The Traffic Accident Reconstruction Origin -Article-
A Business Analysis
The Feasibility of a Solo Practice in Traffic Accident Reconstruction
by Denise Aquilante Johnson
University of Phoenix
This article presents a feasibility study on the business considerations in forming a solo traffic accident reconstruction practice. This task was approached from an academic perspective and fulfilled the thesis requirements of the researcher's Masters of Business Administration program. This article is excerpted from that thesis.
The subject of this study was a police officer employed with large municipal police department. During the course of his sixteen-year law enforcement career, he specialized in the area of accident investigation and reconstruction. He now approaches the time where he is eligible for retirement. He is faced with new opportunities. He faces new career decisions. This officer finds the idea of a solo reconstruction business as attractive. Should he retire now? Does he have the skill set necessary to be successful?
This study addresses these and other relevant issues and makes recommendations that will increase his business' likelihood for success.
Strengths Weaknesses Opportunities and Threats - a SWOT Analysis
A successful strategy for owning any business, including a reconstruction practice, must start with a realistic examination of the organization at hand. This examination should produce an objective assessment of the organizations internal capabilities, its Strengths and Weaknesses, as well as its external situation, Opportunities and Threats. The outcome in this process, known as a SWOT analysis , is to develop a strategy that maximizes the organization's strengths and opportunities, and minimizes its weaknesses and threats (Pearce & Robinson, 1997).
SWOT Analysis - Strengths
Strengths are thought of as key competitive distinctions that would give a firm an edge over other firms with the same product lines (Pearce & Robinson, 1997). Although this private reconstructionist candidate would be new to this arena of business, several strengths would be brought to the table.
First are the credentials of practitioner. A review of his Curriculum Vitae (Appendix A) provides an understanding of the depth and breath of his police, reconstruction, and training experience. In addition to the ACTAR certification, he is currently pursuing an undergraduate degree in mechanical engineering. These qualifications are impressive for anyone that practices accident reconstruction.
The second strength offered by the candidate is his experience. The day to day workload at a major metropolitan police department exposed him to hundreds of collisions. These investigations, conducted over nearly two decades, were primarily conducted on scene. Each of these on scene investigations gave him the opportunity to analyze and examine collision evidence, both commonplace and unusual. It would be difficult to place a monetary value on this broad experience base.
The combination of these two strengths, both education and experience makes this candidate unique in his area. Many are educated. Many are experienced. Few are both educated and experienced.
Name recognition and ethical behavior are other strengths the aspirant brings to the table. Practicing reconstructionists cite "word of mouth" as one of the leading sources of new business (www.tarorigin.com/arnews/arnews4-97/). Name recognition must occur for the right reasons. Good name recognition is consistent with ethical behavior and is key in this business. This candidate is known within his local law enforcement community. This community consists of the police department as well as the offices of the District Attorney and Public Defender. He has a reputation for producing work that is credible, honest, and able to hold up at trial.
SWOT Analysis - Weaknesses
Weaknesses can be found in any organization. They are considered to be a lack of or limit to resources that are necessary to accomplish the objective at hand (Pearce & Robinson, 1997). This potential organization is no exception. Weaknesses would fall into three categories, business experience, financial resources, and client resources.
The first weakness is the aspirant's lack of business experience. A career in Law Enforcement has given the candidate solid technical capabilities. Unfortunately, this experience has given him little in the way of preparation for the skills necessary to operate a business. In his role as President of the organization, the solo practice reconstructionist must provide all key functions. He must determine the overall mission and vision of the organization. Beyond designating these goals, he must see that the goals are attained. He must also develop a strategic plan, complete day to day operations of the business, and market the services of the company. These business skills would represent a significant challenge to this aspirant.
The next weakness is capital to finance the business. It is foreseen that this venture would be financed from the candidate's current assets. Like many individuals nearing the end of their career, these assets were gathered in the name of retirement. Their use places the funds, and ultimately retirement, in jeopardy. The candidate must weigh his retirement goals, his financial position and his appetite for risk. He should be prepared for retirement without his savings should the venture fail. This of course is weighed against the retirement lifestyle offered by a successful reconstruction business. This decision and its consequences are deemed central to the aspirant's long term success.
Notably, incurring debt in order to finance the business is deemed an unwise option to finance the venture. Debt adds the cost of interest to the price of doing business and makes profitability that much harder to attain. Incurring debt also places retirement in greater jeopardy.
The last weakness centers on client resources. The majority of the work done by the aspirant has been through the police department; consequently, there is no current client base. This lack of clients results in a non-existent revenue stream, which is essential for a business.
SWOT Analysis - Opportunities
Opportunities speak to the external environment of the organization. They can be thought of as "grossly favorable situations". These are situations upon which a firm could capitalize and improve their standing (Pearce & Robinson, 1997). The main opportunity for this potential organization is the sheer number of accidents available for reconstruction.
In 1997 (the latest statistics available) there were more than 35,000 accidents of all types in this geographic area. These accidents resulted in 176 fatalities and 21,304 persons injured (State accident statistics, 1998). Of this number of accidents, approximately 20% (7,700 accidents) will require some form of reconstruction outside of the police department (Aspirant, 1999). This occurs primarily at the insurance company or attorney level and is a result of suspect accident circumstances. Such circumstances might include: contributory negligence on the part of the other driver, right of way issues, fraud, and injuries inconsistent with collision forces (Aspirant, 1999).
A second opportunity is the approach to the market taken by other reconstructionists in the area. Most approach reconstruction as a "side business." That is they have regular jobs, typically with police departments. Consequently, they do not pursue business in a structured and planned way. Ninety-four percent of respondents to a survey cite that their referrals come via word of mouth (Survey Results, Q-7). Consequently, a sound structure and active marketing offer promise for success.
SWOT Analysis - Threats
Threats are identified as situations that can be detrimental to the organization (Pearce & Robinson, 1997). There are several threats that loom for this organization. Threats fall predominantly into the category of competition, which is listed as both an opportunity and a threat.
This aspirant's competition falls into two broad categories, large and small providers. The large providers are structured organizations. These organizations have been in business for many years and produce revenue in excess of what a small provider or stand-alone operator can generate. These organizations typically provide general engineering consulting services (aviation, metal failure, and product failure liability) in addition to accident reconstruction.
Small providers are reconstructionists who generate revenue below $200,000 per year. They typically operate their business on a part-time basis. While these competitors are not as organized as this endeavor plans to be, they are already established and practicing. Part-time handicaps notwithstanding, they have developed contacts and inroads into the market, have some referral base in place and have a revenue stream in place.
Analysis - Identifying Critical Success Factors
The analytic approach to the question will be as follows: Determine what elements of owning a single practitioner small accident reconstruction business are critical to its overall success.
The analysis will be presented in the following way:
1) Define the critical success factors for a business in traffic accident reconstruction and analyze the ability of the candidate's organization to achieve these factors.
2) Recommend a course of action based on theses objectives.
First, the critical success factors must be defined in order to answer the question of feasibility. This will be accomplished with both primary and secondary research data, as well as general research in the field of accident reconstruction.
Primary Data Source -The Survey
The primary data comes from responses to a nationwide survey of accident reconstructionists. The survey was developed for reconstructionists who practice as a stand-alone business. It excluded those who practice as part of their job and those that work in a multi-person firm. The survey was sent to 184 randomly selected reconstructionists listed on the ACTAR web site. Fourty-four were gathered at an accident reconstruction conference (AIRP). The survey was also posted on the TARO web site bulletin board (http://www.flinet.com/~bwright/ARnews/ARnews9-98/).
In total, there were 78 responses, of which 73 could be used. The five responses that were not used were rejected for a variety of reasons including: an incomplete survey, not meeting the requirements of the study, or reconstructing accidents only as part of their job. The response returns from the specific survey venues are as follows: 37 from the ACTAR random sample (47%), 14 from the AIRP conference (18%), and 27 from the TARO web site (35%).
The objective of this primary data survey is to identify a profile of the typical privately held reconstruction practice and obtain comments that identify the elements essential to the success of the business. See Appendix C to review the complete survey tool. This data was instrumental in developing the profile of critical success factors.
Secondary Data Source - Accident Statistics
The secondary data came from two main sources, the State Highway Patrol and the National Center for Statistics and Analysis division of the National Highway Traffic Safety Administration (NHTSA). This data provided the basis for determining the market as a whole.
These database systems are the Fatality Analysis Reporting System (FARS) and the General Estimates System (GES). The FARS database holds the census for fatalities and pools data from 50 states as well as the District of Columbia and Puerto Rico. The GES data is a probability-based system dealing with non-fatal injury and property damage motor vehicle crashes. This data comes from a pool of 60 locations throughout the United States and is used to determine national crash statistics (Traffic Safety Facts, 1997, p.1). The statistics begin with general data of all types of accidents and progressively slice the data into more specific information.
Data Analysis - Critical Success Factors
Definition and analysis of the critical success factors: Marketing
The ability of any organization to survive requires a market for the service being offered. Thus, marketing issues must be discussed first. Results obtained from the primary data survey indicate that developing a client list prior to leaving a paid position is one of the critical success factors for accident reconstruction businesses (Survey Results, Q-10). In essence, the idea is to create the market demand for your business while you have a steady income.
As previously stated in the opportunities section of the SWOT analysis, there are sufficient numbers of accidents to provide work. The target market for this business would be the counties immediately surrounding the candidate's home. These counties are all within a reasonable driving distance. The actual target market for clients would be centered on the various categories of attorneys, which the primary survey indicates, are a good source of business (Survey Results, Q-7).
A second marketing consideration is the service offering of the business. The primary survey indicates a wide range of collision analysis services is important in being able to gain cases. It is recognized that specialization would limit the caseload and revenue. The majority of reconstructionists surveyed offer a wide range of collision analysis services (Survey Results, Q-5). These services and the frequency of their offering are listed in the following table.
FREQUENCY OF OFFERING
Speed determination in ABS equipped or electronically stabilized vehicles.
Driver perception/reaction analysis.
Time and distance studies.
Speed estimates based on vehicle damage.
Low speed impact.
Biomechanical analysis of injuries.
Seatbelt and airbag analysis.
Collision report accuracy critique.
DUI involved collisions.
Computer generated collision simulations.
Marketing would prove to be an area of weakness within this organization. While there appear to be a large number of accidents available to reconstruct, little is known about the current flow of referrals to other reconstructionists. There is also insufficient information to understand the true nature of the amount of reconstructionists providing services in these counties. Further work would need to be done by the candidate to better understand the way the market works and how to move into the market in a structured way.
Definition and analysis of the critical success factors – Key Start-Up Issues
The majority of survey respondents cited start-up business issues as a critical success factor. Money issues were cited as a major consideration. "Have money saved to cover times when business is slow" was identified by 35% of the respondents. Thirty-four percent also identified "have a side income of some sort, such as teaching safety classes, to cover times when business is slow" as important for success (Survey Results, Q-10). This side income could be either in some collateral field such as teaching accident reconstruction or employment in a completely unrelated field.
The message about capital reserve is clear. The respondents cited a capital reserve as necessary to fund the times when the business cycle was slower than expected.
Others addressed this same topic in a different manner. Forty-three percent of the respondents advised to "start the business on a part time basis" (Survey Results, Q-10). Also, 29% of the respondents believed it was important to "develop your client list before you leave your current position" (Survey Results, Q-10). The survey results indicate that building a full time client base did not happen quickly. Forty-four percent of the respondents took up to two years to reach a full time client ratio, 22% up to four years, and 18% up to 6 years (Survey Results, Q-9). Failure to have a list of referring clients would prolong the length of time needed to build to a full time case load and increase the start up capital requirements.
The issue of lack of established clients has been previously discussed. A side income is one manner to directly address this open-ended problem. A steady side income would help to alleviate these concerns. The data supports this idea. The respondents are clear in suggesting that the business should be started on a part time basis. Following this advice also reduces the risk concerns of the organization.
Definition and analysis of the critical success factors – Ethical Considerations
Ethical considerations immediately followed start up issues on the list of critical success factors and "Don't compromise your principles for the client" was cited by 66% of the respondents as a key critical success factor (Survey, Q-10, 1999). This consideration also produced a fair amount of comments on the topic (a few quite colorful and descriptive). This leads the researcher to conclude that it is an important issue, and one about which respondents felt strongly. Some of the printable comments include:
"You live and die by your reputation (Survey Results, Q10 – Other Reasons)."
"Know and don't go beyond the limits of what you can do for the client (Survey Results, Q10 – Other Reasons)."
"Give 10% more than you charge for (Survey Results, Q10 – Other Reasons)."
"Tell the client the way it is, not necessarily the way they want to hear it (Survey Results, Q10 – Other Reasons)."
"Know your own limitations and work within them. The client will appreciate your services more (Survey Results, Q10 – Other Reasons)."
"Be honest and ethical (Survey Results, Q10 – Other Reasons)."
Definition and analysis of the critical success factors – Certification -Formal Education
Certification was cited as important to the success of the business. (Survey Results, Q-10). Forty percent of the respondents felt that some form of certification helped to legitimize their work. This could come through ACTAR, state certification or a degree in engineering. One illustrative comment was as follows, "Accident reconstruction has become a very specialized and engineering involved arena. Gone are the days of walking into a courtroom with only a minimum of education, training, and experience..."
Definition and analysis of the critical success factors – Use of a Service Agreement
This area was cited as the fourth category of success (Survey Results, Q-10). Survey responses contained fair amount of discussion about the need of a service agreement. This is important because many reconstructionists cite examples of lack of payment or slow payment. The frequency of occurrence is difficult to define. Nonetheless, the frequency of responses indicated that it was important.
In a sense, this also ties back into the issue of ethical considerations. A proper service agreement will define the parameters and objectives of the work, as well as the outcome, and the cost. Having a service agreement in place covers the disclosure end of the client consultant relationship and helps to avoid miscommunication with the client.
The use of a service agreement should be part of a standardized system for business operations. All such agreements and collateral materials lend credibility to the organization if done correctly. Development of such systems and processes falls under business acumen, a weakness of this potential organization.
Definition and analysis of the critical success factors – Business Operations
The fifth major category of critical success factor falls under the general heading of business operations. "Take training in operating a small business" as well as "have a solid marketing plan then work the plan" were two of the key critical success factors cited by 15% and 18% of the respondents respectively (Survey Results, Q-10). In addition to training in small business operations, one respondent commented that working as an apprentice to a successful small business owner (not necessarily in reconstruction) would be important (Survey Results, Q10 – Other Reasons).
This area also falls under the category of a weakness for this potential organization.
Recommended Course of Action
Based on the above discussion, the assessment of this candidate is mixed. He has the necessary technical qualifications cited as crucial for success. He also possesses the certification and ethics. Clearly, a foundation for the business does exist. Unfortunately, these skills alone are probably not sufficient. The aspirant lacks several competencies identified by this study as key success factors. This researcher's recommendation is simple. Pursuing a solo reconstruction practice with the current skill set would be unwise and likely fail. Fortunately, this is not the end of this recommendation. It continues positively for the candidate.
This aspirant wisely chose to perform this analysis before leaving his stable situation at the police department. He can still pursue his goal of a solo reconstruction practice but he should now address identified weaknesses as intermediate tasks that must be accomplished prior to beginning the business. These efforts should be made systematically .
The researcher offers the following recommendations for strengthening the aspirants skill set:
1) Build business skills.
a) Take formal business classes at a local college.
b) Buy and become familiar with billing and business software.
c) Research and price a Certified Public Accountant to advise on business records.
d) Seek business advice from a mentor currently working in the field.
e) Try to successfully manage his household budget.
2) Find a flexible part time job to ease the transition.
3) Work on building a client list while still employed at the police department
4) Continue to build his savings account for the transitional phase of the business and retirement.
5) Maximize retirement benefits from his current job.
6) Develop a service agreement.
7) Continue his formal engineering education.
8) Plan on transitioning on a part time basis
Mapping progress while completing these intermediate tasks can be accomplished with the same measuring techniques that generated this analysis. If successful in strengthening his skills, the SWOT analysis will continually evolve toward a more favorable view of the business. Meeting key success factors identified in the survey should become progressively easier. This indicates progress.
Moving into private business is a daunting prospect. The task list above is far from trivial. It is hard work. The technical qualifications acquired by the candidate shows that is willing to do hard work. He should now turn this willingness to commit toward his weaknesses. There are great potential rewards for the work. It could pay handsome dividends: a lucrative, flexible, and satisfying lifelong career.
Comments from the survey.
Raw Survey Results (MS Excel Required)
Her 23 year career spans both clinical and business areas. In the last 12 years she has held key positions in three start up businesses. Her experience in operations and the start up environment provide a keen understanding of the issues facing new business ventures.
Ms. Johnson gratefully acknowledges the assistance of those that contributed their time for the survey and other research that formed the basis for this paper. She offers her experience with this project with interested parties. She can be reached at firstname.lastname@example.org.