1.0 Executive Summary
The purpose of this business plan is to raise $100,000 for the development of a credit repair business while showcasing the expected financial results and operations over the next three years. Credit Repair Service, Inc. (“the Company”) is a corporation that will provide credit repair, debt consolidation, debt negotiation, and credit advisory services to customers in its targeted market. The Company was founded by John Doe.
1.1 The Services
Credit Repair Service, Inc. will provide customers with a high level of credit repair, debt consolidation, debt negotiation, and credit advisory services that seek to remove blemishes on a client’s credit report among the three major credit bureaus. Approximately 40% of the US population has issues with their credit profiles and as such, the market for credit repair guides is very strong. There is also very strong demand among immigrants that are seeking to build a credit profile in the United States.
The business will hire licensed debt advisory and credit counselors that will work directly with both clients and lenders in regards to a client’s credit profile or debt issues. The Company will either receive fees (fixed price) from the client for these services or from the lender who is able to successfully renegotiate a debt obligation so that it does not enter collection.
The third section of the business plan will further describe the operations of the Credit Repair Service.
1.2 Financing
Mr. Doe is seeking to raise $100,000 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 computers.
Mr. Doe will contribute $10,000 to the venture.
1.3 Mission Statement
Credit Repair Service’s mission is to assist people with rebuilding and restoring their credit histories in a professional, ethical, and legal manner.
1.4 Management Team
John Doe has over 13 years of experience in the field of credit management and credit repair. Through his wealth of expertise and knowledge, he will be able to bring the operations of the Credit Repair Service to substantial profitability in the coming years.
1.5 Sales Forecasts
1.6 Expansion Plan
Over the next three years, the Company will make ongoing reinvestments into its marketing campaigns with a focus on search engine optimization and highly targeted social media in order to onboard numerous clients throughout the United States. Credit Repair Service will also continually hire additional staff as needed.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Credit Repair Service LLC. The business is registered as a limited liability company.
2.2 Required Funds
The Company will acquire $100,000 of capital to launch the operations of the busniess. The debt capital and owner investment will be used as follows:
2.3 Investor Equity
The business does not require an investor at this time.
2.4 Management Equity
John Doe retains a 100% ownership interest in Credit Repair Service Inc.
2.5 Exit Strategy
In the event that it is financially prudent to do so, a qualified business broker or M&A consultant will be hired to manage the sale to a third party. Generally, credit repair services have a price to earnings ratio of three times the previous year’s income. This event is not expected to occur for a substantial period of time.
3.0 Operations
Credit Repair Services
The primary source of revenue for the business will come from the direct consultation to clients that have minor or substantial credit issues. The Company’s counselors will properly advise and work with clients to effectively mitigate negative remarks on an individual’s credit reports (among the three major credit bureaus: Experian, TransUnion, and Equifax). 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. This tertiary stream of income is an important secondary revenue center as it will provide a recurring income stream for the business, which will substantially increase the Company’s valuation.
In regards to fees, the client will pay directly for these counseling services, which will be offered at a fixed rate and predetermined before the Company develops a plan to improve a client’s credit. The Company will maintain extensive policies on fee disclosures to ensure that clients clearly understand the costs associated with the Company’s services as well as all other applicable disclaimers and warranties.
Debt Negotiation and Other Services
In addition to credit advisory and repair services, the business will also offer debt renegotiation and debt management services to clients that are heavily saddled with credit card debt, automotive debt, or mortgages. The business, on behalf of clients, will work with lenders to adjust the terms of these loans and credit lines to effectively ensure that the client can continue to pay their creditors while concurrently ensuring that the creditors maintain portfolios of serviceable receivables. For this service, the Company will receive fees from lenders in exchange for successfully renegotiating a client’s debt. Full disclosures regarding fees for these services will be provided to the client to ensure that any conflict of interest is kept to an absolute minimum.
It should also be noted that at all times, the Company will maintain the proper licensure to act as a credit counseling firm within each jurisdiction where Credit Repair Service has a client.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the credit counseling industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
At this time, the economic climate in the United States is moderate. There have been changes to global trade policy over the past business corner which may have an impact on businesses throughout the country. At this time, interest rates as well as asset prices have remained steady. The Federal Reserve is doing an outstanding job of implementing appropriate policies that will guide the continued growth of the business even as economic and global trade policies evolve.
However, credit counseling and credit repair 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 credit profiles and debts.
4.2 Industry Analysis
The credit counseling and credit management industry represents over 7,200 established businesses that employ more than 35,000. Each year, these businesses aggregately generate more than $6.5 billion a year of revenue. The growth rate for this industry has been tremendous over the last ten years as the growth of financial transactions over the Internet has increased significantly.
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 overextended 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 people will use the Company’s services. The target market sought by the Company will consist of financially disenfranchised people that have either not properly established credit or have had credit problems in the past. The business, after obtaining licensure to operate in multiple states, will be able to effectively assist thousands of people with the credit challenges and debt management needs. Approximately 40% of adult Americans have some form of issue with the credit profile. As such, the potential market for this type of service exceeds 70 million people. Mr. Doe expects that the average income of a customer will be $30,000 to $150,000 per year.
4.4 Competition
The business will face ongoing competition from other credit repair services throughout the United States. The business will maintain a competitive advantage by providing its services at a more competitive price while also offering credit monitoring services.
5.0 Marketing Plan
5.1 Marketing Objectives
• Leverage search engine optimization techniques for the Company’s website.
• Use social media ads among targeted demographics.
• Maintain relationships with referring accounting professionals.
5.2 Marketing Strategies
Management intends to use a number of marketing strategies that will drive substantial interest in the Credit Repair Service. Most importantly, the Company will maintain an expensive online presence through its proprietary website. This platform will undergo substantial search engine optimization so that when queries for credit repair services are completed, the platform will appear frequently within the body of this search results. In order to conduct this method of marketing effectively, the business will frequently post content regarding proper use of credit and methods to repair an individual’s credit score if they have had delinquencies in the past. Throughout the life of the business, the business will include this type of content.
To complement website-based marketing operations, the business will also maintain an expansive online presence on Facebook, X, Instagram, and YouTube. To a more modest extent, the business will also use targeted advertising on LinkedIn. The Company will produce a number of videos that showcase the effective nature of using the credit repair services offerings in order to address prior delinquencies while concurrently increasing an individual’s credit score. The Company will frequently conduct posts that address issues that are common among people they have struggled with proper use of credit.
In order to generate referrals, the Company will coordinate with certified public accountants as well as enrolled agents that will have their clients use their credit repair service. Given that these recommendations will come from a trusted professional, individuals that contact the business as a result of referral are far more likely to become clients.
Once the business achieves profitability, these marketing strategies will be expanded to include print advertisements within regional and national level financial magazines. The business will use full page advertisements to showcase the broad range of services that are available, especially as it relates to addressing the existing delinquencies, removing errors from a credit report, and information about how a credit score can be improved through the company’s services.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
• The business will have a capitalization of $100,000.
• The Credit Repair Service will have a revenue growth rate of 16%.
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 people turn to professional advisors regarding their credit and debt delinquency issues. Additionally, the Company generates high margin income from its services, which will allow Credit Repair Service, Inc. to thrive in any economic climate.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
