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Starting a Telephone Answering Service

Our research has turned up hundreds of husband and wife entrepreneurs who, beginning with just a couple of thousand dollars in borrowed funds, and a lot of ambition are grossing $250,000 or more after a couple of years in business. The exciting part is that the door is wide open for you to do the same! The demand for telephone answering services is growing!!! The advent of electronic answering devices in not even beginning to slow this demand! A great many people are completely "turned off" by the frustration of expecting to talk with a "live person," and having to listen to a recording that advises the caller to leave a message at the sound of the tone. Exasperation of this kind can sometimes cost a business person thousands of dollars in lost profit. Realizing this, today's successful business person wants the personal touch of a friendly, professional "secretary" answering their phones for them. The professional answering service operator can pass along the proper messages to the different callers, take messages, get clarifications and even set up meetings with special customers. In many instances, businessmen come to thick of the operators at their telephone answering service as vital to their success, and often reward them them with special favors or bonuses when a particularly lucrative deal is closed because of courteous and efficient service by the people at the answering service.

To get started properly, you'll need an initial investment of about $10,000 for equipment and facilities, plus working capital. In the beginning, with a 2 person operation, you can have your operator selling by phone while you make in-person sales calls. You might also want to add a couple of "hungry" commission sales people to help line up a good list of accounts as fast as possible. These efforts will take planning and coordination because you won't want two different sales people calling on the same prospect. You can begin operating out of a spare bedroom or your garage--you'll need a leased switchboard from the telephone company--with plans to move your operation into more formal quarters at a later date.

However, it's quite expensive and time-consuming to have a switchboard moved once it's been installed. Our suggestion would be to locate a "beginning" small office, and plan on being there at least 5 years from the start. Many operations begin in a small 200 to 300 square feet economy office location, and as their growth warrants, open a second location with space for eventual expansion to include 3 or more switchboards. Our research has found that you'll need an average of 85 regular customers per switchboard in order to realize a minimum profit after expenses. Just about anyone with a business card will be a good prospect for your services. People working out of their homes are a very good prospects, especially those holding down regular jobs while moonlighting with a part-time businesses of their own. Every salesmen is a prospect, people who work on a 24 hour "on-call" basis, repair service business owners such as plumers, electricians, locksmiths, and auto mechanics.There are other kinds of services that will be interested too, such as ambulance companies, towing services, volunteer fire departments, survey organizations, and customer complaint departments of virtually every business in your area.By all means don't forget the doctors, dentists and other professionals! A lot of beginners start by providing service only for these intermittent users.

These people "put out the word" that if they can't be reached at their regular number after 4 or 5 rings, the caller should dial the number of the answering service. The answering service, which in this case is just a housewife answering her home phone, takes the caller's message and either relays it to the customer or holds it until he checks in with her. Very simple, very easy and very profitable! Usually after such a "shoestring" operation has 15 to 20 customers. it's necessary to install a phone with multiple incoming lines. The cost and questions of the phone company can be allayed by purchasing your own telephone and explaining that your have several teenagers in the family. However, once you have 35 to 50 customers it's time to expand into a commercial operation complete with switchboard and hired operators. The average rates to charge for your service should be about $35 per month for a specified number of calls--usually 70 to 75--with a surcharge of 25 cents for each call beyond that number. Other calls such as "wake-up" and reminder calls for appointments, are usually billed on a "per call" basis at about 50 cents per call. Most telephone answering services provide a variety of other services to keep their operators busy during the times when there are no incoming calls. These services range form typing, envelope addressing, computer input services, envelope stuffing, subscription soliciting and order fulfillment for mail order operators to reviewing books for publishing agents.

In recent years, some have even included private post office, mail drop and forwarding services. The important thing is to keep your operators busy doing some kind of work that makes money for you. When you decide to lease an office get going, complete with switchboard--it's important that you try to get as close to the telephone company's switching or exchange station as possible. This is due to the mileage charges it'll cost you for landlines. Remember too that each exchange station handles prefixes limited to customers within a certain radius of that station. What all of this means is that if most of the businesses in your area have a 234 and 345 prefix, you'll want to locate your answering services offices as close to the station serving these prefixes as possible. Basic installation and set-up of one switchboard will cost you close to $4,000. Generally, a metro population of 35,000 people will support a telephone answering service hoping for $50,000 per year; 75,000 to 80,000 people will be needed for $100,000 and $150,000 people for $200,000 per year or more. For more help and further information, it would be wise to contact the Associated Telephone Answering Exchange, Inc. This organization the industry's watchdog group can up-date you on current practices and trends.

Meanwhile, in setting up your own facilities keep your costs in line with a realistic view of your anticipated first year income. It should't be too difficult to find low-cost rental space in an older building not far from the telephone company's exchange building- the telephone company is usually just as reluctant to pay high rent as you are.Locating in an older, less than "beautiful" building should not detract from your business because few of your customers will ever actually see your offices. Most will sign up for your services either thru your in-person sales calls on them, or your telephone soliciting efforts, and send their payments in by mail. You'll need 125 square feet of space for each a small reception area which can also double as a rest area for your operators and general office area for bookkeeping, billing and other administrative functions. Be sure there are convenient restroom facilities as well. Before installation of your first switchboard, the phone company will require an inspection of your office, mainly to determine if the floor is strong enough to support the weight of the switchboard. Save yourself a lot of frustration by explaining this to the real estate agents or the building managers before they start showing you what's available.


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