| Starting a Collection Agency or Your own business, What you need to know |
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Money Making And Home Business Ideas If you are wondering if you should or can open your own collection agency or your own business, the answer is yes, you can! There are some things you should do before opening your own agency or business.
If you decide on a debt collection agency, you should have experience in the collection industry. You must know what type of business the collection business is before you can understand what you are getting into. You need to know the day-to-day activities of collections. You need to know the laws in the state you are in and the states you will be collecting in as well as Federal laws you must follow. You want to have experience dealing with people and learn some negotiation and mediation skills.
You should also be ready to spend a lot of time getting people interested in your business. If you have worked in the industry for other people, new clients will know you have experience and be more comfortable placing accounts with you. If you don’t have any experience, you need to build credibility so potential clients will know you can do the job and do it well. One way to learn more about the industry for free is to join www.credit-and-collections.com which is my free list and website for business people in the credit & collection field. I created this list to share ideas, information, and offer an opportunity to Network. This list is for small and large business owners, entrepreneurs and anyone in the credit & collections field. The website offers a free e-book with letters, forms and information on starting your own agency or business. There are many people on the list who have been in the collection industry for over 35 years and some who are trying to start an agency. There are credit managers, business owners and entrepreneurs. You can ask a question and get many answers which are invaluable information. When I started my collection agency in 1998, I could not find the answers to my questions, which is why I created this list and the website. It has been around now for almost 10 years and we have over 750 members. I learn something from this group every day.
What is a Collection Agency? A collection agency is a service business. Bill collectors act as agents for clients who could not get paid for products or services that they provided their customers. A business places past due accounts with an agency, and the agency tries to collect for them. The agency collects what is due on the bill and keeps a commission on what they collected, and then sends the clients the rest of the money. Some agencies charge a flat monthly fee and offer different stages or types of collection efforts. You will want to search the internet for agencies and request their information so you can see what they charge, what services they offer and how they present themselves.
Agencies can collect for hospitals, physicians, lawyers, retailers, service providers, credit card debt, loans and many other types of businesses. Any business that extends credit or accepts checks may have a need for a collection agency. Collection agencies normally provide asset searches, skip tracing, credit reporting, debt collection services, demand letters, public record searches and various other services which might include a letter service or accounts receivable outsourcing. What you decide to provide is entirely up to you. Some agencies only offer one service, while others have a huge list of services they provide.
You will have to write a business plan. If you are going to borrow money to start your agency or start any business, you will need a business plan to show the bank. Usually a business plan is made up of:
An Executive Summary
A Business description
Marketing Strategies
Competitive analysis
Operations and management plans
Financial statements.
I have an example of a Business Plan and a Marketing Plan in my book, How to make money collecting money, Starting a Collection Agency. These can be customized to fit your particular business. You should also include a cover or folder for your business plan. Include a title page and a table of contents. This will be very professional and impress any bank you may present it to. You should LOVE collection work. You either love it or hate it! If you love it, you will be passionate about making your business work. You will need to have communication and investigative skills. As in any business, you will need to be organized, have empathy, persistence, customer service skills and master the art of negotiation.
Your will want to have your marketing plan in place before approaching a bank for a loan. This way you can include your marketing strategies in your business plan. A marketing plan normally consists of:
A description of your target market
Description of competitors
Description of your services
Your marketing budget
Pricing strategy
You will need to market your agency or business to obtain clients. You first need to know who your potential clients are and who you want as customers.
You can look in your local yellow pages and newspapers. Any business that extends credit may need the service of a collection agency. This could include banks, oil companies, contractors, florists, printing companies and more. If you want to collect on bad checks you can also target any business that accepts checks as a form of payment.
You then need to decide what methods you want to use to market your business. Do you want to use direct mail, ads in local papers or magazines, a website? What is your budget? Once you know your budget, you will know what you can afford and then you have to decide what will give you the biggest return for your money. To do this you need to research your potential clients, ask them if they use an agency now, and ask them how they heard about that agency and if they are happy with the service. Ask them, if there was one thing they could change what would it be? Then you can offer that as part of your service. Remember when marketing any business, you must follow up. If you don’t follow up, the potential client may think you are not really interested, or that if you aren’t persistent with them, you may not be with debtors.
It is a good idea for anyone who is thinking about starting their own business, whether it is a debt collection agency or any other business to join Associations in their field. The best association I joined when I started my agency was The American Collectors Association. You may also want to join your local chamber of commerce or rotary club. There are also many online venues where you can network and learn at little or no cost.
You may want to hire a consultant to ask a few key questions before you decide on the type of business you want to start or for tips on working from home with children, and appearing professional or renting office space and hiring employees. When you join Credit & Collections, you can purchase deeply discounted consulting from me on Starting a Collection Agency or Starting a Home Based Business. Maybe there is someone in your local area that has a business similar to the one you would like to open that would consider being a mentor.
Remember, research, networking and patience are very important. I cannot stress this enough. Ask questions and ask for help, if you don’t know. I just love when someone emails me to ask me a question about starting their business or agency. I love it because it is so exciting! I remember when I was starting my agency; I had to create Credit & Collections to have a group of people to ask questions. I didn’t start the group because I knew everything about the industry, I created it to attract all the people I know knew more than I did and I wanted to learn from them. I know how exciting and scared I was to start my agency so I know the excitement and dread the people who email me are feeling. I know they can do it, because I did and I am happy to help anyone succeed. I am proud of all I have done and want more people to feel empowered and successful.
Starting any business is exciting and frightening. You can do it. Remember to be diligent, do your research, work smart, ask questions and you will be successful.
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Posted on Saturday, March 25, 2006 @ 00:00:00 CST by Site_Admin |
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