Are you about starting a debt collection agency? If YES, here is a complete sample debt collection agency business plan template & feasibility report you can use for FREE.

Okay, so we have considered all the requirements for starting a debt collection agency. We also took it further by analyzing and drafting a sample debt collection agency marketing plan template backed up by actionable guerrilla marketing ideas for debt collection agencies. So let’s proceed to the business planning section.

Why Start a Debt Collection Agency?

A debt collection agency is one of the many ventures that can be started with minimal capital. The business that can be started from the comfort of your home and with just a laptop and telephone as long as you have the skills for pulling credit reports, conducting investigations, bringing debtors to negotiation tables, seizing property, putting liens on homes, garnishing wages, among others.

You can be sure that your services would always be in demand by those small businesses and that cannot afford to hire consultants to help them recover their debts. One good thing about this business is that you can handle up to 20 clients per time depending on how organized and hardworking you are.

If you are interested in starting a debt collection agency, then you should be ready to conduct thorough feasibility studies and market survey before committing your money and other resources to it. Below is a sample debt collection agency business plan template that can help you successfully write your own with little or no stress.

A Sample Debt Collection Agency Business Plan Template

  • Industry Overview

The Debt Collection industry comprises of businesses that pursue payments on debts owed by individuals and businesses. Most collection agencies operate as agents of creditors and render their services for a fee or percentage of the total amount owed. Other agencies purchase debt portfolios from creditors at a discount and then pursue outstanding balances for their own gain.

The Debt Collection industry is indeed in a mature stage of its growth. The industry is characterized by growth in line with the overall outlook of the economy, consolidation from the largest players in the industry and wholehearted market acceptance of industry products and services.

Over the five years to 2018, revenue for the Debt Collection industry is expected to contract due to tightening regulations from the Consumer Financial Protection Bureau. For the first two years of the period, consumers continued deleveraging as they had in the immediate wake of the recession.

From 2015 onward, although households began to readily assume debt, industry revenue continued to decline. This is partly attributed to more stringent supervision from the Consumer Financial Protection Bureau and lower debt recovery rates. Regulation is expected to tighten further over the five years to 2023, and as a result, industry revenue is projected to continue to decline.

The Debt Collection industry is indeed a large industry and pretty much active in most developed countries of the world. Statistics has it that in the united states of America alone, there are about 8,941 registered and licensed Debt Collection Agencies responsible for employing about 126,010 people and the industry rakes in a whooping sum of $12 billion annually.

The industry is projected to enjoy -2.4 percent annual growth within 2013 and 2018. The establishments with the lion share of the available market are Alorica and Encore Capital Group. A recent report released by IBISWORLD shows that the Debt Collection industry remains fragmented, with the top four businesses expected to account for 25.2 percent of the industry in 2018, according to IBISWorld estimates.

More than half of the industry comprises sole proprietors and partnerships due to the industry’s low barriers to entry. Market share concentration is expected to continue increasing over the next five years as companies look to mergers and acquisitions for increased revenue.

The report further stated that acquisition activity is common in a mature marketplace, and IBISWorld projects that this trend will continue over the next five years as businesses focus on cutting costs and improving productivity. Companies will look to grow market share by acquiring smaller operators and their portfolios.

One thing is certain about starting a debt collection business, if you are able to conduct your market research and feasibility studies, you are not going to struggle to secure clients because there are always clients who would need your services from to time.

Some of the factors that encourage entrepreneurs to start their own debt collection business is that the business has low level entry requirements and it requires very little startup capital especially if you chose to start from the comfort of your home.

With a debt collection agency business, you can afford to partner with other smaller firms that are into debt collection related services. You can partner with credit repair firms, payday loan firms, prepaid credit card firms and law firms. The bottom line is that if you have a robust network and you are well positioned, you can indeed maximize your debt collection business.

Debt Collection Agency Business Plan – Executive Summary

Blue Horizon™ Debt Collection Agency is a registered and licensed debt collection agency. The business will be based in New Orleans – Louisiana and we were able to secure a standard office facility in one of the most patronized office complexes in New Orleans. We are aware that to run a standard debt collection agency can be demanding which is why we are well trained, certified and equipped to perform excellently in our chosen business.

Blue Horizon™ Debt Collection Agency is a client – focused and result driven agency that provides broad – based services such as pulling credit reports, conducting investigations, bringing the debtor back into negotiation table, seizing property, putting liens on homes, garnishing wages, and so on at an affordable fee that won’t in any way put a hole in the pocket of our clients.

We will offer professional debt collection services to all to our clients at local, state, national, and international levels. We will ensure that we work hard to meet and surpass our clients’ expectations whenever they hire our services.

At Blue Horizon™® Debt Collection Agency, our client’s best interest would always come first, and everything we do will be guided by our values and professional ethics. We will ensure that we hire professionals who are experienced in the debt collection industry.

Blue Horizon™® Debt Collection Agency will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Our plan is to position our business to become the one of the leading brands in the whole of New Orleans – Louisiana, and also to be amongst the top 10 debt collection businesses in the United States of America within the first 10 years of operation.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are confident that New Orleans – Louisiana is the right place to launch our debt collection agency business.

Blue Horizon™® Debt Collection Agency is founded by Bruce Barton and Dianna Brown, his business partner for many years. The organization will be managed by both of them since they have adequate working experience to manage such business.

Diana Brown has over 5 years’ experience working at various capacities within the debt collection industry in the United States of America. Mr. Bruce Barton (senior partner), graduated from both Princeton University with a Degree in Economics and MBA from Harvard Business School.

  • Our Product and Services Offerings

Blue Horizon™® Debt Collection Agency is going to offer varieties of services within the scope of the debt collection industry in the United States of America. Our intention of starting our debt collection agency is to work with individuals, household, smaller organizations (startups and mom and pop shops) and also established corporate organizations that would want to outsource their debt collection concerns to professionals.

We are prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals. Our business offerings are listed below;

  • Account collection services
  • Bill collection services
  • Debt collection services
  • Delinquent account collection services
  • Tax collection services on a contract or fee basis
  • Collection on debt portfolios
  • Repossession services
  • Credit reporting services
  • Dispute processing
  • Cease and desist collections processing
  • Settlement assistance

Our Vision Statement

Our vision is to build a debt collection agency that will become the number one choice for individuals, smaller businesses and corporate clients in the whole of New Orleans – Louisiana.

  • Our Mission Statement

Our mission is to provide professional, reliable, trusted and result oriented debt collection services that assist individuals and corporate organization recover their debts without stress on their part.

  • Our Business Structure

In as much as it will be fair for us to settle for two or three staff members, but as part of our plan to build a standard debt collection agency in New Orleans – Louisiana, we have perfected plans to get it right from the beginning which is why we are going the extra mile to ensure that we have competent, honest and hardworking employees to occupy all the available positions in our firm.

The picture of the kind of debt collection business we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands available in New Orleans – Louisiana. Below is the business structure that we will build in Blue Horizon™® Debt Collection Agency;

  • Chief Executive Officer
  • Debt Collection Consultants
  • Admin and HR Manager
  • Marketing and Sales Executive
  • Accountant
  • Customer Care Executive/Front Desk Officer

Roles and Responsibilities

Chief Executive Office:

  • Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, appraising job results and developing incentives
  • Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
  • Responsible for fixing prices and signing business deals
  • In charge of providing direction for the business
  • Responsible for signing checks and documents on behalf of the company
  • Evaluates the success of the organization

Debt Collection Consultants

  • Responsible for handling services that revolves around account collection services, bill collection services, debt collection services, delinquent account collection services, tax collection services on a contract or fee basis, collection on debt portfolios, repossession services, credit reporting services, dispute processing, cease and desist collections processing and settlement assistance et al
  • Handles any other related services as assigned by the firm

Admin and HR Manager

  • Responsible for overseeing the smooth running of HR and administrative tasks for the organization
  • Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Defines job positions for recruitment and managing interviewing process
  • Carries out induction for new team members
  • Responsible for training, evaluation and assessment of employees
  • Responsible for arranging travel, meetings and appointments
  • Oversees the smooth running of the daily office activities.

Marketing and Sales Executive

  • Identifies, prioritize, and reach out to new partners, and business opportunities et al
  • Recognizes development opportunities; follows up on development leads and contacts
  • Writes winning proposal documents, negotiate fees and rates in line with company policy
  • Responsible for handling business research, market surveys and feasibility studies for clients
  • Develops, executes and evaluates new plans for expanding increase sales
  • Documents all customer contact and information
  • Represents the company in strategic meetings
  • Helps to increase sales and growth for the company

Accountant

  • Accountable for preparing financial reports, budgets, and financial statements for the organization
  • Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
  • Provides managements with financial analyses, development budgets, and accounting reports
  • Responsible for financial forecasting and risks analysis.
  • Performs cash management, general ledger accounting, and financial reporting for one or more properties.
  • Responsible for developing and managing financial systems and policies
  • Responsible for administering payrolls
  • Ensuring compliance with taxation legislation
  • Handles all financial transactions for the company
  • Serves as internal auditor for the company

Client Service Executive/Front Desk Officer

  • Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
  • Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
  • Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
  • Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
  • Receives parcels/documents for the company
  • Distributes mails in the organization
  • Handles any other duties as assigned by the manager

Debt Collection Agency Business Plan – SWOT Analysis

Blue Horizon™® Debt Collection Agency engaged the services of a professional in the area of business consulting and structuring to assist the firm in building a well – structured debt collection agency that can favorably compete in the highly competitive industry.

Here is a summary from the result of the SWOT analysis that was conducted on behalf of Blue Horizon™® Debt Collection Agency;

  • Strength:

The track record of our senior partners and of course the skills that our carefully selected team will be bringing to the table will definitely count as strength for us. We are also confident of the fact that the location of our office is a plus for our business; we are located in one of the busiest office complexes in New Orleans.

  • Weakness:

As a new debt collection agency, it might take some time for our organization to break into the market and gain acceptance in the already saturated debt collection industry; that is perhaps our major weakness. So also we may not have the required cash to give our business the kind of publicity we would have loved to.

  • Opportunities:

The fact that loads of individuals and organizations finds it difficult to recover debts from their defaulters makes the debt collection industry a lucrative industry. As a standard and well – positioned debt collection agency, we are ready to take advantage of any opportunity that comes our way.

  • Threat:

Some of the threats that we are likely going to face as a debt collection agency operating in the United States are unfavorable government policies, the arrival of a competitor within our location of operation and global economic downturn which usually affects purchasing / spending power. There is hardly anything we can do as regards these threats other than to be optimistic that things will continue to work for our good.

Debt Collection Agency Business Plan – MARKET ANALYSIS

  • Market Trends

IBISWORLD recently released a report that said that over the past five years, many internet-savvy consumers turned to an increasing number of free online services, hurting industry revenue. The report also stated that aggregate household debt slowly decreased over the period, along with the national unemployment rate, lessening the need for industry services.

Revenue for the Debt Collection Services industry will continue to decline in the five years to 2020. As the economy improves and the unemployment rate continues to decline, the growth of consumer debt levels is expected to grow at a slower rate. Consequently, there will be a narrower scope for growth in debt collection services in the coming years.

The debt collection industry landscape begun to change, with consumer preferences increasingly trending toward establishments that offer online options. Going forward, increasing product penetration and of course an expanding customer base is expected to drive growth in the industry.

Lastly, operators in this industry ensure that they get testimonials when they can and publish them on their websites and promotional materials. This usually goes a long way to give them credibility and also to attract more clients.

  • Our Target Market

The demographic and psychographic composition of those who need the services of debt collection agencies cut across both small and large corporations and individual clients as well.

Blue Horizon™® Debt Collection Agency will initially serve small to medium sized businesses, from new ventures to well established businesses, but that does not in any way stop us from growing to compete with leading debt collection agencies in the United States.

As a standard debt collection agency, Blue Horizon™® Debt Collection Agency offers a wide range of debt collection services hence we are well trained and equipped to service a wide range of clientele. Below is a list of the businesses and organizations that we have specifically designed our services for;

  • Landlords
  • Households and individual clients
  • Blue Chips Companies
  • Corporate Organizations
  • Religious Organizations (Pilgrimage journeys et al)
  • Political Parties / Politicians
  • Hotels and Restaurants
  • Schools (High Schools, Colleges and Universities)
  • Sport Organizations
  • Entrepreneurs and Startups

Our competitive advantage

The level of competitions in the industry depends largely on the location of the business and of course the niche of your debt collection agency. If you can successfully create a unique brand identity for your debt collection agency or carve out a unique market, you are likely going to experience less competition.

We are quite aware that to be highly competitive in the debt collection industry means that we should be able to deliver consistent quality and result oriented services.

Blue Horizon™® Debt Collection Agency might be a new entrant into the industry, but our management and staff are licensed and highly qualified debt collection experts in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

Debt Collection Agency Business Plan – SALES AND MARKETING STRATEGY

We are mindful of the fact that there are stiff competitions amongst debt collection service providers in the United States of America; hence we have been able to hire some of the best business developers to handle our sales and marketing.

Our sales and marketing team will be recruited base on their experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization. We will also ensure that our excellent job deliveries speak for us in the market place; we want to build a standard debt collection business that will leverage on word of mouth advertisement from satisfied clients.

Our goal is to grow our firm to become one of the top 10 debt collection agencies in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with in New Orleans – Louisiana.

Blue Horizon™® Debt Collection Agency is set to make use of the following marketing and sales strategies to attract clients;

  • Introduce our business by sending introductory letters alongside our brochure to corporate organizations, schools, households, courthouses and key stake holders in New Orleans and other cities in the United States of America.
  • Promptness in bidding for debt collection contracts from celebrities and other cooperate organizations
  • Advertise our business in relevant legal and business related magazines, newspapers, TV and radio stations
  • List our business on yellow pages’ ads (local directories)
  • Attend relevant international and local legal and business expos, seminars, and business fairs et al
  • Create different packages for different category of clients (start – ups and established corporate organizations) in order to work with their budgets and still deliver quality services to them
  • Leverage on the internet to promote our business
  • Engage direct marketing approach
  • Encourage word of mouth marketing from loyal and satisfied clients
  • Join local chambers of commerce and industries with the aim of marketing our services.

Sources of Income

Blue Horizon™® Debt Collection Agency is established with the aim of maximizing profits in the debt collection industry and we are going to go all the way to ensure that we do all it takes to attract clients on a regular basis. Blue Horizon™® Debt Collection Agency will generate income by offering the following services for individual clients, start – ups, NGOs and for corporate organizations;

  • Account collection services
  • Bill collection services
  • Debt collection services
  • Delinquent account collection services
  • Tax collection services on a contract or fee basis
  • Collection on debt portfolios
  • Repossession services
  • Credit reporting services
  • Dispute processing
  • Cease and desist collections processing
  • Settlement assistance

Sales Forecast

We are well positioned to take on the available market in New Orleans – Louisiana, and we are quite optimistic that we will meet our set target of generating enough profits from our first six months of operation and grow the business and our clientele base beyond New Orleans to other cities in the U.S.

We have been able to examine the debt collection market, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.

Below are the sales projections for Blue Horizon™® Debt Collection Agency, it is based on the location of our business and the wide range of debt collection services that we will be offering;

  • First Fiscal Year: $150,000
  • Second Fiscal Year: $300,000
  • Third Fiscal Year: $650,000

N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and natural disasters within the period stated above. There won’t be any major competitor offering same services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

At Blue Horizon™® Debt Collection Agency we will keep our fees below the average market rate by keeping our overhead low and by collecting payment in advance. In addition, we will offer special discounted rates to startups, cooperatives, and small social enterprises.

We are aware that there are some clients that would need regular access to debt collection services and assistance, we will offer flat rate for such services.

  • Payment Options

The payment policy adopted by Blue Horizon™® Debt Collection Agency is all inclusive because we are aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Blue Horizon™® Debt Collection Agency will make available to her clients;

  • Payment via bank transfer
  • Payment with cash
  • Payment via online bank transfer
  • Payment via mobile money
  • Payment via Point of Sales Machines (POS Machines)
  • Payment via check
  • Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client make payment for services offered without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.

Debt Collection Agency Business Plan – Publicity and Advertising Strategy

We have been able to work with our brand and publicity consultants to help us map out publicity strategies that will help us walk our way into the heart of our target market. We are set to take the debt collection agency industry by storm which is why we have made provisions for effective publicity and advertisement of our agency.

Below are the platforms we intend to leverage on to promote and advertise Blue Horizon™® Debt Collection Agency;

  • Place adverts on both print (community based newspapers and magazines) and electronic media platforms
  • Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our brand
  • Install our billboards in strategic locations all around New Orleans – Louisiana
  • Distribute our fliers and handbills in target areas
  • Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo.

Debt Collection Agency Business Plan – Financial Projections and Costing

Starting a debt collection agency can be cost effective because on the average, you are not expected to acquire expensive machines and equipment. What you should be concerned about is the amount needed to secure a standard office facility in a good and busy business district, the amount needed to equip the office, pay bills, promote the business and obtain the appropriate business license and certifications.

These are the areas we are looking towards spending our startup capital on;

  • The total fee for incorporating the Business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • The total cost for payment of insurance policy covers (general liability, workers’ compensation and property casualty) coverage at a total premium – $9,400.
  • The amount needed to acquire a suitable office facility in a business district 6 months (Re – Construction of the facility inclusive) – $40,000.
  • Marketing promotion expenses for the grand opening of Blue Horizon™® Debt Collection Agency in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The total cost for hiring Business Consultant – $2,500
  • The cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $2,000
  • The cost of launching our official Website – $600
  • Budget for paying at least two employees for 3 months and utility bills – $30,000
  • Additional expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
  • Miscellaneous – $1,000

Going by the report from our research and feasibility studies, we will need about One Hundred and thirty Thousand US Dollars ($130,000) to set up a small scale but standard debt collection agency in the United States of America.

Generating Startup Capital for Blue Horizon™® Debt Collection Agency

Blue Horizon™® Debt Collection Agency is owned and managed by Bruce Barton and his business partner Diana Brown. They are the financier of the firm, but may likely welcome partners later which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.

  • Generate part of the startup capital from personal savings
  • Source for soft loans from family members and friends
  • Apply for loan from the bank

N.B: We have been able to generate about $30,000 (Personal savings $20,000 and soft loan from family members $10,000) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

DEBT COLLECTION BUSINESS GROWTH: Sustainability and Expansion Strategy

The prospects of a business lies in the number of loyal customers they have, the capacity and competence of their employees, their investment strategy and business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals for starting Blue Horizon™® Debt Collection Agency is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to offer our debt collection services a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Blue Horizon™® Debt Collection Agency will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re training of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

  • Business Name Availability Check: Completed
  • Business Incorporation: Completed
  • Opening of Corporate Bank Accounts: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of All Insurance for the Business: Completed
  • Conducting Feasibility Studies: Completed
  • Leasing a standard and well positioned office facility in the heart of New Orleans – Louisiana: Completed
  • Generating part of the start – up capital from the founder: Completed
  • Applications for Loan from our Bankers: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Printing of Promotional Materials: Completed
  • Recruitment of employees: In Progress
  • Purchase of the needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business (Business PR): In Progress
  • Health and Safety and Fire Safety Arrangement: In Progress
Joy Nwokoro