Coming to the Rescue
Brad Smith got into the business of debt management by accident. Brad, now the CEO of RescueOne Financial, and his partners were still in the mortgage business in 2005 when he says “the sky started falling.”
“More people were making more money in the appreciation of their homes than they were in their jobs,” Brad says about the years just prior to the crisis. “It wasn’t uncommon to find people that owed $40,000 or $50,000 in credit card debt. They were using their homes as ATMs.”
Brad looked at the debt management business and saw it was going to end badly. He also saw an opportunity.
A Bankruptcy Alternative
Today RescueOne employees 76 across sales, management, and some support staff. He calls his salespeople “financial consultants.” Their mission is to help consumers avoid filing for bankruptcy by providing options to reduce their debt in partnership with the major banks, credit card companies, and their respective collections agencies.
“Collections agencies and third parties we try to settle with want to deal with us,” says Brad. “They know we have the ear of the consumer.”
RescueOne collectively manages over $2 billion in credit card debt, has 200,000 clients enrolled, and does business in 31 states.
The business model is simple: If it works, they get paid. “It’s all performance based,” says Brad. “If we don’t get to any type of required results for our clients we don’t ever get paid.”
Finding a Niche
In terms of getting the word out when they initially started up, Brad said it was relatively easy.
“We’ve done a lot of drill downs on trying to figure out who our client is,” Brad says. “Is it a single mom living in the south who is 35 years of age?” Lucky for Brad, during and post crisis, there was a large need for FinancialOne’s services. He says his customers could really be anyone. “They are not Democrats or Republicans, Northerners or Southerners.”
While having a seemingly infinite addressable market seems like a positive, Brad admits it can be a sad business. The problem Brad identifies is that credit card issuing companies don’t require proof of income. “It’s not uncommon to see an 18 or 21 year old enroll in our program with $50,000 or $60,000 of debt and they work at McDonalds. It’s heartbreaking.”
Brad calls upon direct mailers and more traditional marketing methods to reach the masses. “It’s one of the few businesses that the availability of marketing is really high because everyone was in this predicament,” he says of getting the message out post-crisis.
Brad says the other 19 states they don’t yet do business in are an obvious area for increasing their market share. They are also looking at areas to expand horizontally into related services including tax settlement and the unsecured loan space.
“We’re already doing $10 million a month in loans and we’re not even really focusing there,” says Brad. “When we decide to the move the compass a little bit and focus on loans, we think we can really grow there.”
In addition to more product, more training for their financial consultants will be an area of focus in 2016. Brad says it’s a hungry but compassionate individual who makes a great sales person at RescueOne. They look at hiring athletes or individuals who have shown a determined work ethic and endurance in another part of their lives.
Looking back on the early years, Brad says that, like many other entrepreneurs, he always thought profitability would come much easier and more quickly than it did. “I carried our pro forma around in my pocket for two years thinking next month we’re going to be profitable… it took a lot longer than I expected,“ he says. “Like any business it’s about forecasting and having a model and staying the course.”