Do you want to start a private investigation firm? If YES, here is a complete guide to starting a private investigation business with NO money and NO experience plus a sample private investigation firm business plan template.
If you consider yourself a natural born problem solver, have an eye for facts and a keen mind for unraveling puzzles, then you can totally start up a private investigation business. Asides from the above factors, starting this business means that you need a high level of commitment as well as skill in order to run a standard and successful private investigation business.
However, before starting this business there are several requirements you would need to fulfill. Before starting your own private investigation business, you would need to determine what the licensing requirements are especially in the state where you will be operating your business from.
In most states, it is usually required that you have to, at least be 18 years, must have either actual or transferable experience, must be a citizen of the united states of America and must have a clean criminal record.
Also, some states usually require that those intending to start this business write exams and answer questions on trial protocol and interrogation procedures as well as generally have extensive knowledge of the industry. After determining what the requirements of your state is and then meeting them, you can then obtain a business license through the state and through the agency governing the private investigation agency licensing.
Also, depending on the state where you would be operating from, you might most likely be asked to obtain a general business license in addition to your other licenses so that you can be appropriately taxed. Insurance is also important as each state will most likely have the basic insurance requirements for your business.
You will also need to decide on the type of business structure that would best suit your business as there are various business structures available. However, for the purpose of starting a private investigation business, two kinds of business structures are appropriate such as sole proprietorship and Limited Liability Company (LLC).
You will also need to decide on the kind of services you will be offering and will need to carry out an in depth research in order to determine where your experience will most likely be of benefit to you.
So, if you have the relevant skills, have taken several certification courses and have met all the requirements of your state, then you are well on your way to starting your own private investigation business. If you are still having grey knowledge over some areas, then you might need to peruse this article below.
Steps to Starting a Private Investigation Business
1. Understand the Industry
Even though the government employs more than 2 million protective service workers, it is not enough as these people cannot oversee every situation. According to estimates, even though the rate of crime has diminished over the past decade, individuals and businesses have increasingly turned to private investigation services.
The private investigation service industry is one that provides a whole lot of valuable services to individuals and businesses.
As expected, there are no companies with a dominant market share in this industry that generates $6 billion in revenue. There are more than 24,000 private investigation businesses in the United States of America that has employed over 62,000 people. The industry between the periods of 2011 to 2016 had a projected percentage rate of 1.6%.
Operators in this industry usually make use of several services in order to generate revenue and they include; running background checks, carrying out general surveillance on the person or target of interest, and locating missing persons. There are other services performed in this industry as well and this has helped the industry perform well during the economic downturn experienced by the United States of America.
According to analysts, between the periods of 2014 to 2019, the industry is expected to continue to perform strongly, especially as it is expected that demand would increase and remain sustained in order to increase revenue as well as the profitability of the industry.
This prediction has encouraged new participants to enter the industry despite the stringent government rules and regulations. The barrier to entering this industry by new participants is medium and this is due to government regulations which vary depending on the state that the operator intends to operate from.
Most states usually require a significant work experience of at least 3 years, while some other states require that aspiring private investigators take written exams within two years before applying for a license. Also, extensive background checks and fingerprinting is usually conducted for aspiring private investigators.
The federal government in 2014 spent the sum of nearly $579 million for investigation services. It also awarded 3,754 contracts to 395 private investigation businesses. The investigation services referred here were those that offered skip tracing services, polygraph services, lie detection services, fingerprint services, missing person tracing services, detective agencies and private investigation services.
According to the United States Bureau of Labor and Statistics, the private investigation industry will grow by 11 percent from the period of 2012 to 2022. This increase in demand will arise from security concerns from individuals and businesses and also the need to protect confidential information.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a private investigator often comprise more of individuals and than businesses. It should however be noted that while there are niche related private investigators that offer services to only businesses, a lot more offer services to individuals.
However, more private investigation businesses in a bid to be more encompassing offer services to both individuals and businesses as well.
3. Decide What Niche to Concentrate On
The services offered by private investigation businesses are often varied and focused on a particular industry. In starting your own private investigation business, you will need to know which niche you will be good at and who your target market will be.
If you are a new business with little finance, you might want to stick to just one or two services and add others as you grow and expand. The important thing that must be constant in any service that you would be offering is quality and accuracy.
Below therefore are some of the several major niche ideas within this sector that you can specialize in. It should be noted that each niche idea has several minor niches under them;
- Domestic Investigator
- Insurance Fraud Investigator
- Computer Forensic Investigator
- Criminal Investigator
- Skip Trace Investigator
- Defense Investigator
The Level of Competition in the Industry
The location of each business has nothing to do with the level of competition in the private investigation industry and this is because the private investigation business is one that can be operated in several regions and locations even globally as well.
While you might be fighting to stand out in your local region, you might be more prominent across your state or even across the globe.
This means that if you grow your business well enough and have a degree of success, you will get international clients. This is because most clients do not mind the location where you are as long as you are able to give them accurate results within the agreed upon time-frame and ensure that it is done as privately as possible.
Your services will then ensure that you are able to get clients from any part of the world and not just limited to your location.
This does not mean that the private investigation industry is without stiff competition as there are several private investigation businesses everywhere offering all kinds of services – better and or different – in a bid to stand out in the industry.
Also, there are well established and large private investigation businesses that are able to dictate the trend of the overall industry and these and several more are those that you would be competing with in delivering services to your customers.
4. Know the Major Competitors in the Industry
Every industry has those that stand out either due to the services they offer or how long they have existed and are therefore deemed popular by others.
Becoming a popular brand is no mean feat as there are several strategies that would need to be deployed by these brands in order to remain relevant in the industry. Therefore below are the popular private investigation businesses here in the United States of America;
- FB Eyes
- NWI Investigative Group
- Lateo Surveillance Ltd
- ASG Investigations
Economic Analysis
Private investigation businesses arose out of the need to close the gap that the law enforcement and government couldn’t. This is because no matter how government has recruited enough people to be able to monitor crime and other such vices, the growing population will make the effort of the government look little.
There are also several services which are more suited to a private investigator than a law enforcement officer due to the amount of resources involved in carrying out these services.
Even though several private investigators have chosen a niche, most of the private investigators in the industry have however, chosen to offer clients a wide range of services in a bid to get a high share of the market, stand out and favorably compete against its competitors.
The industry is one where several requirements are usually needed before one can successfully start off in this field and depending on the state, more stringent rules might be applied from state level to the federal government level. Largely established private investigation businesses usually have more of an advantage than smaller ones especially when they offer more services than the smaller companies.
This has led to the large companies generating more revenue especially as regards bidding for jobs from the government. The smaller private investigation companies on the other hand have learnt to offer more services in order to be able to compete.
The private investigation business is one that requires a lot of working experience as it is a business where things can go awry in the field or in the course of getting a task done and the experience garnered can help one to have less hitches especially with government or law enforcement agencies.
5. Decide Whether to Buy a Franchise or Start from Scratch
As an entrepreneur, you have the choice of choosing whatever means that will allow you quickly get established with as little hitches as possible whilst making a name for yourself. While there might not be franchises for the private investigation business, one can either buy off an existing business or start from scratch.
6. Know the Possible Threats and Challenges You Will Face
Even though the private investigation business is not one that is technical or capital intensive, it is still a business that would encounter challenges and threats just like any other business. Having challenges in a business are from circumstances that could not either be controlled or were unforeseen, it does not in any way mean that one didn’t carry out due diligence.
This is why it is important to own a business plan which will allow you come up with different strategies which you can use to combat any challenges you may likely face.
Therefore some threats and challenges that you are likely to face when starting your private investigation business include; the arrival of a competitor offering same services as you do, stringent government regulations and an uncooperative local law enforcement.
While these challenges might deter someone who is not fully prepared to start the business, it should not faze one who has already envisaged it.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When starting your private investigation business, it is important that you choose the legal entity that would best suit the needs of your business.
While this might be quite confusing due to several advantages and disadvantages that come with each legal entity, it wouldn’t be to a law attorney – especially one well versed in your industry – who would know which legal entity you would need to choose to avoid future problems.
You should however understand that there are basically four legal entities for businesses and that your choice can have a great impact on the way you run your business, how you deal with your liability and taxes as well as how you control your company.
Also, there are certain factors that you must consider when choosing a legal entity for your business such as the complexity of the business structure, the liability that comes with the legal entity, the tax benefits, the control you are likely to get and what specific licenses, permits and regulations that you would require in order to be able to start and run your business smoothly without any sort of hitches.
The sole proprietorship form of legal entity is the simplest and is used by more than 70% of business in the United States of America.
In a sole proprietorship, you the owner are liable for all the debts that will be incurred by your business as well as the profits. And one major disadvantage to a sole proprietorship is the inability most times to be able to source for funds externally.
The partnership form of business is that which is owned by two or more individuals, where either everything is equally shared or there is a limit, in this case it will be referred to as a limited partnership. Partnerships usually carry a dual status as either a limited liability partnership or a sole proprietorship, depending on the liability structure and the funding of the entity.
A Limited Liability Company (LLC) is a kind of legal structure where owners limit their personal liabilities and enjoy the flexibility and tax benefits accrued to a partnership structure. The LLC is one of the most common legal entities also as most sole proprietorships usually progress to becoming a limited liability company along the line.
A corporation form of legal entity is one that has its own legal rights separate from that of the owners, as it can sue and be sued, own and sell property without personally affecting the owners. There are three types of corporation, the C Corporation, the S corporation and the B corporation.
The S and B corporations provide certain tax advantages that are better than the C Corporation; however, to get these benefits, your company will need to meet certain requirements.
8. Choose a Catchy Business Name from the ideas Below
Choosing the right name for your private investigation business is very important because it would need to fulfill requirements such as; eye-catching, memorable and meaningful.
This is why you really need to be creative when coming up with a name for your private investigation business. Also to ensure that your potential customers know which field you are in, your name could reflect the major service you would be engaging in.
Below are some very unique, creative and eye-catching names that you can choose from to use in starting your private investigation business;
- Private I Inc
- Splash Private Services
- Double bolt private investigators
- Mr. Holmes Private Services
- Surefire private investigators
- Cast edge private investigators
9. Discuss With an Agent to Know the Best Insurance Policies for You
Choosing the right insurance policy for your business is very important because the private investigation business is a risky business and more so, the United States of America requires that businesses and individuals have insurance. If you are however confused on the kind of insurance policies that would be best for your business, you might approach the services of an insurance broker or agent to help you choose policies that would be best for your business.
There are however basic insurance policies that you might need to consider purchasing if you intend to start your private investigation business in the United States of America;
- General Insurance
- Liability Insurance
- Errors and Omission Insurance
- Workers’ Compensation
- Payment Protection Insurance
- Auto Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
While an intellectual property protection is especially helpful when it comes to protecting certain aspects of your business from copycats and thefts, it is not particularly useful in the private investigation line of business and this is due to the fact that this is a service related business that does not require any invention of any sorts in order to buy an intellectual property. Furthermore, it is very difficult to do so in a service related industry.
If however, you intend to protect your name, logo, slogan or jingle, you would need to file for an intellectual property protection by filing an application with the office of the USPTO or getting a lawyer who is well versed in this area to do so for you.
However, this is not usually an area that bothers entrepreneurs in this sector as they do not regard protecting their slogan or logo as something of high importance.
11. Get the Necessary Professional Certification
Even though you might have the right skills needed to start your own private investigation business, having the necessary qualification in this field is also very important especially as government regulations towards this sector is continually on the increase.
Having a professional certification will not only enable you to stand out from your competitors, it will also add a boost to your business as it tells your target market that you are serious about the business you intend going into and are committed to doing it professionally.
Some of the certifications that you might need to acquire if you want to become a private investigator and run your own private investigation business are;
- IQ Level 3 Certificate in Principles of Professional Private Investigation (RQF)
- IQ Level 3 Award for Professional Investigators (QCF)
12. Get the Necessary Legal Documents You Need to Operate
Every business requires legal documents in line with government requirements in the United States of America to be able run legally.
And so if you intend to start your private investigation business and run it successfully in the United States of America, you will need to get some basic documents in place especially as the government is very strict regarding the private investigation kind of business.
Therefore, some of the basic legal documents that you will need to have in place to be able to run your private investigation business legally in the United States of America are;
- Certificate of incorporation
- Business license
- Business permit
- Insurance coverage
- Business plan
- Non-disclosure agreement
- Consulting contract documents
- Employment agreement
13. Raise the Needed Startup Capital
Every business idea remains one until it gets the necessary finance to make it become a reality. Even though the private investigation kind of business might not be one that is capital intensive in nature, there are still certain aspects where you would be required to spend your start-up capital on in order to run the business in a certain standard and become successful as well.
There are several options that you would need to consider especially if you don’t have all the money you need or if you don’t intend to approach an external investor for partnership purposes. Therefore some of the options that you would need to consider when sourcing for funds to start your private investigation business are;
- Generating capital from your personal savings or sale of personal stock
- Sourcing for soft loan from family members and friends
- Applying for loan from the commercial bank
- Approaching a private investor for loan
14. Choose a Suitable Location for your Business
Picking the right location for your business is very important even as most times you will need to go and visit your clients or always be on the road but this does not however mean that you should not give some thoughts to picking somewhere convenient and strategic for your business.
The fact with the private investigation business is that you can operate it from home and allow your clients get through to you via your website or official mails and phone.
However, if you have carefully studied the trend in the industry, you will realize that while it is convenient for you to run this kind of business from home, it is not usually wise especially if you are keen on becoming a force to be reckoned with in the industry and also be able to compete favorably against your competitors.
And so depending on what niche you are going into, it would be best to locate your business in the hub of your specialized area. If for instance you intend to specialize in insurance, it is only wise that your rent or lease an office facility close to big and established insurance houses.
It should be noted that location plays a huge role in guaranteeing the success of your business and so while the private investigation business is one that thrives on privacy, it doesn’t mean that you should locate your business far away from town or hidden in the woods.
Your location ought to be somewhere where your clients and even employees can easily get to with as little inconvenience as possible.
If you also choose a location that is too far out, you might need to spend more in promoting the business and having to direct customers to your business, if they however find it more difficult and stressful, it might lead to the loss of customers for your private investigation business.
Several other factors ought to also go into deciding your location such as your budget. It is vital that you have a laid down budget that you would work with when choosing the location for your private investigation business; if you decide to go for too cheap, you might end up renovating the facility and incurring more costs than you would if you go for something that is moderate.
In summary, if you are looking for a suitable location for your private investigation business, it should be located close to the hub of the niches that you would major in, it should not be too far or inconveniencing for your clients to locate and it should be one that would fit into your budget without making you spend more than you should.
15. Hire Employees for your Technical and Manpower Needs
Regardless of what the state’s requirements are, you will still need to show extra commitment by gaining some experience and also learning the laws that affect the private investigating industry directly and indirectly. The experience will allow you determine which areas you might want to specialize in.
You must be familiar with criminalistics, know about interrogation procedures and trial protocols and have an extensive knowledge of the industry. This is why it is essential that you continually read books to update yourself as regards the relevant laws. Once you have passed the test, you will need to undergo background check before getting a license.
The basics that you would need to start this business are; a camera, an audio recorder, a video camera and a vehicle. These four are very essential because they will allow you to carry out your work efficiently.
If you intend running a standard private investigation business you might need to hire the following groups of people; a chief executive officer, an admin and human resources manager, a marketing executive, a front desk officer, a cleaner and a security guard.
From the above analysis, you would need to hire at least 6 people if you intend to run your private investigation business successfully and according to standard.
The Service Delivery Process of the business
In ensuring that you rightly deliver in this business, you will need to know your customers well before getting a job from them. After knowing who your customer is, ensure that you thoroughly understand the task at hand and are able to deduce how much it would cost you to carry out the task.
Sometimes, you might have to go farther than usual, but this is to be expected and would endear you more to your customers and even cause more referrals for you. Always ensure that you deliver as at when you said you would and when you need more time, ask in advance.
Just like any other business out there, a successful and standard private investigation business relies solely on professionalism, training as well as experience. These three will endear you to your clients while allowing them to trust you with sensitive information.
16. Write a Marketing Plan Packed With ideas & Strategies
The private investigation business is dependent on how many people know of the existence of your business in order to patronize your services. To ensure that your target market is aware of your company, you would need to have a degree of success that you can market so as to be able to attract your intended target audience and also favorably compete against your competitors in the industry.
Marketing is a very serious aspect of any business either new or start-up and therefore it is important that you are able to determine which marketing ideas and strategies would best suit your business while allowing you to not go overboard in spending. It is therefore vital that you conduct a market survey before determining the right marketing strategies for you.
In conducting a market survey, you will need to use reliable data and information from similar businesses like yours either new or already existing. It is the data sourced from this places that can help you determine where to apply more effort in getting the attention of your target market.
Also, the market survey will allow you understand your target market fully and understand what it is they expect from you and what you should expect from them as well. It is from here that you would be able to craft the right marketing strategies that would best suit you and your budget, while also allowing you to stand out in the industry you will be operating from.
In most cases, you might need to be more aggressive in your marketing especially if you are starting your business in an area where there are enough private investigation businesses that are not only quite popular but have also been in existence for long.
Some of the platforms that you can leverage on to market your private investigation business are;
- Engage in serious networking by introducing your private investigation business to others, law enforcement offices, law institutions and also to stakeholders in the niches which you might have decided to concentrate on.
- Place advertisements for your private investigation business in newspapers and specifically related magazines as well as on radio and television stations.
- Attend association meetings, seminars and conferences so as to market your private investigation business.
- Ensure that your private investigation business is listed in local and national directories as well as in online directories.
- Ensure that you advertise your business in social media platforms such as Facebook, Linkedin and Twitter.
- Pass out handbills and paste fliers in strategic areas.
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Boosting the awareness of your brand is a must if you intend to gain prominence and become something that would be reckoned with nationally. No matter how good your services are, if you make no effort to promote your business, then you aren’t likely to be noticed. Existing businesses understand this and are always willing to spend more in order to boost the awareness of their brand while continually improving on their corporate identity.
While publicity is very important, it can be a bit overwhelming and so most new businesses and even existing ones, usually seek the services of a publicity consultant who is well versed in the industry they are in to help them craft the right publicity strategies that would serve to grow and ensure that they attain the right awareness for their business.
In getting strategies that would effectively promote your brand, you would need to deploy all available means, both online and offline. While you might be thinking on the need to concentrate locally and get the clients you need from your local area, the private investigation business is not one that should be restricted to just a region.
The good thing about publicizing your business to generate awareness is that while you are creating and communicating a positive image or brand to your target market, it also helps you generate the revenue that will help boost and sustain your business.
Therefore the platforms that you can rely on in order to boost the awareness for your brand as well as create a corporate identity are;
- Ensure that you create an interactive website and then engage the services of a Search Engine Consultant (SEO) to ensure that your website pops up amongst the first five when a potential client searches for anything related to your industry.
- Place adverts in local newspapers and security and business magazines as well as on radio and television stations.
- Become a guest writer for popular security related blogs and websites in order to promote your business.
- Use your social media platforms such as Facebook, Twitter, Linkedin and Google plus to vigorously promote your business.
- Pass out handbills, fliers and business cards in various strategic locations.
- Encourage your loyal customers to help refer your business to others.