Business ideas
8 min read

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

Learn how to start a successful private investigator 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.

Starting a private investigator business requires a thorough understanding of the market landscape. A comprehensive market analysis will help you identify potential clients, understand competitor strategies, and determine market needs. Here's how to perform an effective market analysis:

  • Research the demand for private investigation services in your desired area, looking into specific sectors such as legal, corporate, or personal services.
  • Identify your target market by considering who is most likely to need your services, such as law firms, insurance companies, or individuals concerned with marital infidelity.
  • Analyze your competition by exploring their services, pricing, and market share. Pay attention to their strengths and weaknesses to find a competitive edge.
  • Understand the legal requirements and regulations for private investigators in your region to ensure compliance and identify any potential barriers to entry.
  • Examine industry trends, such as the growing importance of cyber investigations or the use of advanced surveillance technology.
  • Assess the pricing models used by existing private investigators to help set competitive yet profitable rates for your services.
  • Gather data from industry reports, online forums, and potential client interviews to validate your market assumptions and refine your business strategy.
image of a private investigator business

Are private investigator businesses profitable?

Yes, private investigator businesses can be very profitable. The amount of profit potential will depend on a variety of factors such as the location, the target audience and the level of experience and services being offered. Generally speaking, private investigator businesses can be quite lucrative if they are properly set up and managed correctly.

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2. Draft a private investigator business plan.

A comprehensive business plan is crucial when starting a private investigator business as it will guide your operation, help in setting objectives, and attract potential investors or partners. It encompasses all critical aspects of your business, from market analysis to financial projections. Here are the essential components that should be included in your business plan:

  • Executive Summary: An overview of your business including mission statement, services, and basic information.
  • Company Description: Details about your business structure, location, and the market needs that your services will fulfill.
  • Market Analysis: Research on industry trends, target market, competition, and how your business will fit into the current market.
  • Organization and Management: Outline your business's organizational structure, details about the ownership, and qualifications of your management team.
  • Services Offered: A detailed description of the services you plan to offer and any unique selling points (USPs).
  • Marketing Plan: Your strategies for branding, marketing, advertising, and client acquisition.
  • Operational Plan: Day-to-day operations, facilities, equipment, and staff required to provide your services.
  • Financial Plan: Projected financial statements, including income statements, balance sheets, cash flow statements, and capital expenditure budgets.
  • Funding Request: If seeking financing, detail your funding requirements, potential future funding, and strategic financial plans.

How does a private investigator business make money?

Private investigators typically make money by charging customers for their services. Most private investigators charge an hourly rate or a per-project rate depending on the type of investigation being conducted. For example, a private investigator business might charge a flat fee to investigate a potential cheating spouse, while they may charge an hourly rate to serve a subpoena. A target audience for an air duct cleaning business would be homeowners and businesses that are in need of air duct cleaning services. Homeowners may be more likely to hire an air duct cleaner when they notice a decrease in indoor air quality, while businesses may need to schedule regular cleanings in order to keep up with health and safety requirements.

3. Develop a private investigator brand.

Developing a strong brand is crucial for your private investigator business as it sets you apart from competitors and helps build trust with potential clients. Your brand is the promise you make to your clients, encompassing your business values, professionalism, and the unique services you offer. Below are key points to consider when creating your brand.

  • Define Your Unique Selling Proposition (USP): Determine what makes your services unique. Is it your experience, your technology, or a specific area of expertise? Use this to differentiate your brand.
  • Create a Professional Logo and Visuals: Invest in a memorable logo and professional branding materials that convey the essence of your business and appeal to your target market.
  • Establish Your Online Presence: Design a professional website and maintain active social media profiles that reflect your brand's identity and values.
  • Consistency is Key: Ensure that all your marketing materials, from business cards to social media posts, have a consistent look and message that aligns with your brand.
  • Engage with Your Audience: Create content that positions you as an expert in your field, such as blog posts, videos, and case studies, to build credibility and engage potential clients.

How to come up with a name for your private investigator business?

Coming up with a name for your private investigator business can be a difficult task. Your name should reflect the qualities you bring to your investigation services, while still making an impression on potential clients. Consider using words that emphasize dependability, or catchy words that evoke trust and confidence. It's also important to do some research and make sure you aren't inadvertently infringing on someone else's trademark. Finally, it's best to stick with a name that is easy for your clients to remember and pronounce.

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4. Formalize your business registration.

Once you've laid the groundwork for your private investigator business by defining your services and market, Step 4 is crucial: formalizing your business registration. This step legitimizes your business in the eyes of the government and the public, and it is essential for legal and tax purposes. Follow these bullet points to ensure you've covered the essentials in business registration:

  • Research local and state requirements: Different regions have specific requirements for registering a business, so it's essential to check with your local Secretary of State or business bureau.
  • Choose a business structure: Decide whether your private investigator business will be a sole proprietorship, partnership, LLC, or corporation. Each structure has different legal and tax implications.
  • Register your business name: If your business name is different from your own, you'll likely need to register a "Doing Business As" (DBA) name with the appropriate government body.
  • Obtain necessary licenses and permits: Since private investigation is a regulated profession, ensure you have all required licenses, which may include a private investigator license, business license, and any additional permits.
  • Apply for an Employer Identification Number (EIN): If you plan to hire employees, you'll need an EIN from the IRS for tax purposes. Even if you don't hire employees, an EIN is useful for opening business bank accounts and handling business taxes.
  • Register for state and local taxes: Get registered with your state's revenue agency to handle sales tax, if applicable, and understand your tax obligations for your business structure.

Resources to help get you started:

Explore crucial publications, reports, and newsletters for private investigator entrepreneurs aiming to understand market trends, enhance operational efficiency, and foster business growth:

  • Professional Investigator Magazine: Offers insights into investigative techniques, industry news, and business tips for private investigators.
  • Pursuit Magazine: Provides resources on investigative methods, ethical considerations, and thoughtful business practices for the modern investigator.
  • PI Now: Compiles articles, tools, and technology updates relevant to private investigators, alongside a directory of international investigators.
  • International Association of Private Detectives (IAPD) Newsletter: Delivers industry news, upcoming events, and educational resources directly from an established global network of private investigators.
  • Private Investigator Market Research Report from IBISWorld: Offers comprehensive market analysis highlighting trends, statistics, and anticipated growth within the private investigator industry.

5. Acquire necessary licenses and permits for private investigator.

Starting a private investigator business involves ensuring you have the proper legal authority to operate. The requirements for licenses and permits can vary by location, so it's crucial to understand and comply with your region's specific regulations. Here are the steps you should consider:

  • Research your state or country's requirements for private investigators, as these can significantly differ from one jurisdiction to another.
  • Complete any mandatory training or education programs that are required to obtain a private investigator license.
  • Pass the state or national licensing exam if one is required in your area.
  • Apply for a private investigator license through the appropriate state department or regulatory body, providing all required documentation and fees.
  • Ensure you obtain any additional permits that may be necessary, such as a business license, a concealed weapons permit, or special surveillance permits if your services include this.
  • Stay informed about the renewal process for your license and permits to maintain continuous legal compliance.
  • Consider professional liability insurance to protect your business from potential legal action.

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

A private investigator business typically requires an agency license from the state and several permits from the local government. Depending on the state and local laws, these might consist of business licenses, occupational licenses, fire department permits, zoning permits, and alarm permits. In addition, investigators might need to pass a proficiency exam or receive formal training before they can be certified to offer investigatory services.

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

Opening a business bank account and securing funding are essential steps in establishing the financial backbone of your private investigator business. These steps not only help in managing your finances effectively but also in establishing credibility with clients and stakeholders. Follow these guidelines to ensure you're on the right track:

  • Research banks that offer business accounts with benefits that align with your needs, such as low fees, online banking, and customer support.
  • Prepare the necessary documents to open a business account, typically including your business license, EIN, and articles of incorporation.
  • Consider the financing needs of your business to determine if you require a loan or other funding sources such as investors, grants, or crowdfunding.
  • Explore small business loans through banks or the Small Business Administration (SBA) if initial capital is required for startup costs.
  • Keep personal and business finances separate to simplify accounting, tax filing, and to maintain a professional image.
  • Regularly review and manage your business bank account to ensure you maintain a positive cash flow and are prepared for any unforeseen expenses.

7. Set pricing for private investigator services.

Setting the right pricing for private investigator services is crucial to ensure the sustainability and profitability of your business. It's a balance between covering your costs, providing value to your clients, and positioning yourself effectively in the market. Here are some guidelines to help you determine your pricing:

  • Assess the Market: Research the prices of competitors in your area to understand the going rates for private investigation services. Make sure you're not overpricing or underpricing your services.
  • Cost-Based Pricing: Calculate all your operational costs, including licensing, equipment, transportation, and labor. Ensure your prices cover these expenses and allow for a reasonable profit margin.
  • Value-Based Pricing: Consider the value you're providing to your clients. Specialized skills or services may command higher fees. Reflect the complexity and risk involved in the job in your pricing.
  • Flexible Pricing Structure: Develop a pricing model that includes hourly rates, flat fees for specific services, retainer fees for ongoing work, or a combination of these structures.
  • Clear Communication: Be transparent with your clients about your pricing. Provide detailed estimates and contracts to avoid misunderstandings.
  • Adjustments Over Time: Regularly review and adjust your pricing to reflect changes in the market, your service offerings, and your business experience.

What does it cost to start a private investigator business?

Initiating a private investigator 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 $20500 for launching such an business. Please note, not all of these costs may be necessary to start up your private investigator business.

8. Acquire private investigator equipment and supplies.

As you embark on the journey of starting a private investigator business, equipping yourself with the right tools is crucial for success. The proper equipment and supplies will not only enhance your investigative capabilities but also ensure your safety and efficiency in the field. Here's a list of essential items to consider for your private investigation kit:

  • Surveillance Equipment: High-quality cameras, video recorders, and binoculars for capturing evidence discreetly.
  • Audio Recording Devices: Digital voice recorders and listening devices to document conversations accurately.
  • Computer with Internet Access: For conducting online research, background checks, and maintaining digital records.
  • Software: Investigation-specific software for case management, data analysis, and encryption for client confidentiality.
  • GPS Tracking Devices: To monitor the whereabouts of subjects during surveillance operations.
  • Covert Cameras: Hidden cameras in everyday items for undercover investigations.
  • Self-Defense Items: Pepper spray, a personal alarm, or a Taser for personal protection.
  • Note-Taking Materials: Notebooks, pens, and a digital tablet for keeping detailed notes during investigations.
  • Flashlight: A powerful flashlight for working in low-light conditions.
  • Lock Picking Set: For legally gaining access to locked areas with client permission.

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

  • Computer system - $1000-3000
  • Police scanner - $50-300
  • GPS tracker - $100-400
  • Investigative supplies - $100-500
  • Digital recorder - $20-100
  • Cell phone jammer - $50-200
  • Background checks software package - $200-1000
  • Vehicle tracking device - $100-500
  • Legal forms software package - $50-250
  • Fax machine/printer/copier combo - $150-400

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

Before embarking on your journey as a private investigator, it's essential to safeguard your business with the appropriate insurance coverage. This step not only protects you from potential liabilities but also instills confidence in your clients. Below are the key points to consider when obtaining business insurance for your private investigation firm:

  • Research the types of insurance required for private investigators in your jurisdiction, such as general liability, professional liability (errors and omissions), and workers' compensation if you plan to hire employees.
  • Consult with an insurance agent or broker who specializes in business policies and has experience with private security firms to ensure you get coverage tailored to your specific needs.
  • Consider additional policies such as cyber liability insurance if your work involves handling sensitive digital information, or a business owner's policy for a comprehensive package.
  • Compare quotes from multiple insurance providers to find the best rates and coverage options for your business.
  • Review and understand the policy details, including coverage limits, deductibles, and any exclusions, to ensure you're adequately protected.
  • Keep your insurance up to date and review it annually or whenever there are significant changes to your business operations.

10. Begin marketing your private investigator services.

Starting a private investigator business involves not only honing your investigative skills but also effectively marketing your services to reach potential clients. You'll want to build a strong presence both online and offline to ensure your business stands out in a competitive market. Here are some key strategies to help you promote your private investigator services:

  • Develop a Professional Website: Create an engaging website that showcases your services, experience, and areas of expertise. Make sure it is optimized for search engines (SEO) to improve your online visibility.
  • Utilize Social Media: Establish profiles on platforms like LinkedIn, Twitter, and Facebook to connect with your community, share insights, and advertise your services.
  • Networking: Attend local business events, join professional associations, and engage with law firms or other entities that may require investigative services.
  • Referral Program: Implement a referral program to encourage satisfied customers to refer new clients to you.
  • Content Marketing: Write blog posts or articles related to private investigation to showcase your knowledge and attract an audience looking for investigative expertise.
  • Online Advertising: Consider using Google Ads or social media advertising to target potential clients actively searching for private investigation services.
  • Local Advertising: Place ads in local newspapers, magazines, or on radio stations to reach a broader audience within your community.
  • Branding Materials: Invest in business cards, brochures, and other promotional materials that you can distribute to potential clients during meetings or networking events.
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What licenses and permits are needed to run a private investigator business?

  • Computer system - $1000-3000
  • Police scanner - $50-300
  • GPS tracker - $100-400
  • Investigative supplies - $100-500
  • Digital recorder - $20-100
  • Cell phone jammer - $50-200
  • Background checks software package - $200-1000
  • Vehicle tracking device - $100-500
  • Legal forms software package - $50-250
  • Fax machine/printer/copier combo - $150-400

11. Expand your private investigator business.

As your private investigator business gains traction and builds a reputation for quality service, it's time to consider expansion. Here are some strategic moves to broaden your reach and increase your capacity to take on more diverse cases:

  • Diversify Services: Offer additional services such as cyber investigations, forensics, or personal security to attract a wider client base.
  • Hire Additional Staff: Recruit experienced investigators and support staff to handle an increased workload and bring in new expertise.
  • Upgrade Equipment: Invest in the latest surveillance technology and software tools to enhance your investigative capabilities.
  • Expand Geographically: Open satellite offices in other cities or regions to reach new markets and clientele.
  • Enhance Marketing Efforts: Increase your online presence, utilize social media marketing, and attend industry events to network and promote your services.
  • Form Partnerships: Collaborate with law firms, corporations, and other PI firms to offer referral services and expand your network.
  • Offer Training: Create a training program for new PIs, which can also serve as an additional revenue stream.
  • Seek Certification: Obtain additional certifications for your business and staff to establish credibility and specialization.