For years, the goal of any collection agency owner has been just to survive, as an onslaught of lawsuits and compliance-related burdens have increased costs and caused a wave of consolidation within the ARM industry. But the tide seems to have turned, the outlook seems to be more cautiously optimistic and more and more agency owners are shifting into growth mode. But it’s been so long since anyone has thought about that, maybe they need a refresher course on how to grow their collection agency?
Thankfully, Harry Strausser and Nick Jarman, two of the most respected names in the business got together last week during a webinar, sponsored by VoApps, to share their tips and insights into how best to grow a collection agency in today’s environment.
“The one thing that has been consistent in the ARM industry is inconsistency,” Jarman said during the webinar. “But now is a great opportunity to think about growing. The stars are in alignment.”
A copy of the webinar recording can be accessed by clicking here. [EDITOR’S NOTE: You can access all past webinar recordings by clicking here.]
The webinar looked at growth from a number of different perspectives, such as whether to grow organically or via acquisition, and whether to add more clients or expand the products and services offered by a collection agency.
Both Strausser and Jarman agreed that if an agency sets out to expand, it must build out its infrastructure first rather than seek new clients without having the necessary tools and technology in place. That infrastructure, Jarman warned, includes having the financial wherewithal to wait up to three months for a new client to remit their commission to your agency.
“You need to be financial stable enough to manage that,” Jarman said.
With respect to adding more clients or adding more products, Strausser pointed out that it’s easier to sell new products to an agency’s existing client base than it is to try and sell the same products to companies that are not clients. Many collection agencies, especially those that focus on healthcare debts, are moving “upstream,” Strausser said, into the world of self-payments and other revenue cycle management functions.
Companies that are looking to grow through acquisition may want to eschew reaching out to the firms that offer merger & acquisition services because they tend to focus more on larger agencies than smaller ones, and Strausser note that there is a “real opportunity” for anyone that looks past the larger agencies and sets their sights on smaller agencies, which may be profitable, but are no longer built to compete in a tougher marketplace.
“There are a lot of agencies that are doing $600,ooo to $800,000 in revenues that are wonderful opportunities,” Strausser said. “But finding them can be a challenge.”
Strausser and Jarman both recommended that agency owners be active in their state and regional trade groups and talk up being in “growth” mode to put the word out to possible sellers that there is someone interested in making an acquisition.
