How to Start an
Answering Service Business

A Phone Answering Service Business is probably one of the easiest service businesses that you can start. It does not involve a lot of risk, has a low start-up cost and does not require any special expertise. What is really needed is a pleasant voice, good telephone manners, tactful answering strategies and of course, a passion to mind your own business.

With many business owners running virtual offices, some of them being internet-based, the demand to outsource to an Answering Service has grown. There are also those who require medical answering services such as doctors who are practically on-call 24 hours a day. Additionally, you can run a live phone answering service business right from the comfort of your own home, especially when you are just starting out.

Estimated start-up costs and financing sources:

The start-up costs for an Answering Service Business are relatively low. All you need when you first start out is a phone and a phone line for each of your clients. This will probably cost you around $200 per phone line with phone rentals of less than $50 a month. Even if you prefer to purchase your own physical phone, each of them will cost less than a $100, which is fairly cheap to start a business with. You can also name each phone with the name of the company that you are representing.

When your business has improved, you can consider renting a switchboard from your phone company. This is especially true when you are already serving more than 10 clients at one time. Also, if you plan to expand your answering service business further, you can even rent a commercial office and operate from there. On a larger scale you can purchase a switchboard that costs up to $25,000 and can run up to 25 lines.

You can start your answering service business by using your own savings or by liquidating some of your assets or obtaining a second mortgage. Getting a loan from the Small Business Administration is also possible for amounts less than $50,000. If you have a good credit report, than you can also consider getting a loan from a local lender such as a bank. Of course, all of these require you to draft a workable business plan with estimated costs, revenue and profit projections.

Pricing guidelines:

In any business, it is always up to the business owner to set the rules and prices of the business in line with industry standards. Among the factors involved in setting prices would be the type of services that the client is purchasing from you, such as whether phone answering is required during office hours or beyond. Some other value added services include order taking, appointment setting or telemarketing, all of which come with different price levels.

In general, a basic call answering service costs a client $50 - $60 for 60 to 100 calls. Additional calls will be charged at $0.30 to $0.50 each call. This service is only for answering calls and does not include any other services. Clients are also charged line rentals of $15 - $20 a month. Paging service will be an additional $20 to $30 a month.

Advertising and marketing methods and tips:

A live answering service business works well if you are located in an urban or metropolitan location. There is where there are many business owners such as plumbers, doctors, physicians, sales people or towing companies that require someone to manage their phone calls. Physicians may require a 24 hour answering service with which you can provide.

Start by advertising yourself in the yellow pages and the local publications where the target readership is parallel to your target market group. You can start a website to advertise yourself and your services as well.

You will probably need to cold call for clients during the early part of your business. Locate listings of your target customers in phone books, newspapers and local community boards. You can also target potential clients who may need telemarketing services which you can provide also. These would be businesses such as employment agencies, pet services, collection agencies, restaurants and travel agencies. Marketing efforts will take time to materialize, but you will soon see results as long as you are persistent and patient.

Essential equipment:

You will initially need a phone and a phone line for each client that you are providing phone answering services for. As your business grows, you may want to utilize computer software to track your calls and your messages, as well as manage your business operations as well. Later on, you will probably need a switchboard which can provide a more efficient method of controlling and managing your phone calls.

Recommended training, experience, or needed skills:

Running an answering service requires personality and a good speaking voice rather than any specific trained skills. Speaking properly and clearly with good diction and excellent grammar would definitely be a plus point for this business. Apart from that, good customer service is a must and an ability to calm an angry caller would definitely add value to your business. If you need to improve your skills, you can always enroll for a self-improvement night class at your local community center.

Income potential:

Depending on how large you want your business to grow, the income potential is huge. There have been businesses with revenues of $150,000 a year, just by providing phone answering services to a huge volume of clients.

Target market for an Answering Service Business:

Target markets for a live phone answering service would be anybody that is always on the go and would need someone to take care of their “virtual” office. These could be sales people, contractors or doctors and physicians who can’t always be around to answer their phones. A range of businesses that would benefit from your telemarketing and appointment setting services would be credit agencies, restaurants, financial services companies, car washes and video stores.

Success tips for an Answering Service Business:

Your business will grow as large as you want it to be. Just by providing excellence to your clients and their customers in business, you will be able to obtain word of mouth marketing and recommendations from your clients. Later, you can move your home business to an office location and run a larger operation from there. Eventually, you may even want to start building a call center and hire staff to handle the huge volume of calls.

Books & Reference Material

• How to Start and Manage an Answering Service Business Step by Step
• Business Start-Up Kit
• How to Start, Run, and Stay in Business
• The Business Planning Guide:Creating a Plan for Success in Your Own Business