INTERMOUNTAIN PI BLOG | 7/21/2020 | 4 TIPS FOR A PROFITABLE PRIVATE INVESTIGATOR
To paraphrase former Chicago mayor, William Hale Thompson, “bill early and bill often.” To be a successful private investigator it is imperative that you, a.) bill the client for all your time, and b.) ensure that all expenses are passed on to the client. German philosopher Friedrich Wilhelm Nietzsche said, “the devil is in the details.” Nowhere is this more evident than in the financial matters of your firm. Accordingly, consider these 4 tips for a profitable private investigator.
1. RUN PERIODIC FINANCIAL REPORTS
How much are you bringing in each quarter? What are your top three expense categories? What percentage of your budget is spent on marketing? Is your gross revenue up over the previous year? Is it down? If so, why? You will NOT become profitable if you can’t answer those questions. Most accounting software programs, like Freshbooks and Quickbooks offer robust report capabilities. Print out a P&L Report (Profit and Loss) and learn how to read it. It’s simple: sales minus costs equals profit. You can’t be profitable until you know where your money is going.
2. DON’T PUT ALL YOUR EGGS IN ONE BASKET
The PI Coach John Hoda learned this the hard way back in his lean years. So did the American PI, Paul Jaeb. The meaning is simple. Don’t focus your efforts on a single customer at the expense of everything else. For example, if your best customer is responsible for 50% of your revenue you’re in a precarious position. Losing that one customer could mean the end of your business. Mr. Hoda recommends never allowing a single customer to be responsible for more than 20% of your revenue. No one likes to lose customers. But you can absorb a 20% loss and still survive.
3. OFFICE ADMINISTRATION FEE
The third of my 4 tips for a profitable private investigator has to do with passing on all costs to the customer. You will have certain fixed expenses, such as your office lease, utilities, website fees and your case management software. Adding an office administration fee to each client’s invoice is a way to pass on those costs. For example, if you normally bill $90.00 per hour, your office administration fee could be $180.00; the equivalent of two hours of your time. This can cover your monthly website fees, case management costs and other expenses.
4. MEASURE EVERYTHING. EVERYTHING.
Finally, the last of my 4 tips for a profitable private investigator has to do with Pearson’s Law: “When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.” At the risk of repeating myself – the devil is in the details. Measure everything: number of clients, active cases, referrals, quality of video…everything. It’s time consuming to do so, but it’s the difference between a successful private investigator and someone that used to be a PI.
Of course, there are a thousand ways to become profitable. However, these 4 tips for a profitable private investigator are a good start.
Until next time, this is Private Investigator Scott Fulmer reminding you the game…is afoot
SCOTT FULMER IS A 30-YEAR VETERAN PRIVATE INVESTIGATOR AND THE PRINCIPAL AT INTERMOUNTAIN PI. HE IS AUTHOR OF THE TRUE CRIME MEMOIR, CONFESSIONS OF A PRIVATE EYE AND A DECORATED COMBAT VETERAN OF THE 1990/1991 GULF WAR. HE HAS A DEGREE IN CRIMINAL JUSTICE AND IS A MEMBER OF THE PRIVATE INVESTIGATORS ASSOCIATION OF UTAH. SCOTT LIVES SOMEWHERE IN THE ROCKY MOUNTAINS NEAR THE CROSSROADS OF THE WEST IN HISTORIC SALT LAKE CITY. YOU MAY CONTACT HIM BY EMAIL AT: MEDIA@INTERMOUNTAINPI.COM OR SCHEDULE A FREE VIDEO CONSULTATION.
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