How to Start a Transcription Business

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Quick Reference

Transcription is a service used by many businesses, law firms, and medical professionals. If you are an excellent typist and writer with good grammar skills, starting your own transcription business could be an opportunity for you to make a good living and be your own boss.

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 business 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.

Industry Summary

According to Grandview Research, the transcription market size in the U.S. was $19.8 billion in 2019 and is expected to grow at a rate of 6.1% per year to reach $32.7 billion in 2027.  The transcription industry has grown steadily for the last five years.

While the sales in the industry are expected to increase, the U.S. Bureau of Labor Statistics (BLS) projects there will be a 2% decline in the number of jobs over the next decade. Speech recognition software continues to improve, and competition from companies outsourcing overseas are the leading factors leading to this decline.

Industry Trends

The amount of data used by companies has driven a need to record data accurately, driving the demand for transcription services.  All sorts of organizations need to ensure data and record-keeping accuracy, including government agencies, corporations, and non-profit organizations.

Target Market

Your target market will be companies that need to have documented data and records.

Skills, Experience, and Education Useful in Running a Transcription Business

There are several specific skills that you will need to open a transcription business.

  • Experience.  Experience doing transcription is valuable.   You also need to have excellent writing and grammar skills and be able to type quickly.
  • Typing skills. Transcriptionists need to have a high typing speed and be extremely accurate.
  • Education.  If you plan to specialize in healthcare or medical transcription, you should become certified.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.

Costs to Start a Transcription Business

Here are the typical costs you will face when you open a transcription business.

  • Relable computer or laptop – $1,000 – $2,000
  • Solid internet connection – $30-$50/month
  • Foot pedal to control audio – $100
  • Transcription course (optional in many cases, but will allow for higher paid work) $3,000 – $15,000
  • Medical transcription certification (optional) $2,000 – $4,000
  • Business cards, flyers, and other marketing collateral – $50-$100

Steps to Starting a Transcription Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your transcription business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect transcription business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

Most transcription businesses can operate from their home office as dedicated commercial office space isn’t usually necessary.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

While there is no licensing specifically for a transcription business, there are general business registrations you may need. A few common ones include a local business license and Employer Identification Number.

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.

Related: Common business licenses, permits, and registrations by state

Step 6: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the company.

Step 7: Get your Marketing Plan in Place

Getting transcription work may be challenging for a new business. There are marketplaces like Upwork and Fiverr where companies look for freelancers 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 market online with social media platforms like LinkedIn and Facebook. Having a nice-looking website is essential as you may get local clients searching for this service.

Related: Low-cost ideas to market a new business

Step 8: Get Insurance

A transcription business may want to consider several types of insurance for full coverage. A few of these include:

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 9: Hiring Employees

You may need to hire additional transcribers to help run your business.  Make sure that you select people with appropriate experience and training.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 10: Set up an Accounting System

Setting up an accounting system for your transcription business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Transcription Business?

Your revenue will depend on how fast you are and how much you can transcribe in a day.  Generally, you can charge $1 – $2 per audio minute (or live time).  If you can transcribe 4 audio hours per day, 5 days per week at $1.50 per minute, you would make $93,600 per year.

Things to Consider Before Starting a Transcription Business

Running a transcription business or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

You will face competition, so you need to make sure that you are doing quality work.

A transcription business may offer additional services such as translation, editing, close captioning, and Communication Access Real-time Translation (CART) services.

To make money, you need to be fast!  The more you can accomplish in a day, the more you will make.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other transcription businesses to see what they offer and what prices they charge.

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