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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 - 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 allayed 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 appoint
ments, 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,OOO 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 administrative 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 under stand 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 compartments 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
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