Business ideas
8 min read

How to Start a Profitable Private Investigation Business [11 Steps]

Learn how to start your own private investigation business with our 11+ step guide. From licensing to marketing, we cover everything you need to know!

By Nick Cotter
Updated Feb 02, 2024

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This page may feature products from our affiliate partners, which could influence the products we discuss due to potential compensation. Despite this, our evaluations are impartial, based solely on our independent analysis. The content here is intended for informational purposes and should not be seen as legal advice. For professional guidance, consulting with a legal expert is recommended.
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1. Perform market analysis.

Before launching a private investigation business, it's imperative to understand the competitive landscape and demand for investigative services. A thorough market analysis will provide insights into potential clientele, market trends, and the positioning of existing competitors. Here are key considerations for conducting an effective market analysis:

  • Identify your target market by considering who will benefit from your services, such as individuals, corporations, or legal firms.
  • Analyze competitors by researching other private investigation businesses in your area, assessing their services, pricing, and market share.
  • Examine industry trends by staying informed about the latest technological advancements in surveillance and investigative techniques that could impact your business.
  • Assess the legal and regulatory environment to ensure compliance with licensing, data protection laws, and other relevant legislation affecting private investigation practices.
  • Conduct a SWOT analysis to evaluate your business's Strengths, Weaknesses, Opportunities, and Threats within the market context.
  • Gauge demand through surveys or by reviewing public data on the frequency and types of investigations commonly requested in your target area.
image of a private investigation business

Are private investigation businesses profitable?

Yes, private investigation businesses can be profitable with the right combination of business acumen, industry knowledge, and market conditions. The profitability of a private investigation business will depend on factors such as the expertise of the professionals working within the business, the demand for the services being offered, location and other factors.

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2. Draft a private investigation business plan.

Drafting a business plan for a private investigation service requires a focus on legal compliance, operational integrity, and client confidentiality. Your plan should demonstrate expertise and trustworthiness. Essential elements to include are:

  • Services Offered: Clearly define the investigation services you will provide, such as background checks, surveillance, or corporate investigations.
  • Licensing and Compliance: Detail the requirements for operating legally in your jurisdiction.
  • Market Analysis: Identify your target clients, including individuals, businesses, or legal firms.
  • Marketing and Sales: Develop strategies for promoting your services and establishing professional networks.
  • Operational Plan: Outline your approach to case management, data security, and client reporting.

How does a private investigation business make money?

Private investigation businesses make money by providing their services to individuals and corporations who are in need of their expertise. This can include background checks, surveillance and investigations for cheating spouses, legal cases, or any other sensitive matter. They may also offer specialized services such as information gathering for corporate espionage or fraud prevention. One potential target audience for a Private Investigation business could be entrepreneurs who are looking to start a spice business. The Private Investigator can provide insights on the competition and industry, potentially leading to a more successful, informed venture.

3. Develop a private investigation brand.

Developing a brand for your private investigation business is crucial in establishing a unique identity that resonates with your target market. A strong brand will differentiate your services, convey professionalism, and build trust with potential clients. Here are some key points to consider when creating your private investigation brand:

  • Define Your Unique Selling Proposition (USP): Determine what sets your agency apart from competitors, whether it’s specialized services, extensive experience, advanced technology, or exceptional customer service.
  • Choose a Memorable Name and Logo: Your business name and logo are often the first things potential clients will notice. Ensure they are professional, memorable, and reflect the nature of your investigative work.
  • Establish Your Visual Identity: Decide on a color scheme, typography, and imagery that consistently represent your brand across all marketing materials and digital platforms.
  • Create a Professional Website: Your website should reflect your brand identity and be the hub for information about your services, qualifications, testimonials, and contact information.
  • Develop a Consistent Voice and Messaging: The tone and language you use in your marketing materials should align with your brand persona, whether it's authoritative, supportive, discreet, or approachable.
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How to come up with a name for your private investigation business?

Coming up with the right name for your private investigation business can be a challenging task. When deciding on a name, you should take into consideration factors such as your target market and the services that you offer. Additionally, you should make sure that your name is something that is easy to remember and can create an emotional connection with customers. Finally, consider adding a keyword to your name that will help customers find you more easily during an online search. By taking these considerations into account, you can create the perfect name for your private investigation business.

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4. Formalize your business registration.

Starting a private investigation business requires due diligence, particularly when it comes to formalizing your business registration. This step is critical as it ensures your business is legally recognized and can operate within the framework of your local and national laws. Here's a guide to help you navigate through the process:

  • Choose a Business Structure: Decide whether you want to operate as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure offers different legal and financial protections.
  • Register Your Business Name: Select a unique business name and check its availability. Register the name with your state's business filing agency.
  • Obtain Necessary Licenses and Permits: Most states require private investigators to have a license. Apply for the appropriate private investigator license and any other required permits or registrations specific to your locality.
  • Apply for an Employer Identification Number (EIN): If you plan to hire employees, or if your business structure requires it, apply for an EIN from the Internal Revenue Service (IRS) for tax purposes.
  • Understand Local Zoning Laws: Ensure your business location is compliant with local zoning laws, which may affect where you can legally operate your business.

Resources to help get you started:

Explore vital resources designed for private investigation entrepreneurs aiming to gain insights on market trends, operational strategies, and guidance for business expansion:

  • PI Magazine: A leading magazine offering articles, news, and resources focused on the private investigation industry.
  • Professional Investigator Magazine (PIMagazine): Features in-depth articles on new investigation techniques, industry news, and business growth strategies.
  • International Association of Private Detectives (IAPD): Provides access to industry reports, networking opportunities, and educational resources.
  • Pursuit Magazine: An online publication offering insights into the art and science of investigation, best practices, and ethical considerations.
  • Intellenet: A network of professionals that shares timely newsletters and reports on various aspects of private investigation, enhancing operational knowledge and tactics.

5. Acquire necessary licenses and permits for private investigation.

Starting a private investigation business requires legal compliance through various licenses and permits. This step is crucial as it ensures your operation is legitimate and adheres to the law. Here are some essential actions to take when acquiring the necessary credentials:

  • Research the specific licensing requirements for private investigators in your state or region as they vary widely. You may need to pass a background check, complete professional training, and pass a licensing exam.
  • Contact your state's licensing board or department of public safety for detailed information on the application process, fees, and any continuing education requirements.
  • Obtain a business license from your local city or county clerk's office. This permits you to operate your business legally within the municipality.
  • Consider acquiring specialized permits if your services will include areas that require them, such as carrying a firearm or conducting surveillance.
  • Keep in mind that some jurisdictions might require you to have insurance, such as general liability or errors and omissions insurance, before granting a license.
  • Ensure all permits and licenses are kept current through timely renewals, as operating with expired credentials can result in fines or closure.

What licenses and permits are needed to run a private investigation business?

Each state has its own set of license and permit requirements for private investigation businesses. Generally, you need a business license, a state license that covers private investigations, and permits depending on the services you plan to offer. You may also need additional permits to access certain types of information central to investigation services. Some states may also require general liability insurance or surety bonds.

6. Open a business bank account and secure funding as needed.

Starting a private investigation business requires careful financial planning and management. Opening a business bank account separates personal and business finances, providing clarity for accounting and taxes. Additionally, securing funding is critical for covering startup costs, operational expenses, and unexpected needs. Follow these steps to set a strong financial foundation for your business:

  • Research banks and credit unions to find the best business banking options with low fees and favorable terms.
  • Collect the required documents to open a business bank account, typically including your business license, EIN, and articles of incorporation or organization.
  • Consider applying for a business credit card to help manage expenses and build your company's credit history.
  • Explore various funding sources such as small business loans, lines of credit, or investors, if your initial capital isn't sufficient.
  • Understand the terms and conditions of any funding you secure, including interest rates, repayment schedules, and any potential equity you might be giving up.
  • Develop a relationship with a financial advisor or accountant who can provide expert advice on managing your business finances effectively.

7. Set pricing for private investigation services.

Pricing for private investigation services should reflect the complexity of the services offered, the experience level of the investigator, and the operational costs involved. Consider these elements:

  • Service Complexity: Charge more for complex investigations requiring specialized skills or equipment.
  • Experience Premium: Higher rates can be justified by the investigator's experience and success rate.
  • Expense Coverage: Include travel and other direct expenses in your pricing model.

What does it cost to start a private investigation business?

Initiating a private investigation business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $18200 for launching such an business. Please note, not all of these costs may be necessary to start up your private investigation business.

8. Acquire private investigation equipment and supplies.

Starting a private investigation business requires not only skill and knowledge but also the right tools of the trade. It's vital to equip yourself with the necessary equipment and supplies to conduct thorough and effective investigations. Here's a list of essential items to consider:

  • Surveillance Equipment: High-quality cameras, video recorders, binoculars, and audio recording devices for gathering evidence.
  • Computer with Internet Access: For online research, accessing databases, and digital surveillance.
  • Software: Data analysis, encryption, and specialized investigation software tools.
  • GPS Tracking Devices: To track vehicle movements with the client's consent where legally permissible.
  • Covert Cameras: Hidden cameras for undercover investigations.
  • Communication Tools: Reliable mobile phone and two-way radios for discreet communication.
  • Note-Taking Materials: Notebooks, pens, and digital note-taking devices to document findings.
  • Safety Equipment: Personal protection gear and a first aid kit for fieldwork safety.
  • Forensic Supplies: Fingerprinting kits and evidence collection bags.
  • Flashlight: A powerful flashlight for low-light situations.
  • Lock Picking Set: For licensed professionals to gain access when legally permitted.

List of software, tools and supplies needed to start a private investigation business:

  • Laptop or desktop computer: $500 - $2,000
  • Cell phone & charger: $200
  • Data storage device (Hard drive or USB drive): $50-$200
  • Photocopier and printer: $100 - $1,000
  • Legal Software: $50 - 500
  • Camera: $100 - 2,000
  • Surveillance Equipment: $500 – 3,000
  • Local Investigation Supplies (Notebooks, Pens, Paperclips etc.): $50 – 150
  • Public Records Research Software (Notary Public Bond, Company Searches etc.): $10 -$100/ month subscription fee or one-time purchase fee varying from 1 – 500 dollars.
  • Office Supplies (Desk and Chair): ~$150 – 1,000 depending on quality.

9. Obtain business insurance for private investigation, if required.

Securing the right business insurance is an essential step in establishing a private investigation business, as it protects against potential liabilities and unforeseen events. Here are some guidelines to help you obtain the appropriate coverage:

  • Research local requirements: Check with your state's department of insurance or professional licensing board to understand specific insurance requirements for private investigators in your area.
  • Consider different types of insurance: Look into professional liability insurance (errors and omissions), general liability insurance, and possibly workers' compensation if you plan to hire employees.
  • Compare quotes: Reach out to multiple insurance providers to get quotes and compare coverage options. Be sure to discuss the unique risks associated with private investigation work.
  • Review policy details: Carefully read the policy documents to ensure that the coverage meets your business needs and complies with state regulations.
  • Consult a professional: If you're unsure about the types of insurance you need, consult with an insurance broker or legal advisor who has experience with private investigation businesses.
  • Keep your insurance updated: As your business grows, periodically review and update your insurance coverage to reflect changes in your services, equipment, or staffing.

10. Begin marketing your private investigation services.

Marketing your private investigation services is crucial for attracting clients and establishing your brand in the industry. A strategic approach will help you reach your target audience effectively. Here are some key strategies to consider:

  • Build a Professional Website: Create an easily navigable website that showcases your services, experience, and testimonials. Ensure it's optimized for search engines (SEO) to improve visibility.
  • Utilize Social Media: Engage with potential clients on platforms like LinkedIn, Twitter, and Facebook. Share insights, case studies, and industry news to establish your expertise.
  • Networking: Join local business groups, attend industry conferences, and connect with law firms or businesses that may require investigation services.
  • Online Advertising: Consider pay-per-click advertising on search engines and social media platforms to target specific demographics or regions.
  • Content Marketing: Publish articles, blogs, or white papers on topics related to private investigation to showcase your knowledge and attract organic traffic to your website.
  • Referral Program: Encourage satisfied customers to refer new clients by offering incentives or discounts on future services.
  • Press Releases: Issue press releases for any notable cases or milestones achieved by your business to garner media attention.
>> MORE:

What licenses and permits are needed to run a private investigation business?

  • Laptop or desktop computer: $500 - $2,000
  • Cell phone & charger: $200
  • Data storage device (Hard drive or USB drive): $50-$200
  • Photocopier and printer: $100 - $1,000
  • Legal Software: $50 - 500
  • Camera: $100 - 2,000
  • Surveillance Equipment: $500 – 3,000
  • Local Investigation Supplies (Notebooks, Pens, Paperclips etc.): $50 – 150
  • Public Records Research Software (Notary Public Bond, Company Searches etc.): $10 -$100/ month subscription fee or one-time purchase fee varying from 1 – 500 dollars.
  • Office Supplies (Desk and Chair): ~$150 – 1,000 depending on quality.

11. Expand your private investigation business.

Once your private investigation business is running smoothly and you've established a solid foundation, it's time to think about expansion. Growth can take many forms, from diversifying services to widening your geographical reach. Here are some strategies to consider for expanding your private investigation business:

  • Diversify Services: Offer specialized services such as cyber investigations, forensic accounting, or background checks to attract a broader range of clients.
  • Franchise Your Business: Create a franchise model to allow others to open branches of your business, spreading your brand while minimizing your risk.
  • Networking: Build relationships with law firms, corporations, and government agencies that may require regular investigative services.
  • Marketing: Invest in a comprehensive marketing strategy that includes digital marketing, to reach potential clients beyond your local area.
  • Hire Experienced Investigators: Expand your team by hiring seasoned professionals who can bring in new expertise and client connections.
  • Continuous Training: Ensure your team is up-to-date with the latest investigation techniques and technologies to stay competitive and efficient.
  • Expand Geographically: Consider opening offices in new locations to cover more territory and tap into new markets.