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How To Start A Transcription Business

How To Start A Transcription Business

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How To Start A Transcription Business

How To Start A Transcription Business

Starting a transcription business might seem straightforward – you simply need to listen and type, right? But in reality, building a successful transcription enterprise involves much more than just having fast fingers.

This guide will walk you through the essentials of starting a transcription business, from understanding the industry, steps to get started, and answers to common questions.

Business Overview

A transcription business converts speech into a written document.  The speech can be either live or recorded video or audio files.  It is often used by businesses to record meetings, speeches, or other important conversations.  Lawyers may use the service to document court proceedings, and physicians may use it to document patient notes that they record.

Many companies outsource this type of work to independent contractors as they may not have enough work to hire a full-time person or lack office space.

A transcription service offers a lot of flexibility as it can be a part-time side job to earn extra money, or it can be a full-time career, and you can transcribe anywhere.

Industry Summary

The transcription industry has grown with the increase in digital recording of interviews, meetings, lectures, and more. The rise of AI-based transcription has created opportunities for human transcriptionists to audit automated transcripts and improve accuracy. Key clients include market research firms, business services, legal practices, authors, and universities.

According to IBISWorld research, in 2022, the US transcription industry generated $2.5 billion in annual revenue and has grown 4.4% per year on average over the last five years. Continued growth is expected as organizations utilize transcripts for improved documentation and analysis, though the U.S. Bureau of Labor Statistics (BLS) projects there will be a 4% decline in the number of jobs over the next decade. Speech recognition software continues to improve, and competition from companies outsourcing overseas is the leading factor leading to this decline.

Steps To Start A Transcription Business

Step 1: Research the Market

One of the most important steps in starting any business is researching the industry you are entering and the transcription industry is no different. This type of research will help you understand your competition, identify market gaps, and familiarize yourself with the industry.

One of the first steps in researching your industry is to identify who your competitors are. Look for the top transcription businesses in your area or nationwide, depending on where you want to focus, and see what services they offer. This will help you identify potential areas of differentiation for your business. For example, if most transcription businesses offer verbatim transcription, you might specialize in a different type, such as edited transcription. Additionally, researching your competitors can give you a sense of what pricing is reasonable for the market.

Once you’ve identified your competitors, research your market demand. Determine if there is an unserved market or a customer need that is not being met. You may find that a specific customer type is not being served and tailor your services towards that group. For instance, medical transcription services serve numerous specialties and provide a unique service to the healthcare sector. Doing market research will also help you determine your price points to attract the right customers.

Another critical step is to understand your potential customers. Look for solutions that your customers might need that competitors are not yet offering or don’t offer well. One way to learn about your customers is to look online for reviews of transcription businesses. Customer reviews offer insights into what customers value most and what they find lacking in other businesses.

Step 2: Identify the Services You Want To Offer

As a transcriptionist, you have a range of services you can offer to your clients. However, before starting a transcription business, you need to identify the services you want to provide to differentiate yourself from other transcription services.

You’ve probably heard the saying, “Jack of all trades, master of none.” In the transcription business, spreading yourself too thin can have similar drawbacks. Yes, being a general transcriptionist offers the benefit of a wide-ranging client base. But by specializing in a niche could be your ticket to higher rates and a more stable workflow.

Here are some popular niches within the transcription business:

  • Medical transcription: This involves transcribing medical records, consultations, and even research notes. Knowledge of medical terminology is a must.
  • Legal transcription: Court proceedings, depositions, and legal briefings are some areas where legal transcription is required. Familiarity with legal jargon is crucial here.
  • Technical transcription: This involves transcribing materials related to specific industries like engineering, IT, or science. It requires familiarity with industry-specific terms and jargon.
  • Media transcription: Media transcriptionists transcribe audio and video content from TV shows, movies, documentaries, news broadcasts, and podcasts. This field may require a broad knowledge base depending on the content being transcribed.
  • Academic transcription: Professors, researchers, and students often need interviews and lectures transcribed. Being comfortable with academic language can be a plus.

As a transcriptionist, you should know your strengths and weaknesses in the industry. Ask yourself questions such as, are you an expert in legal or medical transcription? Can you transcribe multiple languages? Knowing your strengths and weaknesses will help you identify the type of services that you specialize in.

Step 3: Write a Business Plan

Writing a business plan for your transcription business is a step that while optional, should not be overlooked. It serves as a roadmap, guiding you through each stage of starting and managing your business. A business plan is a comprehensive document that describes in detail how a business, in this case, a transcription business, is going to achieve its goals. Writing a business plan can help you identify potential weaknesses in your business idea, marketing strategy, operational plan, and financial projections. By recognizing these weaknesses, you can address them proactively.

Related: How to write a business plan 

Step 4: Secure Funding

After defining your niche and working through the business plan to know how much it is going to cost to start your transcription service, the next step is making sure you have the funds available to start.

Because of the low costs to get started, people primarily start a transcription business through personal funds. If personal savings isn’t enough, there are a few outside sources to look towards.

  1. Friends and family: You could ask your friends and family to invest in your business. Make sure to treat it like a professional engagement and clearly explain your business plan and how you intend to make a profit.
  2. Bank loans: Traditional bank loans are another source of funding. Banks offer various types of business loans that you can apply for. To qualify, you’ll need a strong business plan and possibly some collateral.
  3. Microloans: Microloans are an option when a small amount of funding is needed, or traditional bank credit isn’t available. Some microloan programs offer business training alongside the funding, which can be invaluable for new entrepreneurs.

Step 5: Register the Business

Starting your own transcription business involves several legal steps. Here’s a general guide on how to properly register your business, keeping in mind that rules and procedures may vary by state and country.

Choosing a business structure:

  • Sole proprietorship: The simplest form to start a business. It’s basically you, your skills, and your clients. It’s easier to set up and costs less, but it doesn’t offer any liability protection. That means if the business is sued, your personal assets are at risk.
  • General partnership: If you’re planning to co-own the business, a general partnership is an option. Like a sole proprietorship, it’s straightforward to set up. But, each partner is responsible for the business’s debts and liabilities.
  • Corporation: This structure creates a separate legal entity from the owners, which offers liability protection, but comes with more administrative requirements.
  • Limited Liability Company (LLC): An LLC blends elements of sole proprietorships/partnerships and corporations. Owners have limited personal liability like a corporation, but enjoy the ease of operation of the sole proprietorship and partnership.

In general, sole proprietorships are the most popular structure for transcription businesses due to their ease of startup and low costs.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: While there is no licensing specifically for a transcription business, there are general business registrations that are needed for every business. These vary by where the business is located and can include a local business license, seller’s permit, and Employer Identification Number.

Related: What licenses do transcription businesses need?

Some specialty areas, like legal transcription and medical transcription, require schooling and certifications. Medical transcriptionists, for example, will need to successfully complete a two-year associate’s degree program in medical transcription. In some cases, certifications can help make you more marketable. Even if certification isn’t required, there are some popular free and low-cost courses from Transcribe Anywhere, Udemy, and Skillshare that can help make your business more marketable.

Step 6: Set Up Your Workspace

After you’ve navigated the legal maze and your business is officially up and running, the next significant milestone is setting up your workspace. As a transcriptionist, you’ll likely spend many hours at your desk, so it’s important to create a space that’s comfortable, efficient, and free from distractions. Some essential tips include:

  1. Choose a quiet location: Transcription requires concentration, so choose a quiet location where you won’t be easily distracted. If you’re working from home, this might be a spare room or a quiet corner of a room.
  2. Lighting: Good lighting is essential to reduce eye strain. If possible, set up your workspace in a place with plenty of natural light.
  3. Computer: Invest in a high-quality computer. A slow or outdated system can hinder your efficiency.
  4. Software: There are transcription software options specifically designed for this line of work. Software like Express Scribe or InqScribe can make your job easier.
  5. High-quality headphones: You’ll be wearing these for long periods, so choose headphones that are comfortable and offer excellent sound quality.
  6. Ergonomic furniture: Since you’ll spend long hours sitting, an ergonomic chair and desk can be lifesavers.
  7. Fast internet connection: Time is of the essence in transcription. A fast and reliable internet connection ensures that you can quickly download and upload files.
  8. Data storage: External hard drives or secure cloud storage options are essential for storing large audio and video files.
  9. Foot pedal: This might sound old-school, but a USB foot pedal can free your hands to type while controlling audio playback with your foot.

Step 7: Promote Your Services

Getting transcription work may be challenging for a new business. There are marketplaces like Upwork and Fiverr where companies look for freelance transcribers to complete a project. There are also transcriptionist marketplaces like Rev, Quicktate, and TranscribeMe, though they often have lower pay rates than working directly with companies. These online platforms can be an excellent place to start, but eventually, with some experience under your belt, you should be able to get more consistent and higher-paying work.

A transcriptionist business can also market directly to local businesses with direct mail, attend Chamber of Commerce events, and social media platforms like LinkedIn and Facebook. Having a nice-looking website is helpful, too, as it establishes you as a legitimate business.

Related: Low-cost ideas to market a new business

Step 8: Prepare to Launch!

You’ve done the research, crafted the business plan, and are geared up to launch your transcription business. However, before you take the plunge, there are some remaining tasks that may still need to be done. Every business will have different needs, but here are some common tasks.

Business insurance: Consider getting business insurance to protect your business from potential risks. This could include professional liability insurance to cover claims related to errors and omissions in your work.

Bookkeeping: Establish a system for tracking your income and expenses. This could be as simple as a spreadsheet or a dedicated bookkeeping software like Wave Accounting (FREE) or Quickbooks.

Contracts: Have a standard service agreement that outlines the scope of your services, pricing, and terms and conditions to help prevent misunderstandings and protect your business legally. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.

Business bank account: Open a separate bank account for your business to keep your personal and business finances separate. This makes tax time much easier and helps maintain your business’s financial health.

Pricing: Determine your pricing structure. You could charge per audio minute, per word, or per page. Do market research to understand what competitors are charging and what clients are willing to pay.

Industry Associations: Joining industry associations like the American Association of Electronic Reporters and Transcribers (AAERT) or the National Verbatim Reporters Association (NVRA) can provide networking opportunities, industry updates, and professional development resources.

Greg’s Tip: Underestimating the skills needed for transcription is a common mistake. In addition to typing speed, you must also have excellent listening skills and a good understanding of the language and terminology used in your niche.

Greg's Business Tip

Common Questions When Starting A Transcription Business

How much does it cost to start a transcription business?

Starting a transcription business can range from a few hundred to a couple of thousand dollars, depending on various factors. Here’s a breakdown of some of the initial costs:

Location: Whether you’re working from home or leasing an office space, the initial deposit could range from $0 (home office) to upwards of $1,000 for a small, leased space.

Equipment: A decent computer can cost around $500, while specialized headphones and foot pedals could set you back another $100-$200.

Software: Transcription software costs can vary. Free options are available, but professional software might cost around $100 as a one-time purchase.

Business registration and licenses: Filing fees can vary by state but can be anywhere between $50 to $300.

Insurance: A general liability insurance policy can cost around $300 to $400 for the year, but you’ll need to make an initial down payment that could be around $100.

Marketing: A basic website might cost you around $200 for design and hosting. Business cards and other initial marketing materials might add another $100.

Initial training/certification: If you’re specializing, courses can range from $200 to $500.

How profitable is a transcription business?

Your revenue will vary depending on the type of transcription jobs you are able to take on. A general transcriber will earn less than a medical transcriptionist or someone providing legal transcription work. In addition, the amount of time you can put into your daily transcription work will influence earnings as well.  

Generally, when providing general transcription services, you can charge $.50- $3 per audio minute (or live time), which roughly comes out to $15 to $50 per hour.  

So, suppose you transcribe three audio hours per day, five days per week, at $1.50 per minute, you would make $70,200 per year.

Now let’s consider expenses:
– Monthly software subscription: $50
– Internet: $60
– Utilities: $100
– Insurance: $40
– Marketing: $100

Add these up, and your total monthly operating cost would be around $350.

Subtracting expenses from revenue, translates to an annual profit of $66,000

What skills are helpful in running a transcription business?

Running a transcription business requires a mix of technical, business, and soft skills. Here are some of the most important ones:

Transcription skills: This includes fast and accurate typing, excellent listening skills, and a good understanding of grammar and punctuation. Familiarity with transcription software and equipment, such as foot pedals, is also important.

Language proficiency: A solid grasp of the language you’re transcribing in is crucial. This includes understanding various accents and dialects, industry-specific terminology, and cultural nuances.

Research skills: You may need to look up unfamiliar words, names, or terms to ensure the accuracy of your transcripts.

Time management: Transcription can be time-consuming, and clients often have tight deadlines. Being able to manage your time effectively is crucial.

Customer service: As a business owner, you’ll need to interact with clients regularly. Good communication and customer service skills can help you build strong relationships and secure repeat business.

Marketing and sales: To grow your business, you’ll need to attract and retain clients. This requires skills in marketing, sales, and negotiation.

Financial management: You’ll need to be able to set competitive prices, manage your expenses, and keep track of income and taxes.

Tech-savviness: Since transcription work is usually done electronically, being comfortable with technology is important. This includes knowing how to troubleshoot common technical issues and stay updated on the latest tools and software in the industry.

Confidentiality: Many transcription projects involve sensitive information. Being trustworthy and understanding how to handle confidential information is essential.

Persistence and resilience: Starting and running a business can be challenging. Being able to persevere through difficulties and bounce back from setbacks is key to long-term success.

What is the NAICS code for a transcription business?

The NAICS code for a transcription business is 561410, which is classified under Document Preparation Services.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

How To Start A Transcription Business

How To Start A Transcription Business

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