Starting your own investigative company is an exciting, if risky, endeavor.
Here are some ways to avoid mistakes and save yourself a ton of headaches as you’re just starting out.
This article was adapted from Maguire’s new book, The Business of Private Investigation: Tips and Tricks To Jump Start Your Agency! which is available on Amazon.
As a startup, you’ll initially want to appear to be a larger, more established business than you actually are. Studies have shown that many customers are more comfortable with larger enterprises. OK, fine — you can easily pretend to be one without being deceptive.
Below are a few ways to make your firm look bigger and snazzier — at least, until it actually it. These will provide a professional image while making your life easier and saving you money.
1. Create a First-Class Website
Your website is the world’s first impression of your business. Studies show that you have about three seconds to make a good impression on the web before site visitors give up and move on.
Yep, it’s that quick. If consumers see an outdated and poorly constructed site, they simply believe your business is just that: outdated and poorly constructed. Clean, crisp, informative, and quick to load — that’s what people want to see.
When designing your site, put yourself into a potential client’s shoes: He has a problem, and he’s just Googled “Boston private investigator” and some other term that defines his problem, such as “infidelity” or “adoption search.” Does your site communicate to the searcher that you are professional enough to solve his problem?
You’d better hope so, because you have about three seconds for a potential client to make a decision.
2. Use a Service to Find Freelancers
Your new firm is too small to hire a full-time tech person, graphic designer, or canvasser, so you’ll need to hire that work out. Where can you find a capable contractor?
I’ve found discounted but professional vendors on a site called Upwork. Upwork (formally Elance) links people who need jobs done with folks who have the technical and business skills to complete the work. I’ve used this site for jobs including website creation to cold calling. It’s all there and priced by the specific job.
I’ve found Upwork to be a game-changing resource. Need a transcript fast? Dictate your reports in the evening and have them fully transcribed in your inbox by morning.
Be sure to look for positive reviews from the individual vendors, though. Also note that some vendors are not native English speakers, so be clear in your instructions of how you want the tasks delivered.
If you use my Upwork recommendation, I just saved you time and money! Now you won’t have to waste time searching for specialists to hire. You’re welcome.
One of Upwork’s competitors is Fiverr, another site where you can find independent vendors. I’m currently gravitating toward Fiverr. I find the interface a little more user friendly, and they also have a great app that allows you to track the jobs you’ve posted and communicate directly with the vendor.
3. Try a Virtual Office
The entrepreneurs behind this service are geniuses.
I’d been in business for more than a decade before I finally realized that I’d never had a client in my office. Not once. The office space we rented was terrific, a prime downtown location. We met with our employees regularly, but we never had clients in our office. That prime space cost us $650.00 per month, $7,800.00 annually — a big price for no client visitors.
We decided to move to a virtual office. Davinci and similar companies offer meeting space when required (for an extra fee) and a premier address such as State Street in Boston or Beverly Hills in California. Davinci also provides secretary services, if needed.
Prices range from $65.00 to $250.00 per month. That price gives you the the right to use any of their meeting rooms in any city.
Check it out. It’s worth a look.
4. Use a Virtual Phone System
We’ve used Grasshopper, a virtual phone system, for several years now. Phone calls come into an 800 number and are immediately forwarded to whichever phone you choose. What makes it ideal for our industry is that you can designate which employee will receive business calls. A fax number (if you still use one) is also included in the basic price.
The service also provides a customizable phone tree for different departments or employees. The services then transfer the calls to the employee’s cell phone, allowing for constant business contact, even if people are working remotely. Voicemails are automatically transferred to your email. This service fits seamlessly into our business. It’s perfect for a small PI firm.
5. Factor Your Invoices
If you’re contracting with insurance companies, you can count on waiting at least thirty days to be paid. That’s a best-case scenario. In all likelihood, you’ll wait more like sixty to ninety days to get paid.
This is one of the most frustrating parts of this business: You conduct a blockbuster case and everyone celebrates, yet your invoices sit unpaid on the adjuster’s desk. This type of delay in getting paid will quickly put a serious crimp in your cashflow. When several invoices are outstanding and payroll is due, you simply won’t survive for long. So what to do?
“Factoring” invoices basically means selling your invoices to a third-party company, at a discount, in exchange for getting paid faster. The factoring company takes a percentage, usually between 2% and 5%, and pays you within days. The quicker the insurance company (or other client) pays the invoice, the less the factoring company charges you.
Most factoring companies require a certain monthly volume and want the payment checks mailed directly to their offices. It’s best to set this arrangement up prior to beginning work with a new insurance or investigative client, as some of your clients may not like this arrangement. The factoring company may also require some type of proof the investigative work was actually requested. You may have to provide an email form with the adjuster/requestor. Some factoring companies may also request/require proof the work was completed. Do not provide your investigative report to the factoring company — that information is confidential.
Keeping all of this in mind, factoring invoices may provide relief to the cash crunch that traditional invoicing causes.
6. Charge Retainers, and Sign Contracts for Every Job — If Possible
Whenever possible, obtain a retainer before you begin work (not available in the insurance industry, sorry!). Use those allotted funds as you go during your investigation, and warn the client when funds are getting low.
You can research and purchase boilerplate retainer agreements online and adapt them to your needs. If you do alter the retainer agreement, have an attorney review the document before you use it in your business. If the contract stipulates a retainer, be sure the agreement spells out clearly what happens to unused funds.
Getting paid up front is the best way to go. If possible, charge enough to finish the job, so you won’t have to go back for more money. This also goes for attorney clients: Don’t get the idea that attorneys shouldn’t have to pay a retainer. I’ve been stiffed on invoices by several attorneys, so assume nothing.
Let my loss be your gain: Always get paid first!
7. Consider Carefully What You Will Charge
Rates vary widely in the investigative industry, depending on your specialty, professional experience, and client base. If your focus is the insurance sector, rates usually fall within the $60-80/hour range. The middle of the pack is probably $75 per hour. We charged $80 per hour, as our main focus was long-term disability surveillance. Typically, long-term disability case managers assign three to five days of surveillance at a time. So for a three-day surveillance job, we would usually bill $1920.00. If five-day surveillance was ordered, we’d bill $3200.00.
When dealing with insurance companies, it’s usually best to charge a flat rate, as adjusters don’t want to track mileage. This gets tricky, so you’ll need to consider all of your costs very carefully before agreeing to a flat fee model. Keep an eye on your database costs — multiple searches can eat through your flat fee profit fast!
If you work with attorneys and private clients, you can probably charge more. We charge attorneys $85 and private clients (domestic surveillance) $90. When working with private clients, I strongly recommend that you do a background check on the client before you begin work. You don’t need to get mixed up with a criminal or a tinfoil hat type. As for attorneys, there’s no harm in asking around. The legal community isn’t large; reputations travel fast.
Investigating unknown clients a little bit before you agree to work for them is a habit you will never regret.
About the Author:
Barry Maguire is a twenty-year veteran of the surveillance industry. He has conducted and /or supervised more than 5,000 surveillance private investigations cases to date. Barry has owned and operated his own firm, now called Impact Due Diligence, since 2001. He lives in the Metro Boston area with his wife and three children. Feel free to connect on LinkedIn.