We recently wrote a blog about how hard work coupled with “working smart” is very good for your business. In that blog we offered a handful of specific suggestions on ways that private investigators / risk management firms can improve. However, in addition to developing evolved strategies and methods it is equally important to measure and benchmark your business on a number of levels.
We humbly offer here a few private investigation industry benchmarks and metrics to help you measure and evaluate the growth and progress of your business…
- Projected Revenue Growth – The aberration of 2020 aside and not contemplated here of course, but the Bureau of Labor Statistics projected in 2019 that demand for private investigation services is projected to grow at a very high (8% annual) rate for the next 10 years. This was driven by anticipated demand for information and security increases. We would never recommend extensive hiring in anticipation of that growth but it may make sense to plan for and anticipate the possibility those growth levels.
- Gross Margins – Paul Beauchemin (principal investigator for a Fortune 100 company) stated in privateinvestigatoredu.org, albeit a few years ago, that gross margins for PI Firms typically run between 24% and 28% of revenue. That may be a little bit conservative today if your firm has developed a strong reputation, performs well for existing clients and manages the day-to-day…but overall may arguably be a good benchmark. If you are not at those levels, you might consider your pricing or your value propositions.
- Operating Margins – In our discussions with a number of industry participants, we have inferred that operating profit margins approaching or just over 10% are considered very healthy (although the range can be wide and margins are often below that number). Firms that leverage technology, manage their businesses closely, have strong reputations and a track record may even exceed those numbers. It bears mentioning that even well-run smaller start-ups might struggle to hit that benchmark early on.
- Video Percentage – A conclusive/definitive industry standard may not arguably exist. 30%? 70%? The answer is not clear. There are often extenuating circumstances and limited sample sizes for a specific client. However, as you evaluate and assess your business, understand that existing clients are considering that number. Whatever your past success rate / experience is, it pays to constantly improve that percentage.
- Showing your prospective clients the CROSStrax operating platform and its numerous controls and SOC 2 Type II Certification can be invaluable in sale presentations and with RFPs
- Utilizing The Investigator Alliance can help you find cost effective and proven investigators to manage investigation costs
- The CROSStrax system’s technology, processes and controls drive efficiencies so as you grow, more money flows to the bottom line
- CROSStrax GPS Tracking of both internal and outsourced investigators can help preclude “ghost investigations”; Add’l controls can ensure investigator focus; Results / videos should follow.
Measure and improve your private investigation business. We would love to help.