Do you want a step-by-step guide on how to start a background check business online? If yes, here is a comprehensive guide to starting a no-money, inexperienced background check business.
Okay, we’ve provided you with a comprehensive background check business plan template.
We also took it further by analyzing and writing a sample background check marketing plan backed by actionable guerilla marketing ideas for background check companies.
In this article, we will consider all the requirements for starting a background check business. So put on your entrepreneur hat and let’s proceed.
Why Start an Online Background Check Business?
In this modern world, the need for background checks by corporate organizations and individuals is now unavoidable. These small and large corporations don’t really have the time to run additional background checks on their intended employees or clients.
In addition, individuals have a need for background checks when hiring a babysitter or nanny to ensure that the person does not have a history of drugs and violence or that the person does not use drugs, so there is a great need for business that offer background check services.
When starting a business that offers background check services, your line of duty includes: checking criminal or violence history, credit card records, confirmation of professional licenses, confirmation of educational records and previous employment.
Starting a background check service is not as difficult as people think. For starters, you can even start and run the business from home and move into office space once you make enough money for leasing and project management.
This industry is a very good one to launch into if you know you want to launch into a field that is not overly competitive and saturated, as may be the case with some other industries.
You will also need to be really familiar with the terrain you want to enter.
This is why you need to be willing to do good feasibility studies so that you can learn and grow as you seek to start the background check business. If you want to start a background check business, here is a complete detail on how to do it;
Starting an Online Background Check Business: A Complete Guide
• Industry overview
The background check industry will always be interesting. why? This is due to the analytical way and the approach in which information and details are handled.
Companies in the background check industry offer employment and tenant background checks to consumers, landlords, corporations, and other organizations.
Interesting Statistics on the Background Check Industry
The background check services industry has enjoyed encouraging growth over the past five years. The industry underperformed in the wake of the recession and economic downturn.
However, the decline in unemployment increased the need for companies to screen job candidates.
In the coming years, the industry will benefit from an improvement in the labor market. However, strong growth will be slowed by an increase in vacancy rates, which will reduce demand from apartment rental companies. The background check services industry has few barriers to entry.
Although the major players in this industry have considerable computer and database infrastructure, most small businesses have minimal capital costs because only basic computing power is required to aggregate public records data.
Also, the smallest fish in this ocean can choose to get data from free sources, which costs more. As a result, potential companies looking to enter this industry can easily enter and participate in this industry.
The industry tends to the one-stop shop, offering pre-employment drug and alcohol testing, as well as education checks, fingerprints, credit and driving history reports, enrollment checks, and background checks for criminal or terrorist activities.
The events of the last 20 years have created something of a “perfect storm”for the employee screening industry, notably the 1987 train accident driven by a marijuana-smudged engineer in Maryland, the rise in identity theft and September 11 and guaranteeing terrorist alerts.
Starting a Background Check Business: Market Feasibility Research
• Demographics and psychographics
According to a study by the Society for Human Resource Management, 87 percent of employers now choose to conduct criminal background checks on potential employees, a number that has grown tremendously in the past two decades.
And while this has been a huge boost to the background check services industry, it has also led many companies within the industry to make mistakes regarding the information they provide to these employers and this has caused people their work or has resulted in class action lawsuits against the background check companies from which the incorrect information was provided.
The annual revenue value of the background check services industry is $ 2 billion and experienced a growth of 1.3 percent between the years 2011 and 2016.
In the United States, there are more than 5,400 background check companies employing more than 14,800 people.
The industry has experienced growth between the periods of 2011 and 2016.
However, in the wake of the economic downturn, the industry underperformed as fewer companies and businesses felt the need to employ anyone and therefore did not need the services of a background check business.
The decrease in unemployment rates has brought about a change in the industry, as companies feel the need to select candidates for the job.
The primary services provided by background check services in the industry are credit and criminal background checks that are generally required by employers and landlords.
Another service performed is the reference background check that most employers outsource to a background check business.
Landlords use credit history checks to assess a tenant’s ability to pay their rent on time.
The results of the background checks generally contain information that generally touches on the criminal and credit history of the individual, which generates stability in the market share for each of the services provided in its different segments.
Background check services in the United States are projected to grow annually at a rate of 2.2 percent over a period of 10 to 15 years. Operators in this industry are expected to benefit from the slow improvement in the labor market.
A 2015 report from the Bureau of Labor Statistics revealed that more than 210,000 jobs were added to the US economy in November of that year, helping the background check on businesses that are thriving on declining unemployment rates.
There is a high demand for the services of a background check firm as long as people and organizations continue to recruit new entries, making the business a lucrative venture.
First, companies conduct background checks to help keep their customers, their employees, and their businesses safe. Lack of background check, or poor background check, can lead to horrible crimes. The sad thing is that people rape, people murder, people steal.
They don’t want anyone to experience that, and they have a responsibility to protect their customers and employees.
Employee protection is essential in any business. A 2005 survey found that 2.3% of all companies experience some form of coworker violence, ranging from .6% to 8.1% for companies with up to 250 employees and up to 34.1% for companies with more than 1000 employees in total.
Additionally, a 2006 survey found that 13% of all workplace deaths were caused by assaults and violent acts.
List of Niche Ideas in the Background Check Industry
You don’t need to have a special skill or college degree to start a background check firm.
As long as you can conduct a thorough investigation and gather detailed information on each individual assigned to you to conduct a background check, then you have what it takes to run the business.
The background check industry has many niches that you can choose to focus on when starting out, then picking up more as you grow. may include:
• Check criminal records or history of violence
• Credit card verification
• Home background check
• Small Business Background Check
• Drug testing
• Confirmation of professional licenses
• Verification of educational records
• Confirmation of past employment
• Traveler Background Check
• Tenant Background Check
• Franchise Background Check
• Level 2 fbi background checks
• Competition level in the background check industry
Competition in this industry is very high, because most of the operators in the industry provide similar services.
The US background check industry is forecast to earn $ 2 billion in annual revenue with 2.2 percent annual growth over the next 10 to 15 years.
Judging by the number of background check firms that have been bought and sold in recent years and the number of startups that entered the background check business, the industry will continue to expand and consolidate simultaneously.
With the growing economy and tight competition, we are seeing larger firms showing a renewed emphasis on trying to gain market share through acquisitions.
New entrants with a business or technology background view the background check as a simple movement of data and calculate how difficult it can be.
There are also companies and investors in the human capital space who see background check services as an easy addition to what they are already doing.
Since there are few barriers to entry and almost anyone can call themselves a background check firm, new signatures will continue to appear. But all of them do not displace the fact that the industry is lucrative and will remain competitive.
Industry Known Background Check Business List
Every industry has great players who have done very well for themselves; This is the same with this industry.
Some of these brands have been around for a long time and therefore have been able to pay their dues over the years.
Here are some well-known brands in the background check business;
• Instant checkmate
• Verified status
• Central logic
• We look for
• Find the truth
• Intelligent people
• People Finder
• To know
Background checks on prospective employees help select the safest and most qualified candidate.
Pre-employment checks provide a guarantee that the person is who they say they are and that they have the experience and qualifications to perform the role they have applied for.
No matter the size of your business, pre-employment screening is a necessary hiring practice to avoid lawsuits, costly hiring mistakes, and mitigate any reputational damage.
Instinct alone is not enough to protect the reputation of the company. In addition, and to comply with the law (criminal code / criminal liability company) is one of the necessary steps for any company.
Among the many economic benefits of this service are:
• Reduce the economic costs of redeeming your image among your employees and dishonest people.
• Reduction of labor costs by reducing the firing of problem employees. Improve the profitability of the company avoiding these costs.
• Immediate deterrent effect on candidates who wish to distort their résumé or have a problematic record.
Is it worth starting a background check business from scratch or is it better to buy a franchise?
There are two ways to venture into business full time. You start from scratch or buy a franchise.
In this case of background check, it is recommended that you start from scratch.
The background check has become the norm in the hiring process and many companies, and especially small businesses, do not have the time or means to properly verify all of their job candidates.
This leaves you an opportunity to start your own background check company from scratch.
A background check service has relatively low up-front costs and a low barrier to entry – you don’t need a special degree for this service, but you do need a firm understanding of federal, state, and local laws.
Starting from scratch offers you these few advantages.
• It allows you to determine what services you will provide and choose a niche
• You have control over your marketing strategy
• You choose your speed and scale of business
• It gives you control over your business
Possible Threats and Challenges of Starting a Background Check Firm
Starting a background check business doesn’t require a lot of capital, as you don’t need to buy expensive machinery and equipment to run the business.
On the workforce side, you can get fewer employees running the business with you.
But there are some challenges and barriers that you may face when starting your background check business and they may include:
• Choosing a niche for you
• Register your business as a company
• Rent an office space
• Write a business plan
• Choosing a suitable marketing strategy
Starting an Online Background Check Business – Legal Aspect
• Best Legal Entity for a Background Check Business
Since you will be working with both large and small corporate organizations, you must incorporate your business as a body of law because it may be difficult for you to get clients to use your services if they know that you are running the business privately as an individual, not a corporate company.
Thus, you will need to register your business as a corporate entity.
Catchy Business Name Ideas for a Background Check Business
There are several trade names that you can adopt. You need to look for names that will surprise potential customers as something worth dealing with.
Here is an idea you can adopt;
• American data bank
• Argus services
• M & m screening
• Background solutions
• April search
• Certifix Live Scan
• Data search
• Center Funds
• Edge information
• Fastrak services
• Checks latch
• Lighthouse information services
• Nation check
• Paper traces
• People check
• Smart job screening
• Law infosystems
• Super eye
• Made of usa
Choosing the best insurance policy for your background check company
The background check business as we know it now offers its investigative skills to employers and companies who want to hire the best candidates and work with reputable companies, from the selection of employment references and character references to the scope of education and employment history, criminal history, professional licenses and credit.
When you work from home to provide a background screening for your clients, the concerns of lawsuits and liability claims can seem like a long shot.
But in truth, your line of business exposes you to unique risks, some of which come with price tags high enough to bankrupt a small business owner.
And even though you run your business from home, your owner’s insurance won’t cover these losses.
To protect your background check business, you need adequate business insurance coverage that can address your most pressing risks. may include:
• General liability insurance.
• Property insurance / inland marine insurance.
• Business owner policy.
• Workers’ compensation insurance.
• Errors and omissions insurance.
• Cyber liability insurance.
• Umbrella insurance
Is intellectual property protection necessary for a background check company?
If you are considering starting your background check business, then you should consider applying for IP protection in order to protect your IP.
Applying for intellectual property protection for a background check business goes beyond protecting your company logo and other documents, but also protecting your investments, patents and, of course, your company name.
If you want to apply for intellectual property protection and also register your trademark in the United States, you are expected to start the process by filing an application with the uspto.
Final approval of your trademark is subject to attorney review as required by us.
Is professional certification required to run a background check company?
It is true that you don’t need to have a special skill or a college degree to start a background check firm; As long as you can conduct a thorough investigation and gather detailed information on each individual assigned to carry out a background check, then you have what it takes to run the business, but also having a professional certification can boost your business and increase cooperative identity.
Professional Background Examiners Association
Esr online secure hiring certification
Professional license and certificate verification
List of Legal Documents Needed for a Background Check Firm
It is always very important to run your business with the correct legal documents. Why is this important?
This is vital due to the need not to risk being repressed by the necessary authorities involved in the industry in which it operates.
So, here are the documents you need to deal with;
• Corporate name reservation request
• Articles of Incorporation
• Corporate statutes
• Minutes of the first meeting
• Stock certifications
Every state or even country has different terms for issuing such licenses, ask about the requirement for the state where you plan to run your business and get the license.
Or better still, you can use the services of an attorney to speed up the process.
Writing a business plan for a background check company
Starting an employment background check business can lead to a secure financial future if you do it right.
Writing a business plan can be a daunting task for a new entrepreneur. Learning how to write an employment background check is not difficult.
If you can get past the mystique, you’ll find that a business plan only describes where your employment background check business is headed and how you plan to get there.
When you write a business plan, you formally document the foundations of your business vision.
The information in your plan (and its rationale) is essential for lenders, investors, and others who have a stake in your business.
You should also consider looking through the list of ideas below before compiling your business plan.
• Take a look at the competitors
• Learn from others who are already in this space
• Be open to ideas and corrections
A detailed cost analysis to start a background check business
Starting a background check business doesn’t require a lot of capital, as you don’t need to buy expensive machinery and equipment to run the business.
On the workforce side, you can get fewer employees running the business with you.
That will mean that all official project appointments will take place in your client’s office space or in a public place like a coffee shop or restaurant.
At this stage, everything is ready for your company to start business, but you need customers to get started.
The estimated cost of starting a small scale background check business is believed to be $ 2,300, a medium and large scale background check business is estimated at $ 46,963 and $ 92,563 respectively.
Financing Your Background Check Business
Finances are very important for business organization. Finance includes financial resource planning, creating an optimal capital structure, and effective utilization of financial resources through in-depth cost of capital analysis and capital budgeting tool.
Ways to fund your background check business may include …
• Financial debt
• Personal savings
• Raising money from investors and business partners
• Apply for a loan from your bank / banks
• Present your business idea and apply for business grants and seed funding from donor organizations and angel investors
Choosing a suitable location for your background check company
You can start your background check business from home, but the commercial building you choose will have a huge impact on your business; its size, design, location, and appearance should enhance your operations while complying with environmental and zoning regulations.
Buildings come in a variety of shapes, locations, and prices, so you need to know what your needs are and how much you can afford.
If you’ve worked on a business plan, you probably know how much you can spend on rent or mortgage, utilities, and taxes.
A cash flow analysis will help you determine if you can afford to buy commercial property or if renting is your only viable option.
Renting can allow you to conserve more of your working capital for business operations. Still, don’t forget to factor in future rent increases.
When you own your property, you know what your monthly mortgage payments will be and you are building equity for your business.
It is always a good idea to seek the advice of an independent commercial real estate consultant who can help you establish the criteria for choosing the right building.
This advisor should know the area and be familiar with the zoning regulations and any potential issues related to the building, its location, or uses to which it may be assigned.
Things to consider when choosing a suitable location for your background check business include;
• If it’s the right place
• Does it require modification?
• Taxes and infrastructure
• Enabling future growth
• Separate your needs from your wants
Starting an Online Background Check Business: Technical and Workforce Requirements
Checking the history of a potential employee or even a new acquaintance or love interest is easy in this digital age.
A simple search on the Internet can generate substantial and interesting results. Better yet, working with a third-party service ensures that all disclosure and disclosure rules are followed to the letter.
Either way, the background information helps paint a picture of the person based on past habits.
Computers and software can certainly be helpful during the background check process, but the information gathered by a computer is not necessarily as reliable as the facts that a human being can obtain.
In an ever-changing compliance landscape, automated adjudication can aid and assist the selection process, but it should not be the only means by which you “remove” candidates or employees.
Several industries, especially those that require the handling of other people’s personal and private information, require in-depth evaluations.
These include the health, finance, and home insurance industries, among others. But even if your business doesn’t operate or service these industries, there are still enough crucial reasons to manage them.
If you want to request and review any type of background check to determine someone’s eligibility for employment, you must request their permission. The applicant must complete two forms, the authorization and the disclosure.
There is no standard background check package because different industries, and even different companies within the same industry, will have different criteria regarding what constitutes an eligible candidate.
Your company should have packages configured based on business needs, packages that should be different for different types of jobs.
Any executive position must be subject to more stringent tests than a basic minimum wage employee.
The depth of your assessment should reflect the risks of criminal misconduct in each specific position.
When creating the packages, remember that if the screening guidelines are too lenient, you may hire criminals and accept unnecessary risks to your business, but if the reviews are too strict, you may miss out on opportunities to hire well-qualified candidates who pose no threat, and it can even conflict with the eeoc.
Documents and sources accessed during a background check would include social security numbers, driver’s licenses, vehicle registration, driving records, credit records, criminal records, educational history, workers’ compensation records, records bankruptcy records, character references, medical, property records, military property records, state licensing records, drug test records, previous employers, personal references, incarceration records, and sex offender lists.
The depth of the background check will depend on the nature of the job. It is critical, for example, that someone who has a history of fraud is not employed as a teller, or a possible terrorist employed in a defense facility.
The service provision process in the background check business
The background check can take from one to five days in most cases. This often depends on the type of background check an employer is running and a myriad of other circumstances.
While many employers want the quickest change possible, it’s more important to be thorough and precise.
This helps mitigate risk at a later date and ensures that employees will reflect the value of the company.
There are multiple aspects to a pre-employment assessment. Depending on the organization, industry, and job responsibilities, checks may include items such as a criminal background check, reference checks, employment check, education check, driving record, drug testing, and / or network investigation. social.
All of these things are important and they can all take time.
The best method of conducting criminal background checks is to investigate any county courthouse where an individual has resided in the course of their adult life.
There are about 3,000 counties in the United States, and unfortunately there is no reliable centralized database of criminal records.
One bottleneck that can occur is when a court orders the investigation to be conducted by one of its own clerks. In some cases, this can take a week or more and there is no reliable alternative. other delays can occur when a record is found.
If your background screening company is doing its job correctly, it will use methods to ensure that the record they report belongs to the person they are screening, is accurate and up-to-date, and is legally reportable.
When it comes to resuming verifications, results can take between one and three days.
However, delays can occur if a previous employer does not respond to a request in a timely manner.
It is also not uncommon for there to be delays in verifying secondary education during the summer months or holidays when schools are not adequately staffed to respond to such requests.
Industries with high turnover rates, like hospitality, tend not to do a lot of background checks.
However, most other industries conduct in-depth background checks on job applicants because they will be liable for damages for things that employees might do during their employment.
Employers conducting background checks will review publicly available records, most of them generated by the government.
They will also scan social media and other digital spaces where people generally disappoint their guards and express their views.
Starting an Online Background Check Business: The Marketing Plan
Marketing Strategies for a Background Check Business
Multiple marketing factors can affect the profitability of the bottom line. However, one characteristic seems to be part of the shared DNA of all effective marketing programs.
Experienced entrepreneurs often have a solid foundation in marketing. But to achieve your goals, there are a few other things you also need to learn about marketing your employment background check business.
• Marketing experience
• Measurement and evaluation
• Price matching
Finding the Right Price for Your Background Check Business
Over the past decade, the consumer reporting and background check industry has seen significant growth. with growth usually comes competition, and with competition usually comes aggressive pricing.
With certain background checks, counties, states, and data providers charge jurisdictional and data access fees.
Therefore, to get the right price that covers your expenses and suits your prospects, you should consider the following details.
• Background check type
• Jurisdictions (location) to look in
• Access fees paid for information
• Competitor price
• Information the customer needs
Possible Strategies for Winning Competitors in the Background Check Business
Today, success is about making friends. it’s about finding common ground with your competitors. it’s about collaborating with each other to collectively get more customers.
If you want to take your background check business to the next level, understand the power of partnerships.
Stop seeing your competition as your enemy. and learn to embrace it, instead of fighting it.
By joining forces with your competitors, you will worry less about losing sales and can focus more on growing your business.
Now, the question is, how do you create joint ventures that deliver results, without hurting your own profits?
For starters, be sure to do your homework before jumping into any kind of partnership with a competitor.
You need to understand and get to know them before you jump into bed with them, find a space, and make the most of it. Effective ways to leverage your competition to boost your background check business include:
• Conduct free value-based webinars
• Create branded pdf reports
• Refer service to get services in exchange
• Give 100% commission on a front-end service
Strategies to Increase Customer Retention in the Background Check Business
The only way for a business to be profitable is for its customers to buy its products or services.
Historically, companies have spent the majority of their marketing budgets on customer acquisition, the idea was that if companies reached more people, they could sell more.
Today, as companies use data to determine customer motivation and behavior, they are realizing that customer retention is where they should focus their marketing efforts.
Retention requires a serious commitment to building long-term relationships. But often, retaining existing customers is more profitable and even more profitable than acquiring new customers.
With every business that has its own unique customers and target audience, it can be difficult to identify that strategy that builds trust and ultimately brand loyalty.
In fact, many times it is a combination of tactics and strategies, coupled with real-time adaptations to individual customer needs that facilitates lifetime customer loyalty and enables a business to achieve customer retention goals.
Loyal customers are often the ones that lead to referrals. In other words, the lifetime value of your existing customers extends far beyond the obvious. Ways to increase customer retention in your background check business include …
• Establish and meet customer expectations
• Nail the first impression
• You will always be adding value
• Improve competitive advantage
• Build ‘sticky’ customer loyalty
• Let customers know what you are doing for them.
• Focus on becoming a dependency
• Listen to them
• Keep your eyes open for changes in the external environment
• Know your weakness
Strategies to increase brand awareness and create a corporate identity in the background check business
Corporate identity actually refers to the overall image of a corporation / start-up / business in the minds of your audiences – customers, your own employees, partners, competition, etc., your company needs to be recognizable and stand out from the rest.
Corporate identity allows your brand to speak with a single, consistent voice. Over time, you begin to grow in people’s minds and begin to create a particular impression on them.
In a world completely awash in advertising, this is extremely important! you can adopt the following modes;
• Send proposals
• Word of mouth ad
• Create an online presence
• Create a supplier / distribution network for your background check business
It is not enough to simply state a company’s objective as maximizing the present value of total profit, as this does not differentiate it from other companies and says nothing about how this objective will be achieved.
Instead, a business and marketing plan should suggest how the company can best use its unique resources to maximize shareholder value.
Ultimately, your company’s distribution goals must be highly related – some will improve upon each other while others will compete. for example, it should be more exclusive because a greater distribution of the service will generally imply less intensity and less reach. Cost has to be traded for speed of delivery and intensity.
Given the need for balanced markets, the same distribution strategy is unlikely to be successful for every company. The question, then, is exactly what strategy should you use?
It may not be obvious whether higher margins in a selective distribution environment will offset smaller unit sales.
Here, various research tools are useful. In focus groups, it is possible to assess what consumers are looking for which attributes are most important.
Scanner data, which indicates how often various background and fact checks are checked whose prices correlate with each other can suggest the best placement strategies.
It may also, to the extent ethically possible, be helpful to observe clients in the field using the services and making decisions.
So you can look at factors like:
• How much time do you spend completing your research?
• How many checks are compared?
• What different types of controls and access are compared or substitutes (for example, drug tests and license verification?
• What are the “supplemental” facts that others’ background checks may indicate if placed nearby. Channel members, both customers and potential individuals, may have valuable information, but their comments should be viewed with suspicion as they have their own agendas and can distort the information.
Tips for Running a Background Check Business Successfully
A background check is an essential part of the candidate selection process. A background check is the most accurate way to verify a candidate’s credentials. It also allows hiring managers to learn less than desirable information that many candidates will not share on their resumes.
Every hiring manager wants to make sure they find the right candidate for the job. A candidate’s credentials are just one piece of that puzzle.
Employers want to hire people they consider responsible and trustworthy. While background checks are a great way to confirm a candidate and avoid hiring mishaps, hiring managers must follow a set of guidelines to protect both the candidate and their company.
There are many local and national laws to protect the privacy of job seekers. Background checks must be reasonable and are best performed when aligned with the job profile and local laws.
Therefore, to run your background check business successfully, you must adhere to the following.
• Be reasonable and open
• Be detailed and inexpensive
• Create good marketing strategies
• Secure your plan
• Never underestimate the power of customer feedback