Do You Want To Be A Debt Counsellor?
A Noble Profession
Debt Counselling is a noble profession.
It presents you with the opportunity to help consumers who are going through tough financial times, to find a dignified and manageable way to handle their debt situation and get back on their feet.
Though it is not easy work, it can be very rewarding and give you a real sense of accomplishment.
The question though: Is it right for you?
Many people who consider becoming a Debt Counsellor do not really know what is involved. Most are unprepared for the challenges that lie ahead, and later change their mind or regret the time and expense spent to qualify and set up a practice.
They say it’s good to look before you leap. Let’s look at what is involved, and what being a Debt Counsellor is really like.
What Kind of Debt Counsellor Do You Want To Be?
Essentially there are two types of Debt Counsellors. The ‘lone wolf’ or the ‘run with a pack’ Debt Counsellor.
The ‘lone wolf’ is best suited to running a smaller practice where they work with one or two support staff, and call all the shots.
The ‘run with the pack’ is more suited to working with an established practice, where there may be 5, 10 or 50 Debt Counsellors all working together under a communal brand.
You can liken it to the difference between a GP working from their own office, or a group of doctors and specialists working from a hospital.
By Yourself and For Yourself
The lone wolf is often destined to build up a small practice, and focus on striking a balance between helping a manageable number of clients, and running their small business (covering rent, communication, staff, advertising and accounting and tax related costs). It is the classic small business.
It comes with all the advantages of doing what you want, when you want.
Unfortunately, that usually includes working late at night and most weekends to get everything done, while stressing about how you will keep the lights on. It may also involve spending a day trying to get your internet working while no one can email you, or fighting with the municipality about your bills. These issues are common for a small business.
Many small practices run from a home office, and are only able to help a smaller number of clients. Many smaller Debt Counsellor Practices pride themselves on knowing their clients well, and are able to give the personal touch.
With Others Or For Others
A larger practice, where you work with, and perhaps for others may present other advantages and disadvantages.
A large practice may advertise that they need a Debt Counsellor for a particular part of their operation, they may offer regular hours and regular salary.
A large practice may have arrangements in place to handle accounting, tax, advertising, IT etc. They may have established arrangements with legal firms, PDA’s and software providers.
Larger practices pride themselves on breaking the work up into a production line, and are thus able to help hundreds (or even thousands) of consumers simultaneously. More resources, more clients, more impact.
You should think about what kind of person you are:
Are you a business person, who is good at running a business?
Do you prefer to call the shots and are you ready for all the risk?
Do you want to decide where and when you work?
Are you more suited to being one of the team, and letting others call the shots and sort out the day to day?
Do you want to let others worry about covering the costs?
Do you prefer to be part of a team and get a regular salary?
That will help you plan ahead and decide if you need to focus on setting up a practice, (with all that’s involved) or reaching out to others who are already in the industry.
It is good to think about what income you would like to have before heading into an industry. After all, we all work to make money and pay our own bills.
While salaries at bigger practices will change and there will be a range, based on experience and market factors, it is not unrealistic to find that many larger practices might offer anywhere from R10 – R16 000 pm. This figure will often be linked to some sort of commission, based on if clients stay in the process and make all their payments.
For a smaller solo operation, the Debt Counsellor has to pay all the bills (incl. staff) and then draw something for themselves. The challenge here is finding new clients and ensuring they make their payments.
Debt Counselling fees, as they stand, reward signing up new clients, but as client numbers increase, so does the workload. It is therefore good to think about the ongoing aftercare fees which are more consistent.
New clients may be increasing your income by +- R4,000 a month per client you bring in*. You may even be able to find a higher average, and bring in as much as R6,000 per new client. It will average out a bit, obviously.
*a lot depends on client profiles and what they end up paying. So we are using a rough figure here
This may seem very lucrative at first glance.
You may think: Hey I am gonna get 10 new clients a month and make lots of money. Easy!
Realistically, many small practices only bring on a few clients each month (eg. 2 or 4). So, manage your expectations.
If you have 50 clients who are all paying each month, then you may expect a regular income of R200 x 50 = R10 000
If you are able to build up to a client book of 100 clients, you would double that so, R20, 000.
However, you also need to pay: rent, electricity, IT costs, accounting and tax, general office stuff like paper and printer cartridges, tea and coffee etc.
‘Don’t forget about paying your support staff as well’
Don’t forget about paying your support staff as well. Even if it is just one or two staff members, it will add up.
Some smaller Debt Counsellors, at first, use the cash injections from the sign ups to cover costs as they grow their book, and then as things settle down to a realistic ongoing turn over with a few new clients each month, try to balance their staff and office running costs with their monthly aftercare fees. They then end up taking what comes in as the sign up (restructuring) fees to cover their costs.
Like any small business, it’s a balancing act that is dependent on how many clients you can handle and how many new clients you can bring in and help.
Wondering what the qualifications are?
Continued in next article…