Are you interested in starting a debt management company? Do you need a sample debt management company business plan template? Do you want to make money helping businesses consolidate their debts or loans? Then I advice you read on.
It is a known fact that the state of the economy has led a lot people into serious debts and it has become a source of embarrassment to many. Not a few people are neck-deep in debt from outstanding bills and loans such as Business loans, Mortgage, Car loans and Credit card debts.
Such debts end up becoming a source of frustration to the owners, who end up running from pillar to post, looking for ways to eliminate or reduce the debts. If you have a good knowledge of financial management, then you can start assisting people who are in a serious financial dilemma by helping them manage their debts and subsequently, eliminating such debts.
Debt managers assist people in managing their debts by negotiating with creditors and spreading out monthly payments amongst the various creditors from the income of the debtor in a way that won’t be stressful to the debtor. Debt management companies help their clients to negotiate and get better interest rates from lenders. Debt managers also offer credit counseling and advice to their clients.
Table of Content
- What is Business Debt Consolidation and Management?
- How Do Debt Managers Make Money?
- 1. Do your research
- 2. Ask Questions
- 3. Acquire Financial Management Knowledge
- 4. Fine-Tune your business plan
- 5. Test and improve your business skills
- 6. Start your business
- 7. Register your business
- 8. Create a Business Website
- 9. Engage Extra Hands
- Social Media Advertisement
- Organizing Seminars and Webinars
- Buying Leads and Making Cold Calls
What is Business Debt Consolidation and Management?
Business debt consolidation is the act of putting together several business related debts from different lenders, payable under different terms, conditions as well as periods. These debts are paid by taking out a single loan that provides for a simpler and often times, more manageable payment scheme.
For example Mr. A has a real estate mortgage on his principal place of business, an employee car loan, a student loan and few company credit card debts. All these debts are payable to different lenders under different terms, interest rates and period.
Mr. A then computes the entire indebtedness and goes to lender ABC to apply for a loan in an amount that covers all the debts and with interest rates and an installment scheme that is more manageable (i.e. lower total monthly amortization).
In the above mentioned example, it is necessary for an individual to negotiate for better terms as well as accurately collate and compute all the outstanding loans. This article will discuss how an individual can put up a business debt consolidation enterprise which does not only provide enterprising individuals with an income generating enterprise but is a way to help struggling businesses keep afloat.
How Do Debt Managers Make Money?
Though some debt management companies choose to parade themselves as a not-for-profit business but the truth is that debt management companies make money from charging their clients monthly fees however, such fees are usually small. It might be a flat rate or a certain percentage of the sum paid to lenders monthly.
However, the fact remains that debt management is one of the fastest growing businesses in the world today and to start your own debt management business; these are the steps you have to take:
How to Start a Debt Management Company – Sample Business Plan Template
The first thing to do is research extensively from different sources. You can go to the public library, the internet or business debt consolidation seminars in order to increase your knowledge base. Always remember that it is best to get information from several sources, that way your knowledge base is wider and less prejudiced.
2. Ask Questions
Listen carefully and take notes if you happen to attend a seminar and do not forget to ask questions. Also, when written materials are given, be sure to read them before and after the seminar. Business debt consolidation knowledge is best reinforced through reading, hearing and writing but one cannot do all three at the same time because he or she might miss out on some very crucial points.
A very important tip is to listen to the speaker, highlight important points and write notes sparingly. Then when you are alone refer to your notes and highlights; and then write down your own guide from your own understanding using the notes and highlights as benchmark.
3. Acquire Financial Management Knowledge
As a debt manager, you would have to be very smart and know how to make smart financial decisions. In fact, you must be financial savvy and sound. Basic knowledge of Accounting, Book-Keeping, Taxation, and a general knowledge of laws governing borrowing and lending is required. To increase your chances of success, it is advisable to obtain a financial related degree.
This phase is very important. Take the time to review your notes and remember the experience. Now determine which phase needs improvement and come up with ways to make the process better. If you bought a DIY guide or attended a seminar, then contact someone to ask more questions. Be friendly with the lender’s representative because he or she can even guide you towards the negotiation process.
5. Test and improve your business skills
After researching, it is important to actually do business debt consolidation in reality. It would be a good idea to try this with your own business or the business of a family member or a close friend. Do not charge for this because you are not yet that experienced. Take things slow and avoid making promises to the business owner or lenders.
Remember that the goal is not to miraculously save a business but to get to know the process and provide workable alternatives. It would be best to negotiate with several lenders and then lay out the proposed plans to the business owner. At this point it is not really important to actually sign a deal. The important thing is to get to feel the negotiation process, note down your thoughts and build your network of lenders.
Also, you must remember to be very courteous to the lenders representatives or the creditors you will be speaking with because chances are you will be talking with them again. It is always best to create rapport and a good working business relationship early on.
6. Start your business
It’s now time to actually go out there and market your business. Remember the friend or family member you helped out and ask them for referrals. Or go to online sites that allow you to market your product or service. Remember, patience and perseverance pays up in the long run.
Your job is to present alternatives, not to force consolidation. This is especially true during your first few trials. Present several business debt consolidation plans and explain the importance of each offer, then allow the client to make up his or her mind.
7. Register your business
You will be required to register your business with the government agency responsible for business registration in your country or state. It would also be wise for you to incorporate your business so that you can separate your personal assets and liabilities from your business assets.
When registering your business, you must make sure that you choose a name that is appealing to the clients and find out if the name is not already being used by another company. To register and incorporate your business, you will require the services of a lawyer or a professional accountant.
8. Create a Business Website
You can either choose to start your debt management business from home or open a physical office in an open and accessible area. Whichever option you choose, you would need a professionally created business website to create awareness for your business. Your website should have space for reviews where your customers can leave reviews of your business for others to see and be encouraged to patronize your business.
You should however be aware that some clients would prefer to meet with you physically before they can entrust their debt management business to you.
9. Engage Extra Hands
You will need a few extra hands to work with you on the business. The secret is to employ people who would be paid commission based on the number of clients they bring into the business. This would help you reduce your business expenses. Your staff can be part-time or full-time staff but as a beginner, it’s more cost-effective to hire virtual assistants who would work from their own homes in order to reduce overhead costs.
10. Keep yourself relevant
Offer business debt consolidation services that are affordable and substantive; this way, customers refer you to others and come back for additional services. A very good tip is to always add services to target repeat customers. Remember, a satisfied customer should be kept in the loop regarding updates and new services offered.
Try making weekly newsletters to provide for free and then gently advertise additional services through the newsletter or try charging low for products but charge separately for membership. This way you can charge less but earn more in the long run.
How to Get Clients for your Debt Management Company
One the factors that would determine the success of your debt management business is the availability of customers to continue to patronize you. You can guarantee a continuous stream of customers from doing the following-:
Social Media Advertisement
Advertising on social media platforms like Facebook, Twitter and LinkedIn has been proven to work for such businesses. On Facebook, you can create a page for your business where you can make regular updates about your business. Bring up interesting topics for discussion and have many people join in the discussion. You can also put up classified adverts on Facebook for a fee.
Organizing Seminars and Webinars
A very good way to get customers to patronize your business is by organizing seminars or webinars on debt and credit management topics. You can be sure that many people who are facing financial challenges as a result of debts would want to attend such events.
However, it is important that you choose topics that show a genuine concern for their financial situation. After such seminars, you can now start to follow up on the attendees and subtly encourage them to do business with you.
Buying Leads and Making Cold Calls
You can also embrace Tele-marketing by getting a list of people who recently made enquiries about debt management services and their telephone numbers. You can now place phone calls and advertise your services to them. It is important that you are very polite, courteous and smart when making such calls.
To help you further in your debt management business, you should join a trade union of debt managers and take professional courses in debt management.