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How to start a telephone answering service
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 then reach for 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 $20,000 or
more after just a couple of years in the 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 the electronic answering devices is not even beginning
to slow this demand! A great many people are "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
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 think of the operators at their
telephone answering service as vital to their success, and often
regard 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 don't want
two different sales people calling on the same prospect.
You can begin operating out of a spare bedroom or your garage -
plus... 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 foot 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 very good
prospects, especially those holding down regular jobs while
moonlighting with a part-time businesses of their own. Every
salesman is a prospect, people who work on a 24 hour "on-call"
basis, repair service business owners such as plumbers,
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 or
ganizations, and customer complaint departments of virtually every
business in your area... By all means, don't for get the doctors,
dentists and other professionals.
A lot of beginners start by providing service only for theses
intermittent users. These people "put out the word" that if they
can be reached at their regular number after 4 or 5 rings, the
caller should dial the number of their 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 or 20 such
customers, it's necessary to install a phone with multiple incoming
lines. The cost and questions of the phone company can be ofset by
purchasing your own telephone and explaining that you 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 switch
board 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 calls" 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 from 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 and 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
will cost you for land lines. Remember too that each exchange
station handles prefixes limited to customers within a certain
radius of that station. What all of this means that if most of the
business in your area have a 234 and 345 prefix, you'll want to
locate your answering services offices as close to the station
serving theses prefixes as possible. Basic installation and set-up
of one switchboard will cost 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 update you on current practices and trends.
Meanwhile in setting up your own facilities, keep your cost in line
with a realistic view of your first year's anticipated income. It
shouldn'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 through your in-person sales calls on them, or your
telephone soliciting efforts, and send their payment in by mail.
You'll need 125 square feet of space for each switchboard you plan
to eventually install. Also plan for a small reception area which
can also double as a rest area for your operators and general office
area for bookkeeping, billing and other admin-istrative functions.
Be sure there are convenient rest room 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 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 are ready to go, consider the attitudes and feelings of the
people who will be working long hours on the switchboards for you -
invest in some cheery 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 basis.
When you order your first switchboard, listen to the telephone
company's instructions, 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 out going 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 of 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, 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 all maintenance, so when ever
you have a problem or something isn't working properly to suit your
needs, call and ask the phone company to send a repairman.
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 after the operator has
answered. The customer could then 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 head set 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 are
calling from a different number, or pre-designated trunk line. Most
answering service owners experiment both ways until they decide upon
the system that works best for them. Which ever method is finally
chosen should be decided upon with the efficiency of the operators
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 then takes the call, jots down the
message, punches the time clock and then 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 shift 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 a
message received or double-check his billing against your records.
Basically, your message rack can be either pigeon-hole com-partments
in a wooden box designed and built to fit your space, or lazy-Susan
clips similar to what any restaurants use for fast food orders. At
any rate, you shouldn't have any problems 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 up 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 through 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
Efficiency is the name of the road leading to profits in any small
business, so when you begin with one switchboard, make sure you have
that position-splitting key, and that you balance the board - half
of them on one side and half on the other side. This will enable
you to put two operators on that one 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 service, you should have him
sign a simple contract that specifies the name and address of the
firm to be billed for the service, and the typed name as well as the
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
an emergency, and any special answering instructions the client may
want you to use. Don't forget to include a clause requiring a
30-day notification of 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 will be money ahead by paying a good
contract attorney 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 from mistakes or missed messages - very good to have, and
available at very low cost through the Associated Telephone
Answering Exchange, Inc. by special arrangement 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 you customer list
warrants. The longer you try to operate with just two 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-shifts, moonlighting jobs to 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 shift. Break them in by having them "sit in" with an
experienced operator during the day-time 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
to allow their "personal feelings" to show through when they are
answering the phone. They represent your business and your
customers. As such, they must project a professional manner at all
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 any thing frustrates anyone
calling a business number more than a telephone that seemingly rings
forever before someone answers it.
You can start your inexperienced people at $4 an hour, and your
experienced operators at $6 an hour. Try to explain to them that
the success of your business depends on them, and as your business
prospers, so will their monetary rewards. Get them involved and
interested in helping you succeed.
It's going to take aggressive selling on your part to reach success
with a venture of this kind. You must spend at least 50 percent of
your time making sales calls - if you can't or don't wish to do any
personal selling, then you will have to hire at least two full time
sales people to take your place. In addition to your own sales
efforts or people who fill your shoes in this area, you should hire
at least one other full time salesperson. You should plan to have
someone making telephone solicitations for at least 3 hours out of
each working day.
Selling your service - building an ever larger customer list - is
the name of the game for real success. You've got the start up
information, and from here on, the rest depends on your own
Associated Telephone Answering Exchanges, Inc. Bankers Square 100 Pitt
Street Alexandria, VA 22314 (703) 683-3770
TYPICAL EQUIPMENT COSTS
Two Operators Chairs................$ 90
Desk & Chairs.......................$ 100
Two side chairs.....................$ 50
Filing/Supply Cabinet...............$ 50
Used Typewriter.....................$ 150
Base for Switchboard................$ 60
Message Rack........................$ 75
Time Clock..........................$ 250
Office Furnishings/Decorations......$ 150
5 thousand 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 fees..........................$ 100
>>>>>>>>>>> a postscript <<<<<<<<<<<<
You might also consider other related
businesses contained in other How To
reports that can go on at the same
time. This will fill your operators'
time when they aren't on the phones.
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