AURORA, N.Y., Aug. 29, 2013 /PRNewswire/ — Niche marketing agency PI Profits (www.piprofitsagency.com) has put the spotlight on one of the critical problems for many private investigation firms—low profitability. The reasons behind meager or nonexistent profits are numerous, but the results are always the same. Firms that can't generate a reliable profit may flounder for a few years before quietly going out of business. To address this issue, PI Profits founder Paul Beauchemin has developed a set of solutions that can turn any struggling firm into a leader.
(Photo: http://photos.prnewswire.com/prnh/20130829/PH71430)
The numbers tell the low profitability story quite succinctly. Over the past three years, gross margins at PI firms ranged from 24 to 28%. After-tax profit for the same time frame ran about 1.8 to 7%. Firms closer to the 1.8% number are just barely hanging on.
Labor is the prime factor dragging down profitability. Private investigation is a labor-intensive occupation, meaning employee costs soak up a sizable chunk of potential employee revenue, anywhere from 50 to 75% by one estimate. Even at an average revenue per worker of $90,000, these costs stymie any chance of sustainable growth—at least without making some proactive changes.
Recruitment and retention are major components of PI firms' high labor costs. Because the median income of a PI employee is only $28,000, skilled employees often move on to greener pastures. Plus, they frequently take valuable clients with them. The firm is left to pick up the pieces, hiring and training new employees and courting new clients. It's a draining cycle that saps not only money, but time, energy and ambition.
"Cutting costs is the quickest, most obvious solution to the problem of low profitability, but many firms don't know where to start," explained Beauchemin. "Outsourcing is a relatively easy cost-cutting approach that can be implemented almost immediately, with tangible results almost overnight. Accounting and payroll, administrative tasks and marketing are a few areas where the occasional help of a freelancer is a more economical investment of time and money, rather than hiring an employee or tackling the work yourself."
Beauchemin also pinpoints the other major component of the profit margin equation—revenue. He advises firms to think bigger and think creatively when considering which companies and individuals to target as potential clients. For instance, companies that are subject to the regulatory power of the federal government often need help avoiding needless penalties. PI firms can more effectively interact with big bureaucracies like the EPA and FDA that like to swamp small businesses with mountains of paperwork.
Corporations also deal with a host of internal and external factors that provide opportunities for PI firms to demonstrate their worth. Corporate espionage costs tens of millions of dollars, while activists and whistleblowers sully companies' reputations. Private investigators can expose spies, safeguard essential data and fight back against public smear campaigns. Even HR departments can benefit from a review of background check procedures from a reputable PI firm.
One important tip applies to PI firms regardless of their profit margin, and that is the value of maintaining an aura of professionalism. Investigators are encouraged to become experts in their fields both by learning on the job and seeking out professional development opportunities. The film noir portrait of the seedy "private eye" has a certain romance, but doesn't actually bring clients to the door—knowledge and professionalism do.
Like any niche marketing agency, PI Profits is focused on achieving results without a lot of smoke and mirrors. Beauchemin encourages prospective clients to get in touch by filling out a short contact form.
About PI Profits
PI Profits is a results-oriented marketing, sales and customer service agency dedicated exclusively to the private investigation niche. PI Profits has proven online and offline marketing strategies that are focused on increasing net, bottom line profits.
Paul Beauchemin has over 30 years' experience as a Principal Investigator for a Fortune 100 company, during which he has patented numerous technologies. He also has 20 years' experience as an entrepreneur, working directly with hundreds of millionaire business creators.
Contact:
Paul Beauchemin
Phone: 888-344-0434
Email