How to Start a Collection Agency from Home: Plan and Tips

Collection agencies are in high demand in today’s current economy.  A lot of people are finding it difficult to meet their financial obligations due to loss of employment, a cut in hours at work and other various reasons.  Collection agencies have all they can do to keep up with the current demands of their clients.  If you are interested in starting a collection agency, now is a good time.  However, just because there is a high demand for this type of service, it still requires a lot of hard work and knowledge of the market to be able to succeed.

Plan for Starting Collection Agency

  • The first order of business is to set up a detailed business plan.  If you will be seeking financial assistance from lenders or investors, the business plan is a necessity.
  • Include at least the past five years of your financial information in the business plan.  This includes bank statements, tax return records and any other loan information (paid off or still outstanding), assets and other financial obligations.  Potential investors or lenders will also like a current and updated list of the names and contact information for all of the financial institutes that have held or currently hold your accounts.
  • Before a lender will be willing to consider offering you financial assistance, they will want to know how you foresee your business’s future outlook.  Put together a projected profit and cost analysis for at least five years, possibly even ten or fifteen years as well.
  • Marketing is essential to the success of any business.  Develop an aggressive marketing strategy that details how you plan to advertise your business and gain customers.  Potential lenders will use this information when determining if or how much they are willing to lend you to start your business.

Getting Started from Home

  • Get needed education and certificates.  Take several accounting courses as you will be dealing in financial matters; debits and credits.  If possible, try to at least become a certified CPA or other financial degree.
  • Learn the laws and regulations that govern the Fair Consumer Act and other laws pertaining to the rights of consumers in your area as well as the federal laws and regulations.  Without this knowledge it is possible that you may end up violating a harassment law or commit another type of violation without even realizing it.

How to Develop the Business

  • Armed with the education and knowledge of the market, it’s time to develop the business and get clientele.
  • Visit and get to know the businesses in your area.  Research the types of businesses that may be of need of your services.  Avoid those that probably wouldn’t use your services more than once or twice a year such as auto body repair shops or other businesses that don’t usually have a high demand in collecting past debts.
  • Research the different software material available for collection agencies.  You may not necessarily need these upfront, but it’s a good idea to know what is available and how you may use them for future growth.
  • Aggressively market your business.  Drop off business cards to potential businesses and try to set up appointments to meet with management.  Study your competition and see how you can provide better services and lower costs to gain more clients.

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