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
    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 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 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 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
    constant use.

    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
    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 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
    ambition.

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
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 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
Supplies............................$  200

TOTAL...............................$7,962

            >>>>>>>>>>> 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.