Start a Business
Helping People Reduce Their Debts

(Last updated: April 24, 2010)

This page shows how to start a business helping people reduce their debts. By using the telephone and the mail to perform this service, it can be an ideal work at home business.

Use this information together with the Business Plan for Simple Services page.

The methods and procedures described on this page can be used to help satisfy your needs, and the needs of likely customers.

Here are the topics:

Introduction to idea
Estimated startup costs
Putting idea to work

Other useful information

The Vital Guidelines for Novices page helps beginners who want to start a business. These guidelines provide focused advice and useful insights.


Before using this information to start a business be sure to read the following notice: Disclaimer

Introduction to idea

This topic provides an overview of the business idea so you can decide if it suits you.

Basic idea

People pay you for helping them reduce their debts to a manageable level. The primary method to achieve this is to coach them on ways to eliminate excessive living expenses. (If people spend more than they earn, they will always be in debt.)

Over the years, people have been encouraged by the government, credit card companies, and business firms to go into debt. With the current hard times, this debt is too heavy a burden for many people.

This is an indoors activity that can be performed year round.

Suitability of idea

This idea is best suited for people who favor social activities.

Skills and equipment required

Primary skills -- You must be able to gain the confidence of people and help them change their habits. You also need some experience with setting and keeping personal budgets.

Primary equipment -- You need a telephone, preferably a business telephone in your home. It would be desirable if this telephone allowed unlimited long-distance calls at little or no cost.

Other equipment -- As part of a basic home office, I recommend the office equipment described in the following topic.

Profitability of idea

In order to show a profit, you would have to sell enough of your services to cover the startup costs and operating expenses. The more fees you collect over a certain time period the larger your profits. Therefore, you want to have substantial sales, along with low startup costs and operating expenses.

The fees you charge pay for your time and your ability to help people change their spending habits.

The amount you can charge depends on how anxious both you and the customer are to make a deal.

See the Setting the Sales Price page in another section for more detailed information.

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Estimated startup costs

This topic discusses the estimated startup costs for this business idea. Startup costs are what you need to pay in order to be ready to begin business operations. The amount of these costs also helps you decide if the idea suits you.

List of items in startup costs

Note: I am only showing one month for certain expenses. You should be able to get your first job or two in a month. Then these items become operating expenses, not startup costs.

The assumed startup costs for this business idea, using a frugal style of business operations, consist of the following items:

Advertising and promotion (1 month) -- Small classified advertisements in a local newspaper, or a national newspaper or magazine.

Business insurance (1 month) -- Business liability insurance. (Talk to a local insurance agent to see if you need this coverage.)

Governmental requirements -- Local fees and business license. (Note: You might also be subject to state and federal deposits and registration fees, but these will vary. So I have not included them in these startup costs.)

Office equipment -- Business telephone, desk accessories (stapler, paper clips, pen and pencils, etc.), and listing adding machine. (Note: Use the kitchen table and chairs for your desk and chair at first.)

Office supplies -- Check blanks for business checking account, file folders or large manila envelopes (for filing papers), lined writing tablets, and pads of accounting journals and ledger.

Other operating expenses (1 month) -- Business telephone expense.

Reference book -- Bookkeeping for Dummies (Paperback). (Note: The "for Dummies" series of books are easy to read manuals for normal people, not dummies.)

Dollar amount of startup costs

Here are the dollar amounts for a frugal business operation:


Estimated Startup Costs

  Advertising and promotion (1 month) $ 75
  Business insurance (1 month)   50
  Governmental requirements (local fees and business license)   50
  Office equipment   120
  Office supplies   85
  Other operating expenses (1 month)   50
  Reference book   15
       Total estimated startup costs $ 445

Note: See the Planning costs and expenses subtopic in the Business Plan on another page for ways to reduce these startup costs.

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Putting idea to work

This topic satisfies the Starting business operations subtopic in the Business Plan page.

Preparing for business operations

Completing the startup requirements -- This is the last step needed just before you start business operations. See the Listing the startup requirements subtopic in the Business Plan for the items remaining to be completed.

As a minimum, you should have discussed the business idea with your family, set up your business entity, and satisfied all governmental and insurance requirements.

Operating the business

Soliciting customers -- Place classified advertisements in your local newspaper and/or a national newspaper or magazine. Use a simple, honest description of your services. (Once you become well known in the community, you should benefit from word of mouth advertising from satisfied customers.)

For additional ideas on soliciting customers, see the Sales Methods page in another section.

Qualifying customers -- Hopefully, some of the people who read your advertisements will inquire about your services. During this initial telephone conversation, you should determine:

  • If you are willing and able to provide the desired services.
  • If you and the customer can agree on an hourly fee, unless this was stated in your advertisements.

See the preceding Profitability of idea subtopic for my thoughts about setting your fee.

Getting customers -- After you review your methods and services with prospective customers, they might agree to pay for an initial consultation. This service might continue for an indefinite time.

After gaining sufficient experience, you could try for as many customers as you can handle.

Determining needs of customers -- To insure satisfied customers, you need to determine what they want from you. You need to replace assumptions with specific information.

After you and the customer agree on the service to be provided, you need some background information.

  • How many people are in the household?
  • What is the current after-tax income of the household?
  • What are the most urgent financial problems facing the household?
  • What are the ages and occupations of all adult household members?
  • What are the possibilities of any household member gaining initial or additional employment?

Continuing on, you need to determine how and when to contact the customer for your telephone consultations. You also need to determine how you will be paid.

Job procedures

Note: The following activities for this business idea are based mainly on the Use a Budget to Lower Expenses page.

When preparing a budget, you can use the expense categories shown on the Reduce Living Expenses main page. These are "Auto and Travel Expenses," "Clothing Expenses," "Drug and Medical Expenses," and so on.

Preliminary service activities -- Ask the customer to fill out a schedule of their average monthly living expenses using the above categories.

It would be very helpful if the customer identified most of the larger expenses in each category. Thus under food and grocery expenses, some major items might be breakfast cereals, canned goods, dairy products, frozen TV dinners, meat, produce, soda pop and snacks, and soups. An estimated breakdown for each major category would be good enough.

After you receive the schedule of average expenses from the customer, you can review it and see if some expenses seem excessive.

Main service activities -- During the first major telephone conference with the customer, you can discuss expenses that seem excessive. This discussion might use some of the concepts of the Deciding where to cut expenses topic on another page. The customer probably won't want to make big changes all at once. Don't force the issue. Ask the customer to try for a five to ten percent reduction in one expense category.

During the second major telephone conference, you might discuss ways to make larger expense reductions. This discussion might use some of the concepts of the Making the changes topic on another page.

Here are some other methods you can discuss with your customers:

  • Pay more than the minimum amount on the credit card with the highest interest rate.
  • Don't buy things that you can borrow instead.
  • Learn to enjoy the simple things in life (the things that cost little or nothing).
  • Keep on the lookout for odd jobs to earn some money.
  • Use some of the ideas under the Earn Extra Cash main page.

You probably want to telephone the customer every one or two weeks after each major conference to see how much progress is being made.

At some point, you would end the telephone calls. (This would represent either success or failure of the budget process.)

Final service activities -- From time to time collect your agreed upon fee from the customer. (Your agreement with the customer should specify the frequency and amounts of these payments.)

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