion, after contracting 2.6% per year since 2017.
Growth forecast – The market size of the bail bond services industry is expected to increase 0.5% in 2022.
Number of businesses – The number of bail bonds businesses operating in the US has declined to just over 12,000, falling nearly 9% annually over the past 5 years.
Number of people employed – The industry employs nearly 25,000 people.

Trends and challenges

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Trends shaping the bail bond services industry include:

Some states are eliminating cash bail requirements
Fewer crimes and arrests because of pandemic

Challenges in the bail bond services industry include:

Bail reform legislation
Bail bondsmen are outlawed in some state

Demand hotspots

Most favorable states – The District of Columbia, New Mexico, and Alaska top the list of states with the highest poverty rates while Mississippi has the highest poverty rate and lowest disposable income.
Least favorable states – Illinois, Kentucky, Oregon, and Wisconsin have abolished commercial bail bonds.

What kind of people work in bail bonds?

Gender – Nearly 57% of all bail bond agents are female, while 43% are male.
Average level of education – 29% of bail bond agents hold a bachelor’s degree and 27% have an associate degree.
Average age – The average age of a bail bond agent is 43 years old.

How much does it cost to start a bail bond business?

Setting up your own bail bonds business will set you back between $4,000 and $13,000, with an average cost of $8,500. Assuming you set up a home office to start, a big portion of your budget will be allocated to marketing in order to gain clientele, in addition to computers and other office equipment.

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Insurance can also be a recurring but necessary expense as bail bonds businesses benefit significantly from protecting their legal risk associated with forfeiture of the bail amount. A $2 million general liability insurance policy usually costs around $100 to $120 per month. If you have more funds for insurance, you can secure broader coverage.

The equipment you would need to get your bail bond business up and running is fairly simple. Some of them may already be in your possession:

Mobile phone
Fax line
Computer
Printers
Answering device
Landline
Scanners

Start-up Costs	Min	Max	Average
Mandatory pre-licensing class	$750	$750	$750
Company incorporation, licenses, and permits	$250	$750	$500
Insurance	$350	$1,650	$1,000
Computers and equipment	$1,000	$3,000	$2,000
Branding, marketing, and advertising	$1,000	$5,000	$3,000
Website	$250	$1,000	$625
Hiring	$0	$350	$175
Miscellaneous	$400	$500	$450
TOTAL	$4,000	$13,000	$8,500

How much can you earn from a bail bond business?

Considering that only a small share of defendants show up to their court hearing, being a bail bonds provider can be an attractive venture. But to measure profitability, we need to consider the average bail amount and the average fee charged by bail bonds firms.

The median bail amount for US felonies is about $10,000, with bail bonds companies generally charging clients 10%-15% of that amount for its services. This means that for every $10,000 bail you service, you’ll take in about $1,000 in revenue.

For more severe crimes that incur bail amounts up to $1 million, the fee can fall as low as 1%. But even with the reduced percentage, it’s still a win for you because of the higher monetary value. For example, a $1 million bail bond will provide your firm with $10,000 in revenue.

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In your first year or two, you might service a little more than half the industry average of 177 clients. If you’re able to service 100 clients in a year at the $10,000 median bail, that would mean $100,000 in annual revenue. With a profit margin of 80%, you would end up with $80,000 in profit.

After a couple of years you might be able to provide bonds for 200 clients, which would give you $200,000 in annual revenue and about $110,000 in profit, due to higher overhead and a margin of 55%.

What barriers to entry are there?

Setting up your bail bonds service can be challenging because it must meet some very stringent requirements.

The industry has an extremely regulated space with extensive requirements like background checks and fingerprinting.

Before you get your foot in the door, you’ll have to make sure you have all the necessary paperwork and pass the background check. You’ll also need to assess whether you meet all of the requirements to become a bail bonds agent. The main requirements are:

Over 18 years of age
High school diploma or GED
Attend pre-licensing class and pass exam with at least 70% score
Apply for state license and undergo background check and fingerprinting
Prove ability to meet financial obligations; may require aligning with a bail insurance/surety firm

On top of this, certain laws and regulations dictate how bail agents do their business. From how you execute your bond to the way you can interact with law enforcement and clients, different states have specific regulations to which you must adhere.

Some states prohibit setting up a private bail bond business.

The laws vary by state. Nebraska has eliminated commercial bail bond businesses, for instance, while in Virginia commercial bail bond agents must have insurance. So, make sure you double-check your state’s requirements.

Bail bond agents must undergo an approved training program to become licensed.

To become a bail bond agent, you’ll need a license. This will require you to complete a state-accredited course and exam. Some states require apprenticeship work and/or Continuing Education Credits, so it’s a good idea to confirm with your local government.

Hone Your Idea

Now that you know what’s involved in starting a bail bonds business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Why? Identify an opportunity

The bail bonds business has grown over the years mainly due to the fact that most Americans live paycheck to paycheck and don’t have enough saved up for emergencies. The latest survey suggests that nearly 70% of Americans have less than $1,000 in savings.

This presents an opportunity for bonds services to step in and provide the essential financial backing that defendants need to stay out of jail during their trial period. As such, the ideal environment for a bail bond business to flourish are areas that have:

High crime rate
High poverty rate
Low disposable income

To guide you better, we’ve compiled the list of states where the above-mentioned three attributes are favorable for a bail bonds business that new entrants can seize:

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What? Determine your products or service

Once you’re ready to step into the business, you’ll need to do a feasibility study of the city or state where you want to open up your business. Speaking with law enforcement officers, defense attorneys, prosecutors, and competitors will help you understand the local market dynamics and the demand for a bail bond service in your target area.

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There are many types of bails that are granted by the court. These vary based on jurisdiction and your clients can request any of them.

Here’s a list of some of the most common types of bails:

Surety bond
Citation release
Property bond
Recognizance
Unsecured bail
Immigration bond
Combinations
Pretrial services
Conditions of release
Protective order
Cash-only bail

How much should you charge for the service?

Most bail bond businesses charge 10%-15% of the total bail. However, there’s room for flexibility depending on factors like the bail amount, the severity of charges, and the client’s reputation. For severe crimes with huge bail amounts, some companies charge as little as 1%.

Indeed, many bail bond businesses offer a sliding rate. A $10,000 bond will mean a 15% fee, for instance, while a $100,000 bond will result in a 5% fee.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

The key target market for a bail bond business is individuals who get arrested by law enforcement agencies and are charged with minor to severe criminal offenses in the court of law.

You may get clients by approaching them directly, or by reaching out to them indirectly through lawyers and law enforcement. Building rapport with defense attorneys and law enforcement is a great way to get referrals because these are the people who regularly deal with your target market.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. Most bail bond businesses prefer to establish an office near city courts, police stations, and jails. They usually target customers by putting up visible signage to indicate their office location.

Find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe. When choosing a commercial space, you may want to follow these rules of thumb:

Central location accessible via public transport
Ventilated and spacious, with good natural light
Flexible lease that can be extended as your business grows
Ready-to-use space with no major renovations or repairs needed

Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
The name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “stitches” or “embroidery”, boosts SEO
Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
Avoid location-based names that might hinder future expansion
Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart.

Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
Product and Services: Describe your embroidery products and services in detail.
Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to embroidery.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your embroidery business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding an embroidery business. You might also try crowdfunding if you have an innovative concept.

Apply for Licenses/Permits

Starting an embroidery business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your embroidery business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

If you want to be competitive, you’ll probably need good embroidery design software such as Hatch Embroidery, Stitch Era, and EmbroideryStudio to create designs from scratch or by scanning images.

Accounting

Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:

Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
Instagram: Same benefits as Facebook but with different target audiences.
Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now.” This can sharply increase purchases.
Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as the first corporate client each month gets half off.
Signage – Put up eye-catching signage at your store and website.
Flyering – Distribute flyers in your neighborhood and at industry events.
In-Person Sales – Offer your products/services at local markets and trade shows.
Post a video – Post a video about your embroidery business. Use humor and maybe it will go viral!
Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
Seek out referrals – Offer incentives to generate customer referrals to new clients.
Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your embroidery business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your embroidery business could be:

Best embroidery skills in town!
Wildest, most creative designs
Digital embroidery creations for businesses large and small

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an embroidery business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in embroidery for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in embroidery. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an embroidery business would include:

Embroiderer: Your embroiderer is at the heart of your operations, that’s why this person must be qualified and experienced enough to handle large, multiple assignments.
Digital content creator: Building a strong digital footprint takes continuous effort and requires a well-thought-out content strategy that a digital content creator can help you with.
Sales executive: A sales executive will be focused on closing sales online or through face-to-face encounters with prospective customers in the shop to boost revenue.
Operations assistant: Your operations assistant will be on top of all operational, clerical, procurement, and administrative tasks so you can better focus on running the business.

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Start Making Money!

Now that you have an in-depth understanding of the embroidery market, it’s time to roll up your sleeves and put your plans into action. The hardest part will be the first 100 days of business development, when you’re still trying to find clients.

But you can make this work if you put in a lot of hard work and use the marketing strategies we’ve outlined above. You can also do affiliate marketing, where you compensate third parties in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other.

You’re now ready to start embroidering and making good money!