More than 140 million tax returns are filed every year, and there’s a lot of money being made preparing them. Should you be a part of this growth industry?
When the 16th amendment was ratified in 1913, the Federal Income Tax as we know it today was born, and with it came a brand new business: paid tax preparation. Today, it’s a $7 billion dollar industry employing nearly 130,000 people, and processing nearly a quarter of the 140 million returns filed annually. Could this be a good opportunity for you?
Immigrants from many countries have become successful franchisees at Liberty Tax Service
A Bright Future for Tax Preparation
Although it’s generally considered recession-proof, tax preparation, like all industries, has been going through changes brought about by both technology and politics. Tax preparation software such as Turbo Tax, and Intuit now account for 21% of all returns. However, according to industry sources, converts to tax software are primarily those who formerly prepared their taxes by hand. Paid tax preparation as a whole has continued to grow, and the future of the industry appears to be bright, especially given the following:
- Despite calls for a simplified flat tax, the U.S. tax code grows increasingly complex by the year, making it very difficult for many taxpayers to prepare their own returns.
- New federal programs such as the Affordable Care Act, (Obama Care) will require taxpayers to file more complex returns in order to demonstrate that they qualify for insurance subsidies.
- The IRS now required paid tax preparers to be pass certification exams and go through continuing education in order to protect the public —requirements that tend to favor franchise organizations.
Liberty Tax Service: One of the Big Three
Of the big three tax prep companies — H&R Block, Jackson Hewitt and Liberty Tax Service — Liberty is the smallest and newest company, but it has grown faster than the other two competitors combined. since it was founded in 1997. Located in all 50 states and Canada, Liberty now claims 2100 franchisees, and 4400 offices. The business was started by a group of veteran tax preparers, led by John Hewitt, who also founded Jackson Hewitt. The management team used everything they had learned in their previous experiences to fashion a new franchise model, one that would benefit the franchisees, the customer, and the parent company equally.
What Makes Liberty Different
Liberty trains their franchisees to pay attention to the little things that resonate with customers, like child friendly environments, providing a variety of snacks and beverages in the waiting rooms. Going the extra mile, franchisees have even been known to order pizza for evening appointments during tax season. Martha O’Gorman, the chief marketing officer of Liberty, sums up the philosophy. “When you come into our offices, you feel at home; you feel welcome.”
“Our franchisees are the number one thing that we take into consideration with virtually every decision we make.”
While a friendly environment is nice, sound business practices ensure longevity. So Liberty teaches their franchisees how to run their businesses at a strict margin, keeping their overheads below 50%, and watching payroll costs like a hawk. They want to make sure that at the end of the tax season that franchisees are walking away with a nice profit.
A Revealing Slogan: Happy Successful Franchisees
This same welcoming feeling also extends to Liberty’s franchisees. In the corporate headquarters in Virginia Beach is a mural that proclaims, “Happy, Successful Franchisees.” This is not just a slogan, but also a concise mission statement. “It’s what we strive to do every day,” says Martha O’Gorman. “Our franchisees are the number one thing that we take into consideration with virtually every decision we make.”
“We don’t turn off the spigot when things go wrong; we definitely hold the hand of franchisees that struggle. We do everything in our power to bolster people up”
According to Liberty’s management team, every franchise organization that’s been hugely successful has gotten their best ideas from their franchisees, so their goal is to make Liberty’s franchisees feel like they’re an integral part of the organization. To that end, Liberty hosts weekly conference calls and a national convention each year to get feedback and input from their franchisees.
To ensure that feedback is a two-way street, Liberty have constructed a reporting system that monitors all important metrics: completed tax returns, revenues, staffing levels, and adherence to the marketing program during the tax season. It’s a system that allows for timely intervention should an individual office begins to falter. In these cases, Liberty will send in a team to help, either directly, or via telephone or Skype.
What Makes a Good Franchisee?
Liberty’s franchisees come from all walks of life: CPAs, lawyers, retired schoolteachers, small business people, and corporate employees that have been downsized, and all of them have become successful in their new businesses. What do they have in common?
- Those that make the transition to franchise ownership easily, understand the unique challenges of being self-employed and making a payroll every two weeks.
- Being organized is important too, because the tax season is only 115 days long, and a franchisee needs to be ready when the season kicks off, or it will not only lose business, but referrals as well.
- A good command of the English language is also necessary because of the complexity of tax documents.
Liberty teaches their franchisees how to run their businesses at a strict margin, keeping their overheads below 50%
However, sometimes a strong entrepreneurial drive can be a double-edged sword in running a franchise. You have to learn the value of following the system instead of trying to reinvent the wheel when you buy a franchise. Succeeding sometimes requires reining in one’s natural impulses, which is why Liberty works hard to create a template that helps franchisees avoid all the usual mistakes. “We’re here to protect the franchisee so they won’t waste time and money,” says O’Gorman.
What’s Required
Purchasing a Liberty Tax franchise is relatively inexpensive as franchises go, typically requiring from $50,000 – $70,000 of capital to get started, and all potential franchisees must go through a thorough vetting process to avoid unfortunate mistakes before they go into the 5-day training period. Even then, there are safeguards to protect both Liberty and the investor. During the training period, should a potential franchisee feel that Liberty is not a good fit, his or her investment will be returned and all legal obligations will be voided. By the same token, Liberty might also decide that the candidate is not appropriate and all investments will be returned.
Become a Liberty Tax Franchisee, get started now!
Liberty’s Successful Immigrant Franchisees
Immigrants from many regions and countries, including Pakistan, India, South America, the Middle East, and Southeast Asia have become successful franchisees at Liberty Tax Services. Their drive, motivation, and curiosity are noteworthy, as well as their desire to expand and own multiple locations.
The only thing that is required is American citizenship. You must have a social security number in order to prepare taxes, and a good command of the English language since the tax code is highly complex and the Liberty operating system is only available in English.
“We’re not selling pizzas and ice cream cones, when it comes to professional services, you have to be known in the community.”
Smart Effective Marketing
While their competitors have spent huge sums on television advertising over the years, Liberty Tax Services does not believe in electronic marketing. Instead, they are dedicated to “guerrilla marketing,” which they believe provides more bang for the buck. What is guerrilla marketing? Basically it’s a collection of old fashioned and low dollar techniques like cold calling, handing out coupons, and deploying employees dressed as Lady Liberty on the streets to build share of mind and generate consumer interest.
Because tax prep is a professional service, Liberty believes that relationships are the critical factor in building a customer base, not expensive advertising campaigns. So, they use robust business-to-business campaigns, gifts and couponing – tactics that involve creating personal connections with potential customers.
It’s worked so well for them that Liberty has created a Guerrilla Marketing Calendar which tells franchises what to do every day of the tax season, based on the number of returns they’ve budgeted for. Following the system is the hardest part of being a franchisee, according to Liberty, but if you do, you’re almost guaranteed to succeed.
For More Information About Becoming a Franchisee
Liberty Tax Service
1716 Corporate Landing Parkway
Virginia Beach, Virginia 23454 USA
877-AT-LIBERTY (877-285-4237)
Fax Number: 1-800-880-6432
Email: Sales@libtax.com
www.libertytaxfranchise.com
Facebook: https://www.facebook.com/libertytax
Twitter: https://twitter.com/libertytax
Youtube: http://www.youtube.com/user/libertytax
Linkedin: www.linkedin.com/company/liberty-tax-service
This is a very thorough story, thank you its an interesting idea for a business..
Dont try to reinvent the wheel when buying a franchise, good advice!