If you’ve ever considered becoming a private investigator, chances are you’ve also considered what it might be like to run your own private investigator agency—whether that means having a team of investigators or simply running your own career as a sole proprietor of your own business. In any case, there is a lot to know about starting your own private investigation agency, and quite a bit you should consider in order to determine if it’s right for you.
What is a Private Investigation Agency?
Generally, a Private Investigation Agency is a company focused solely on performing private investigations for clients. Oftentimes, they are considered small businesses, and many times can be operated by a sole proprietor. A private agency may work as a generalist—serving anyone who has a case they need investigated—or may specialize in a certain area, such as corporate affairs, insurance fraud, or financial issues.
How does a Private Investigation Agency make money?
A private investigation agency makes money by billing clients for their services—usually at the rate of around $50-100 per hour, according to Truic. In some cases, investigators may make more, such as in insurance fraud investigations or cyber crimes, where their clients (corporations, in most cases) have a higher budget amount to work with and are looking for additional or specialized expertise.
How do you start a Private Investigation firm?
If you’re considering starting your own private investigation firm, there are a number of things you need to consider, just as you would when starting up any new business. Keep in mind, however, that each state has different requirements both in licensing and in business organization, so it is important to do your own research and find information that is up-to-date and correct for your state.
1. Get licensed
If you want to open your own private investigation firm, one of the first things you need to do is become a licensed private investigator yourself. As such, there are basic requirements as well as state specific ones that you will need to consider. Generally, to become a licensed private investigator, you must pass a background check and have a clean record; and have some degree of relevant experience and education. In addition to that, in order to attain a PI agency license, you must also carry liability insurance (or a surety bond), and follow the appropriate business licensing requirements for your state.
2. Organize the business
Keeping in mind that by opening your own private investigator firm you are also starting your own business, you’ll need to make sure that you are following all necessary requirements within your state of operation (and if operating in multiple states, you are following all regulations, not just that of your state of organization). As a first step, you’ll want to ensure you choose the correct business structure—an LLP, corporation, LLC or S-corp are the most common. To get the best advice on this decision, consult an accountant and/or an attorney for their professional insight. You’ll also need to file with the IRS and any taxing authorities in the state, and open a bank account to get started.
3. Get insured
Because liability insurance is one of the primary requirements in most states for operating a private investigative agency, it should be one of the first things you do, and each state will be able to guide you in the policy requirements you should have. Additionally, however, should you choose to have employees, you will also likely need workers’ compensation insurance as part of your coverage.
If you have questions, look toward your state guidelines and directives; they will be the clearest source of information for any insurances, permits or other regulatory paperwork you will need to hold.
4. Determine your target market
Now that you are mostly set up, it’s time to determine who your target client will be! Much of this will be based on who you want to work for, so you’ll need to be clear about who that is and what they are looking for in your service area. Additionally, if you have specializations—such as working solely for companies, insurance companies or in cyber activity—this will help you narrow down your focus in who you will be going after for clients. All of this information will help you brand yourself and your services better, as it will be a part of who you are and what you offer.
5. Find clients
Finally, you’re ready to get your clients, but sometimes that can be easier said than done. Determine the best way—based on your target market—to get in front of your ideal client, and start there. You’ll also want to ensure that you have the basic business and sales tools set up: a logo, website, and business cards, at the very least. If you’re lost on how to do this, get referrals for a local marketing or advertising agency that can help you get your message to the right people.
Who can help me get started?
If you’re starting your own private investigation firm, there are a few entities that may be able to help. On the private investigator front, an organization like NITA can provide continuing education and pre-certification, as well as general information regarding state licensing requirements and other industry-focused information you might find useful. From the business side, find your local Small Business Development group, or SBA. These organizations exist for the primary purpose of educating and informing small business owners in all the aspects of business ownership and management.
Regardless of where you’re starting from, if you’re considering a career as a Private Investigator, or even starting your own agency, NITA offers self-paced, online pre-certification training along with continuing education and professional development courses to help you along your path. If you have questions as you get started, please give us a call and we’ll help you navigate the best path forward.