You want to start your own business to make money and to help people. There are many businesses you can choose from but you want to know how to start a payday loan business.
Payday loan businesses can bring in a lot of cash and help people when they are in a bind. If you’ve never started a business before, you may be confused as to what your first steps should be. Continue reading this article to learn how to start your business out on the right foot.
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The 411 on How to Start a Payday Loan Business
If you want to start a payday loan business with third party lenders or with no third party, the beginning stages are the same.
Know How You’ll Structure Your Business Before You Begin
When you want to make money off of payday loans, you need to know important things like how much money you’ll require for repayment. Some companies choose to max out the amount they are allowed to charge people to pay back their loans while others opt to charge smaller amounts of interest.
Understand your goal as you’re starting your business so you know what structure works best for your business.
Outline & Write Your Business Plan
Your business plan will allow you to stay on track when you might otherwise be confused about the best way to move forward with your company. Include as much detail in your business plan as possible.
If you need to go to a lender to secure more capital in the future, the more in-depth your business plan is, the more likely they will take your business plan seriously.
You don’t have to know everything about your business plan when you get started but you want to fill in the blanks as soon as possible.
Establish Your Business in a Secure Commercial Space
Since your business handles cash, you need to ensure your location is a secure space. If you have too many entries and exits, you may set yourself up for robberies and other unpleasant experiences.
You may also choose to hire security so you don’t have to worry about someone coming in to rob your establishment.
Understand What You’re Able to Do Legally
Depending on the state where you’re located, there are going to be different laws that govern what you’re allowed to do with your payday loan business. These laws may dictate what you’re allowed to charge for interest, what type of loans you’re able to give out and more.
Consult an Attorney
If you have any question about what you’re able to do legally, you should consult with an attorney. Even if you think you understand how to operate within the law, it is advisable to speak to a professional that can help you stay on the good side of the law.
If your business practices come into question, your business may be shut down before it can take a good foothold.
Screen Your Customers Thoroughly
If you want to keep your business profitable, you need to screen your customers thoroughly. Giving out money to anyone that walks in because they have a paycheck stub isn’t going to keep you in business very long.
Instead of just taking their paycheck stub at face value, you should ask them to provide income tax returns and any other supporting information to prove they have the job and income they claim.
Besides not getting paid back because a customer doesn’t make good on the payment plan, if you do business with criminals, your business can get into trouble.
Implement a Strategic Marketing Plan
When you’re ready to ramp up your business, you need to implement a strategic marketing plan.
Whether you’re focusing on online or offline marketing, you need to understand how to get the best results for your efforts. Outline your strategies and either learn how to put them into play yourself or hire a marketing team to do the work for you.
Some good marketing tips for your payday loan company are as follows.
1. Get Your Messaging Down
Before you do anything else, you need to get your messaging down so people will resonate with what you’re saying. People that are looking for payday loans are looking for short-term fixes to short-term problems.
Most of the time the people looking for payday loans are dealing with an unexpected breakdown or maybe even need extra cash during Christmas week. When you keep this in mind, you can craft your message in a way so that they respond.
2. Consider the Location
When you’re deciding on your location, you should put it in an area that makes it easy for people that will use the service to access it. Make it easy for people that might be walking through town or near the bus stop.
3. Embrace Direct Marketing
Another way to get people into your location is through direct marketing. Sending mailers with discounted cash advance options will help more people make it into your store.
Flashy and easy to understand mailers get attention and people that are looking for the extra cash will come into your location quickly.
Learn More Key Skills for Business Owners
Now that you know how to start a payday loan business, why stop there? We have many other articles that will allow you to take your knowledge to the next level. Navigate through our site, bookmark your favorite sections and come back later for more great reads.
What a Payday Loan Startup might look like.
About Carson Derrow
