Before you hang a shingle, set yourself up for success by doing your due diligence.
The world of the private investigator has evolved from a simple to a complex business. Early in our history, the private investigator primarily operated like a law enforcement officer but was employed by an individual or corporate entity. The basic qualifications of the private investigator were being able to find people who may or may not have committed a crime and, when the circumstances required, being able to shoot first and accurately.
There was no public outcry for restrictions on their activities because there was a general public opinion that the alleged perpetrators deserved what happened to them. There was also a common opinion that a person had a right to protect his personal reputation and business interests by any means possible.
We now call that “vigilante justice,” and we’re generally not in favor of it, as a society. In most states, private investigators are now licensed and regulated, and they certainly can’t operate “by any means possible.”
That said, private investigation is a fascinating field and a viable business model if you approach it with deliberation. Here’s how to do that.
First, make a plan.
Starting a private investigation business requires a host of skills. Here are some things to consider before you begin:
• Define your market. Can you provide a specific service that has adequate market potential?
• Are you willing to develop a business niche and become an expert in this area (instead of offering every possible service under the sun)?
• Are you computer literate? How competent are you with database, accounting, word processing, and contract management programs?
• Are you a self-starter? You get what you work for. No one will motivate you or set deadlines. That’s all on you.
• Are you willing to promote your investigative services? Can you write and publish marketing materials? Are you willing to be a public speaker? Writing and speaking are the best marketing tools available. Don’t “preach to the choir” — get in front of potential client groups.
• Are you willing to develop a solid business plan? This is essential to identify markets, services, and business goal benchmarks.
• Do you have the financial and physical resources to set up an office? What equipment and facilities will you need?
• What are the fee and expense schedules of your competitors? How will you set your fee schedule to remain competitive while promoting a professional image?
• What market areas should you target for business opportunities? What is your competition in these areas?
Doing the work up front to develop a niche, a business plan, and a marketing strategy are key to setting yourself up to succeed once you hang a shingle. Along the way, you must always present a professional image, with honesty and ethics at the core.
In this business, your reputation for competency and ethics is your most important professional asset. If you cut ethical corners at the beginning of your career, no degree of investigative skill will never rescue your reputation.
Now let’s ask some of those tough questions I’ve touched on above in a little more detail:
What is the future of the investigative business?
Start with some general market research about the profession. Among several market research firms, the Fredonia Group conducts research in the private security industry.
Then dive into the specifics of your niche and your regional market.
What are the governmental or regulatory factors in this business?
Because of public concerns for privacy and identity theft, federal, state, and local governments have placed many restrictions on information that was previously accessible through data research companies. Most states require licensing for private investigators, to protect the public from incompetent and unscrupulous investigators. A few states don’t. They should: it only takes one PI committing a felony to besmirch our entire profession.
The increasing privacy concerns and restrictions may seriously affect your future business capabilities. When choosing a direction for your business, find out what’s possible for you to do, given the current regulatory climate.
Where can I get advice on starting a business?
First, seek legal and business advice from a trusted professional. This can be an expensive process, but it’s a lot less expensive than making bad initial decisions that will lead to business failure.
The Small Business Administration provides many services to help you start your business. Along with documents, they frequently have business seminars that can be valuable for new entrepreneurs. The following are some SBA services:
• Business loans for women
• Contract assistance programs
• Disaster assistance
• Funding programs
• SBA grants
• SBA loans
The RSVP Program of the Corporation for National and Community Service have experienced retirees from the business world who can advise business owners.
Another great source of business advice is to talk with your future colleagues. Go to conferences. Meet mid-career PIs, and if they’re open to it, ask them to share the problems they faced starting a business — and how they solved those problems. Most will be happy to talk to you. Fostering these relationships will likely pay off down the road in shared advice, referrals. and long-term friendships with folks who understand your world. Remember: it’s a two-way street. Offer something in return, even if it’s just the lunch tab.
Do I need a business plan?
Yes. A business plan forces you to develop a strategy for your business future. Business plan software is readily available and a wise investment. Also, you’ll usually need a formal business plan if you’re seeking investment funds or loans. The plan demonstrates to investors that you’ve conducted a thorough investigation to identify the potential for your business to succeed. It’s also a document you can refer to later to keep you on track if you’re losing yourself in the weeds of day-to-day operations.
Who are my competitors?
Find out what individuals and firms are working in your area, and study their reach, specialties, and reputations. Not every private investigator or firm in your area will be a competitor. Figure out whether there’s market space for you to occupy a specific niche, and develop your business reputation around this niche.
Do you have the resources, either as part of your business or through associates to compete in this niche and this geographical area? Know the answer before you begin.
What is the best corporate structure?
Each legal structure has advantages and disadvantages. Competent business attorneys can help you choose the best legal structure for your business. Some possibilities include:
• General C corporation
• Closed corporation
• Corporation
• Doing business as (DBA)
• Limited liability company
• Nonprofit corporation
• Partnerships
• Sole proprietorship
• Subchapter S corporation
How do I choose a business name?
Choose your business name carefully. Having a name that’s identical or similar to another business entity will cause you nothing but grief. The name will also have long-term consequences for your reputation and marketing efforts.
Consider also whether the name is transferrable down the road. Names such as “Madman Investigations” or “Killer Investigations” can be fatal to your reputation, and using your own name can make the business harder to sell or pass on.
How do I market my business?
Marketing never ends. If you wait for clients to come to you, you will fail. And the first step is branding.
“Branding” means creating an identifiable entity that makes a promise of value. It’s your company’s personality. Your branding must be consistent across your marketing endeavors, business cards, website, stationery, and brochures. A brand communicates your products, services, and initiatives, but also your mission and values — through imagery, design, and a few well-chosen words. If you can spend money on a professionally-designed logo and company website. Your site is often the first thing someone sees when they’re researching you, and it communicates volumes.
In the long run, your most important and lasting marketing tools are your expertise and reputation for quality work. You will fail if your performance falls short of your marketing claims. You cannot be everything to everybody all the time. Restrict your claims and business services to what you can professionally accomplish.
Another powerful marketing tool is simple professionalism — and attention to detail, Your documentation, whether it’s a case report or thank-you note to an attorney-client, should be printed on high-quality stationery. Use spell check, or ask someone to proof-read any materials that leave your office. Misspelled words, poor formatting, silly fonts, or tasteless, archaic graphic design will imperil your brand and your reputation.
There are so many ways to get the word out about your work. You’re only limited by your imagination and ambition. Some of these techniques are:
• Producing a professional quality brochure
• Public speaking at professional events
• Writing articles for local media or professional journals
• Joining professional associations and groups
• Being a subject matter expert for the media
• Working pro-bono cases
Do I need insurance?
It can be business suicide to operate without adequate insurance to protect your investment.
Errors and omissions (E&O) insurance protects you from mistakes that you make on the job. However, it doesn’t necessarily protect you from the misdeeds of your subcontractors.
That’s why you should require subcontractors to provide proof of E&O and workers’ compensation prior to doing any work for you. If you have a subcontractor without insurance, your E&O provider may cancel your policy or greatly increase the premiums.
Depending on state law, you may or may not required to have workers’ compensation if you don’t have employees. If your subcontractor does not have workers’ compensation, you may be liable for treble damages as a penalty for medical and rehabilitation costs as well as any legal settlement.
Proof of automobile liability insurance, as required by the state, should be another requirement for each subcontractor. If the subcontractor does not have the necessary insurance and has an accident while working for you, you may become a defendant in civil litigation.
Be a stickler when it comes to insurance. You can either enforce proof of insurance or suffer the possible financial and reputational consequences.
Where should I locate my office?
Many start-ups have their initial office in the owner’s residence. The first obvious advantage is keeping overhead low. Another is the ability to work in an informal environment at any time of the day.
The major disadvantages to a home office include the distractions of family activities, a temptation to work excessive hours because you live in your office, and a lack of meeting space.
I do not advise meeting with clients in your home office. Some might view it as informal or unprofessional. And it’s wise to keep a wall of separation between your family and your clients
One solution is to identify facilities with free or inexpensive meeting rooms. Many public libraries have rooms that you can reserve for meeting with clients. Some executive suite management offices have conference rooms that you can rent at a reasonable cost.
If you plan to open a physical office, think hard about the costs. Maintaining an office in a city center area can be an expensive proposition. Although there may be some prestige in having your office in a commercial building, the rent is based on square footage and may require a multiyear lease. You’ll also be charged proportional costs to maintain common areas in the building. Parking may cost extra for you and any employees, and downtown parking may be difficult for your clients when they visit your office. City center parking lots and garages are expensive, and metered parking is limited.
A third alternative is using the services of an executive suite facility. This provides you with office space and an address that’s identifiable with your business. These businesses may provide telephone services and will answer calls with your business name. They may also provide receptionist services, conference rooms with audio-visual capability, and clerical services.
Summary
Starting a private investigation business requires a wide range of skills, from investigative niches to marketing and business acumen. To be a successful businessperson, you’ll need to do a detailed and candid analysis of your abilities, market influences, and client development. Realistic (not idealistic) insight is a major requirement. Success takes time, but it’s attainable if you plan carefully and stay the course.
This article is excerpted from Basic Private Investigation: A Guide to Business Organization, Management, and Basic Investigative Skills for the Private Investigator, with permission of the author, William F. Blake.
About the author:
William F. Blake, MS, CPP, CFE has more than 60 years’ experience in civil and criminal investigations, security, executive protection, loss prevention, disaster recovery planning, and counterintelligence operations. He is a retired Chief Warrant Officer of the U.S. Army, where he served as Military Intelligence Special Agent and Criminal Investigation Division Special Agent. As a military instructor, he oversaw the criminal investigation curriculum attended by members of the Department of Defense. After retiring from the military, he worked as a security manager and investigator for a major bank. Blake has a B.S. in police administration and an M.S. in foundations of education and is the author of several books on security and investigations.