Free Debt Collection Agency Business Plan
For Raising Capital from Investors, Banks, or Grant Companies!
Please note that the financials
in this complete free business plan are completely fictitious and may not
match the text of the business plan below. This free business plan demonstration
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Each business plan features:
- Excecutive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors,
or Grant Companies!
1.0 Executive Summary
The purpose of this business plan is to raise $100,000 for the development of a debt collection and credit advisory firm while showcasing the expected financials and operations over the next three years. Debt Collection Agency, Inc. (“the Company”) is a New York based corporation that will arrange for the collection of debts on behalf of clients within the target market. The business will also provide credit advisory services as an ancillary service. The Company was founded by John Doe.
1.1 Products and Services
Debt Collection Agency is the in the business of purchasing debt obligations from creditors that are “writing off” specific debts as a result of the debtors failure to remit payment. The Company will purchase these debt obligations at ten to twelve percent of their face value with the intent to settle the obligation with the debtor for a substantially reduced payment amount. The business will also act in a third party capacity for securing bad debts on behalf of clients for a fee equal to 30% of the amount collected. The Company will also directly assist clients with credit advisory issues as most people that require debt coollection also have issues with their credit profiles. Approximately 40% of the US population has issues with their credit profiles and as such, the market for credit advisory services is extremely strong, especially in today’s economic climate. The business will receive per hour fees from the client for these services. The third section of the business plan will further describe the services offered by Debt Collection Agency, Inc.
1.2 The Financing
Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate. The financing will be used for the following: • Development of the Company’s office location. • Financing for the first six months of operation. • Capital to purchase FF&E and obtain the Company’s licensure. Mr. Doe will contribute $10,000 to the venture.
1.3 Mission Statement
Debt Collection Agency, Inc.’s mission is to become a recognized leader within its target market for assisting people with collecting bad debts.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the lending industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target companies that have outstanding receivables within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Debt Collection Agency, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Debt Collection Agency requires $100,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Debt Collection Agency, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Debt Collection Agency. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Products and Services
Below is a description of the debt collection and credit advisory services offered by the Company.
3.1 Debt Collection Services
The primary function of the Debt Collection Agency is to purchase defaulted loan and receivables portfolios that have not been properly serviced by the debt for more than 180 days. The business intends to purchase these portfolios for three to four percent of their face value. The secondary market for defaulted debts is immensely large, and debts are regularly sold and divested among debt collection agencies. The business will maintain a call center that will house 2 to 3 debt collection staff members that will be responsible for managing the phone calling and correspondence with each debtor of the Debt Collection Agency. Management estimates that on any given day, a staff member will make 100 to 150 phone calls, and will service approximately 100 accounts. The Company will provide incentives for these agents by providing them with 20% commissions on each dollar of debt collected after their monthly quota. The Company is currently developing its procedures for employee incentives. The business will also act in a third party capacity among companies that contract with the Company for collecting debts on their behalf. The business will charge a fee equal to 30% of the amount collected.
3.2 Credit Advisory Services
The Company’s secondary source of revenue for the business will come from the direct consultation to client’s that have minor or substantial credit issues. The Company will also offer per hour advice to clients regarding how to properly maintain their credit scores. Finally, the business will develop an internal program that monitors clients’ credit profiles on a monthly basis for an ongoing yearly fee. In regards to fees, the client will pay directly for these counseling services, which will be offered at a fixed rate. The Company will maintain extensive policies on fee disclosures to ensure that client’s clearly understand the costs associated with the Company’s services as well as all other applicable disclaimers and warranties.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the debt collection and credit counseling/advisory industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this recession will continue for a significant period of time, at which point the economy will begin a prolonged recovery period. However, debt collection businesses typically operate with a great degree of economic immunity as people will continue to require these services on an ongoing basis, especially during deleterious economic climates. As such, Management feels that the current economic climate is actually an excellent time to launch this type of business as millions of people are currently having substantial issues with their debts.
4.2 Industry Analysis
In the United States there are over 60,000 businesses that operate as credit intermediaries (which includes debt collection businesses). Among these business, aggregates receipts over each of the last five years has been in excess of $229 billion dollars of interest revenue. These businesses employ over 500,000 people and provide gross annual payrolls in excess of $22 billion dollars. The Internet has revolutionized the way that many these companies do business. It is not uncommon for debt collection companies to assist a broad geographical base and to a wide variety of clients that have varying incomes and credit qualities. Additionally, since the Internet has created a method of receiving information at a much faster rate, information relating to the credit quality and outstanding debts of borrowers is readily available. The credit counseling and credit management industry represents over 5,000 established businesses that employ more than 15,000. Each year, these businesses aggregately generate more than $2 billion dollars a year of revenue and provide gross annual payrolls of $600 million dollars. The growth rate for this industry has been tremendous over the last five years as the growth of financial transaction over the Internet has increased significantly. Over the last five years, the number of agents operating within this market more than doubled, with income received by these firms increasing more than 300%. As lending has become much more scientific over the last fifteen years with the implementation of electronic credit reporting, FICO scores, and electronic employment records, the need for consumers to maintain strong credit profiles is tremendous. This is especially true in today’s economy where millions of people have over extended themselves with debt, and require professional assistance with loan renegotiations, credit repair services, and credit advisory services.
4.3 Customer Profile
Management expects that a diverse group of companies will use the Company’s services. The target market sought by the Company will consist of businesses that have substantial owed debts or receivables. The business, after obtaining licensure to operate in multiple states will be able to effectively assist thousands of businesses with their debt collection needs. Approximately 40% of adult Americans currently have past due payments or debts that require collection or renegotiation. As such, the potential market for this type of service exceeds 70 million people. Mr. Doe expects that the average income of a collection customer will be $28,000 to $45,000 per year.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
Debt Collection Agency, Inc. intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.
5.1 Marketing Objectives
• Develop relationships with companies that maintain a large amount of unpaid receivables.
• Establish relationships with accountants within the targeted market.
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Mr. Doe intends on using a number of marketing strategies that will allow Debt Collection Agency, Inc. to easily target businesses within the target market. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. The Company will also use an internet based strategy. This is very important as many people seeking local and regional service providers, such as debt collection companies, now the Internet to conduct their preliminary searches. Mr. Doe will register Debt Collection Agency, Inc. with online portals so that potential customers can easily reach the business. The Company will also develop its own website showcasing the services offered by the business, the Senior Management, and relevant contact information. The Company will maintain a sizable amount of print and traditional advertising methods within local markets to promote the debt collection services and credit advisory that the Company is offering. Mr. Doe will also develop ongoing referral relationships with accountants and small business associations within the Company’s local market who will refer clients with significant debt issues. In time, this will become an invaluable source of new business for the Company.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or
key employee, you should provide a brief biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• Debt Collection Agency, Inc. will have an annual revenue growth rate of 16% per year.
• The Owner will acquire $100,000 of debt funds to develop the business.
• The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
The Company’s revenues are not sensitive to changes in the general economy. In fact, during deleterious economic conditions (like the current economy), Mr. Doe expects an increase in revenue as more businesses turn to debt collection companies to assist with the collection of existing debts. Additionally, the Company generates high margin income from its services, which will allow the business to thrive in any economic climate.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis