New York Tax Prep Franchiser Eyes Hartford Market
By Becky Bergman – Special to the Hartford Business Journal
While many businesses are slowing down due to the rocky economic climate, Smart Tax, a tax preparation franchise concept founded in 2006 by financial whiz Nick Rizzi, is just starting to speed up.
And the Greater Hartford area is squarely in the crosshairs of its expansion strategy.
The Brooklyn, N.Y.-based tax preparation service grew to three locations before Rizzi decided to expand the business via franchising. That was in November. Seven franchises have been added since and CEO Rizzi, who still manages the original three sites, says Smart Tax is on pace to develop 100 locations nationwide by tax season 2012.
The entrepreneur is aggressively eyeing the Hartford market, where he wants to launch 20 new locations in the next two to three years.
Rizzi spent more than 16 years cutting his teeth in the industry working for H&R Block before he began to explore the idea of entrepreneurship.
“When I was looking at starting my own business several years ago, I wanted to do something that was recession-proof,” said Rizzi. “I also wanted to specialize in something that was solid. You can count on death and taxes no matter what kind of economy it is.”
Tax return preparation is one appointment people, especially small business owners, can’t afford to miss, Rizzi said.
The Internal Revenue Service reports that roughly 60 percent of the projected 140 million individual tax returns filed each year are completed with the help of a tax preparer — creating a $65 billion industry.
Even though the industry is under-saturated — as Rizzi learned when he first looked into the tax preparation industry — many competing franchisors had oversold the markets. In fact, there are more than 90,000 firms catering to income tax preparation services.
When it comes to developing territories, Rizzi said he looks for areas with a minimum population of 25,000 people, median income of $35,000 or greater and large percentage of households with children.
“We know that Hartford is not an over-saturated market,” said Rizzi. “Based on the population and statistics, taxpayers are dealing with complex earned income, school and childcare credits that might require an expert preparer.”
Rizzi said each territory should generate between 1,000 and 2,000 income tax return opportunities for a franchisee. As a way to adapt to the economic climate and offer a wide range of entrepreneurs the ability to own their own business, Smart Tax’s initial investment is a two-part plan.
Franchisees pay half of the $20,000 fee up-front and the remaining interest-free balance after their first tax season in business.
“This allows the franchisee to get their business up and running while focusing on connecting with the community and marketing their business,” said Rizzi. “Smart Tax has a lower franchise fee than many other concepts in the franchising industry.”
Liberty Tax charges a franchise fee of $40,000 while H & R Block’s fee runs $25,000 to $50,000.
“Smart Tax is a step above the competition and is now targeting Hartford to provide quicker returns, better services and a strong connection to the community,” said Rizzi.
Franchise: Smart Tax
Company: Smart Tax is a professional tax preparation service provider that offers e-filing and drop-off service, same-day or next-day loans and state-of-the-art tools that help make the entire business run efficiently and intelligently.
Address: 329 Myrtle Ave., Brooklyn, NY 11205
Liquid capital required: $35,000-$45,000
Net worth required: $75,000
Total capital to invest: $36,650-$93,600