THROUGH A PRIVATE EYE DARKLY

October 4, 2001

By Bob Stevens

Q&A

Question: Dear Bob, What are the logistics, legal and otherwise to starting up a private investigations firm?
Kris Schroder

Bob:
Dear Kris,

Iím not a lawyer, so Iím not qualified to give legal advice about starting up a business or anything else. If you plan to start a business in California, I suggest you check out the information available at http://www.calgold.ca.gov/. If youíre not in California, check your stateís government sites to see if they have something similar.

I can tell you that in most states youíll need at a minimum a private investigators license. That generally requires a certain amount of experience working as an investigator for another PI, a law enforcement agency, lawyer, insurance company, etc., a clean record, and possibly passage of a test. Last I heard, forty states required licensing and twenty-three administered an exam. A word of caution about getting that license if youíre not sure you want to be self-employed. If you plan to seek employment as an investigator, you may find that some potential employers wonít hire you once youíre licensed for fear that youíll rip off their clients when you start your own agency.

The first thing to consider is whether or not you want to actually make any money in your PI business. If so, in addition to having all the necessary licenses, permits, etc., youíll need a business plan, budget projections, marketing plan and enough cash to live on for a year or so, as well as the financing to set up the business and get it operating. Youíd best have some clients lined up in advance, and should probably get errors and omissions insurance. Some jurisdictions require insurance, and many corporate clients, like banks and insurance companies, wonít use you if you donít have it. You might even want to conduct a little research to select a good office location and consider hiring some employees.

Since my own experience might be better classified as a quest for adventure than a business, I donít know anything about any of that stuff, but I have several successful investigator friends who tell me itís worked for them.

The first time I started my own agency, I got my private investigators license and firearms permit, then rented a private post box and hired an answering service and I was in business. I didnít have any clients, so I stayed up until all hours typing up mailers (this was before computers), and sending them to all the attorneys in the phone book. I soon learned that the only lawyers who respond to unsolicited flyers are the ones who need to hire a new investigator for every assignment because they donít pay them.

I did know one investigator who told me he had great success with mailers. His were sloppily written, full of spelling mistakes and grammatical errors. When I offered to edit them, he told me the secret of this success was that secretaries passed his flyers around their offices and posted them on bulletin boards in break rooms just for laughs because they were so badly written. But the next time their bosses told them to hire an investigator, they remembered his name.

I was saved from starvation by my sister, a legal secretary, who introduced me to all the lawyers she knew. A couple of them gave me assignments. The first two were murder cases. Iíd spent years telling people that real private eyes didnít investigate murders, and my first two cases proved me wrong. Some of my friends also kept me in business by sending me their overflow -- for a twenty- percent kickback, of course.

I soon discovered that trying to operate a detective agency out of oneís home can be difficult, especially with a couple of kids. Somehow, the wife and little ones couldnít seem to grasp that just because Daddy was home all day didnít mean he was available for babysitting, shopping and other domestic chores. There was also the possibility that I might place my loved ones in danger, since I seemed to be pissing off a lot of people.

I found a cheap office beneath a staircase, situated between a nurseís registry and a place that sold mail order law degrees and ordinations. A client who needed some work experience following her divorce volunteered her secretarial expertise, and a bartender friend needed a little part-time off-the-books income, so I even had a staff. (I did warn you that Iím not giving legal advice, didnít I?)

During the course of the next couple of years, I was beaten up, stabbed, shot at, cheated and robbed -- and that was just by my clients and employees. I also wound up divorced and drinking way too much. I did have some adventures though, and managed to parlay that operation into a good job with an insurance-type company, complete with expense account and company car. My ever-loyal secretary/office manager even found herself an actual paying position with a larger agency.

And we lived happily ever after.

Someday Iíll tell you about the second time I went into business for myself.