How To Start A Telephone Answering Service

Organize yourself properly. decide how much money it's going to

take for you to feel comfortably wealthy, and the reach it with

your own 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. The best thing is to ask

for certified copies of the original building blueprints or

previous inspection reports, and have these in hand when you

contact the phone company.

Once you're ready to go, consider the attitudes and feelings of

the people who'll be working long hours on the switchboards for

you--invest in some cherry paint for the walls, non-glare

lighting, carpeting for the floors and a few wall prints,

pictures or other decorations. Look around for good used office

furniture and buy or lease only what is absolutely essential. A

pocket calculator and a used manual typewriter will work fine

until you get the business running on a dependably profitable.

When you order your first switchboard, listen to the telephone

company's instruction, read the operating manual and attend their

training sessions. The more you know about the equipment, the

easier it's going to be to operate it, and the more you'll

understand your profit potentials.

The traditional telephone company switchboard is known as the

model 557 or TAS-100. This board handles 100 incoming secretarial

lines and 15 office trunk lines, with this board, you have the

capabilities of receiving incoming calls and making outgoing

calls at the same time. You also have a business answering line

which can be used as your number for customers wanting to use

your number as their business number and/or for special events

such as a special number for survey replies or telephone orders

such as advertised on television for one-time-only sales

promotions.

Even though you have the capabilities of 100 incoming lines, you

shouldn't activate more than 5 or 10 more than your actual

customer list. As you add to your customer list, it's then a

simple matter for the phone company to activate or "tie-in"

according to your needs. Your rental lease payments to the phone

company for equipment includes maintenance, so whenever you have

a problem or something isn't working properly to suit your needs,

call and ask the phone company to send a repairmen.

Some of the extras you can get with your board includes a

"secrecy" switch. This feature prevents an operator from

listening in if a customer has already picked up his phone and

answered the call, but it does not prevent the customer from

picking up his phone after the operator has answered. The

customer could by request the operator to hang up and conduct

whatever conversation he wants with the caller.

Another feature is the "position-splitting" key. This involves

plugging in a second headset and simply turning the key to enable

two operators to work the same board during an especially busy

period.

When your customers want to call to check with you for any

messages, you can have them call their own number if they're

calling from a different number, or pre-designated trunk line.

Most answering service owners equipment works both ways until

they decide upon the system that works best for them. Whichever

method is finally chosen should be decided upon with the

efficiency of the operators in mind.

In addition to your switchboard, you should install a time clock

and message racks. These are ideally located above or on top of

your switchboard. The operator the takes the call, jots down the

message, punches the time clock and quickly slips it into the

customer's message box. When the customer calls in for his

messages the operator retrieves the messages from his message

box, reads them to him, again punches the time clock with each

message slip, and drops them into a "dead message" box.

You should keep these message slips for totalling at billing

time, so it's a good idea to have each operator file them in your

customer folders as they finish their shifts on the board.

retention of these message slips for at least 30 days is not

required, but it is a good policy to practice. You may find a

customer will want to check on a message received or double-check

his billing against your records.

Basically your message rack can be either pigeon hole

compartments in a wooden box designed and built to fit your

space, or a lazy Susan clips similar to what restaurants use for

fast food orders. At any rate, you shouldn't have any problem in

finding what you need on the open market.

It isn't necessary that you have specially designed or printed

message slips, but you should have a plentiful supply available

and within easy access to your operators. Simple 4 x 5 inch pads

should be all you'll need, and if you'll check with your local

quick print shops, you'll find most of them willing to make a

thousand or so pads of 50 to 100 pages each, from scrap paper,

for almost next to nothing. Another essential to plan on--buy in

wholesale lots and keep handy for your operators--is pens. It may

be exasperating until the business is on a sound profitability

basis, but in a busy month, one operator can easily go thru 100

or more pens. Don't fight the how's and why's just charge it up

as a business expense and order more pens.

You'll need some form of maintaining basic customer information

such as address, name and number to contact during an emergency

and any special answering instructions. For this, simply go with

3 x 5 or 4 x 5 index cards and place them in each customer's

message slot for easy operator reference. Many services have

these cards laminated in plastic to prevent them from getting

dirty or deteriorating with constant use.

Efficiency is the name of the road leading to profits in any

small business, so when you begin one switchboard, make sure you

have that position-splitting key, and that you balance the board.

In other words, don't put all of your similar customers--such as

plumers, electricians and doctors on one side of the board.

Instead, divide them across your board--half on them on one side

and half on the other side. This will enable you to put two

operators on that board in times of emergency. Your customer

lines must be distributed according to usage across the board for

maximum efficiency of your operation.

Each time a customer "signs" for your services you should have

him sign a simple contract that specifies the name and address of

the firm to be billed for the service, and typed name as well as

signature of the person authorizing the service. There should

also be space on this contract for alternate phone numbers, names

and addresses as well as phone numbers of persons to contact in

case of emergency, and any special answering instructions the

client may want you to use. Don't forget to include a clause

requiring 30-day notification of service cancellation by either

party to the contract. It's also a good idea to state that a full

month's payment must be made for any partial month's usage, in

order to cover any disconnect charges. You'll probably want to

stipulate that the last month's base charges are to be paid at

the time of service approval, in order to enhance your working

capital situation.

Check with the phone company--find out if they or you are to bill

the customer for hook-up charges, and the line into your

switchboard. By all means, get everything written out and fully

explained in the contract. You'll be money ahead by paying a good

contract that not to put all that you want into a legal contract

that not only protects you, but also is binding upon your

customers.

One other item of paperwork you should have is an Errors &

Omissions Insurance Policy. This protects you and your operators

against any liability form mistakes or missed messages--very good

to have, and available at very low cost thru the Associated

Telephone Answering Exchange, inc. by special arrangements with

Lloyd's of London. Your other insurance needs are those basic to

any business. Always shop around for the best rates.

In the beginning, you and your spouse or partner can operate a

telephone answering service. However, we strongly suggest that

you add to your "operator staff" just as quickly as your customer

list warrants. The longer you try to operate with just 2 people,

the longer it's going to take you to achieve real profitability.

Remember, you want a 24 hour, seven-days-a-week, full service

operation. This will require at least three full time operators

for your board, plus at least one relief operator--and don't

forget about commission sales people.

Ideally, you should try to hire people with telephone switchboard

experience, but in order to get these people, you may have to

offer short-shift, moonlighting tom regular telephone company

operators. It will take some time to train inexperienced people,

so bear this in mind when you begin looking for people to hire.

It's always a good policy to hire your new, inexperienced people

for the evening shifts. Break them in by having them "sit in"

with an experienced operator during the daytime hours, and have

someone close at hand during their first week on the evening

shift before turning them loose to handle the board by

themselves.

The most important qualifications to look for in an operator are

voice and attitude. The voice must be pleasant and sound alert,

interested and ready to help the caller. Warn your operators

never allow their "personal feelings" to show thru when they're

answering the phone. They represent your business and your

customers. As such, they must project a professional manner at

all times.

Teach your operators to answer the phones with a "happy smile" in

their voices. Train them to take their time with the callers, and

get the message right by reading the message back to the caller,

and also be sure they ask the caller for the correct spelling of

his or her name. Unless specifically instructed otherwise by a

customer, insist that your operators never allow an incoming call

to ring more than twice before answering it. Hardly anything

frustrates anyone calling a business number more than a telephone

that seemingly rings forever before someone answers it.

You can start you inexperienced people at $4 an hour, and your

experienced operators at $6 an hour. Try to explain to them that

the success of your business depends on them, and as your

business prospers, so will give them their monetary rewards. Get

them involved and interested in helping you succeed.

It's going to take aggressive selling on your part to reach

success with a venture of this kind. You must spend at least 50

percent of your time making sales calls--if you can't or don't

wish to do any personal selling, then you'll have to hire at

least two full time people to take your place. In addition to

your own sales efforts or people who will fill your shoes in this

area, you should hire at least one other full time sales person.

You should plan to have someone making telephone solicitations

for at least 3 hours out of each working day.

TYPICAL EQUIPMENT COSTS:

TWO OPERATOR CHAIRS...........................$90

DESK & CHAIR..................................100

TWO SIDE CHAIRS................................50

BOOKCASE.......................................50

FILING/SUPPLY CABINET..........................50

CALCULATOR.....................................50

USED TYPEWRITER...............................150

BASE FOR SWITCHBOARD...........................60

MESSAGE RACK...................................75

TIME CLOCK....................................250

OFFICE FURNISHINGS/DECORATIONS................150

5-THOUSNAD MESSAGE PADS........................25

24-DOZEN PENS..................................12

SWITCHBOARD LEASE (ONE BOARD)...............4,000

CABLE INSTALLATION (ONE BOARD)..............1,500

RENT ON OFFICE................................600

UTILITY DEPOSITS...............................50

BUSINESS LICENSES..............................50

BUSINESS INSURANCE............................350

LEGAL FEE.....................................100

SUPPLIES..................................... 200

                                            

                             TOTAL         $7,957