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3 Recommended Ways to Grow Your Firm

strausser harryThe collections industry has weathered several years of turmoil and instability. Firms have closed, sold or struggled to keep their proverbial heads above water and just survive. Although some verticals have maintained a robust outlook, for most it has been painful. Add the regulatory and compliance dynamics and it is safe to say that most in our industry wouldn’t categorize the last five to seven years as a fun time.

Many believe the winds of change are subsiding and it might be time to get our bearings once again and think about the growth of our organizations. A popular quote I have used often states, “Change is inevitable. Growth is optional.” Not everyone wants to grow their organizations. Some are happy where they’re at and that is OK. But if you are part of the emerging industry segment that sees optimism in our future and sunny skies ahead, you might want to read on!

I recently participated in a webinar with AccountsRecovery. net on this very topic. Here are the highlights of the discussion:

Is now a good time to grow your collection firm?

It is always a good time to grow! If we don’t grow, then we stay the same and risk losing ground in our organizations. For those firms that have survived recent industry challenges they find themselves in a market with very few new entrants/ competitors. There are opportunities that abound for those that want to gain a larger market share or expand into new verticals. The time may be perfect for growth.

What are some pros and cons of growth?

A certain pro is that growth, if managed correctly, can add revenue to your bottom line and opportunities for current staff to rise to new positions of leadership. As you gain additional market share, and perform, your increased notoriety in market segments can give your firm momentum for continued forward movement. With growth, however, comes challenges. You will have to establish and/or bolster your training programs, focus on skill development of your staff and address any additional compliance issues that might come with new industries you penetrate.

Is it better to grow organically or via acquisition?

It makes sense that growth often comes to fruition by the careful and strategic application of the sales process. Most agree, in the programs I have conducted over the years, that organic growth is difficult and hard to maintain. One of the core frustrations of most organizations has been the flat level of sales they have endured. The good news is that there are many opportunities today to grow via acquisition. The M&A firms typically only handle the deals over $5 million in fees but there are many small companies with solid clientele with fees $1 million or less that are happy to work a deal. Let your competitors know you are in an acquisition mode. Get the word out. Often, these deals are relationship based and owners don’t respond well to the cold call or form letter received in the mail.

Do you build up your infrastructure before acquiring new clients or should you get the new business first?

Growth is not good just for the sake of getting bigger. This should be a strategic process and so I believe that you need to build the machine before going to production! There have been many failure stories in the industry where firms were not prepared for growth relative to staffing, technology, education and compliance and failed miserably. There are times when a huge opportunity presents itself to your organization; perhaps a client that could double your size. Part of being strategic is also knowing when to say “no.” Start a strategic planning process and determine the level of growth and desired direction and then apply the plan.

Is it good to grow by adding more clients or by expanding products and services to your current clientele?

There has always been a sentiment in business that “it is easier to upsell your current clients than to find new clients.” I’ve owned a retail floral business for 22 years and we always ask a customer if they want to add a balloon, card, or a box of candy to their floral order. I can add a $5 balloon to a $25 bouquet and increase the sale by 20% instantly. Not as simple in the collections industry, but I always maintained and embraced a culture in my collection firm that provided a consultative relationship to our clients. We were the firm that had the answers and creatively worked to troubleshoot challenges in the client’s world.