Introduction
Getting Started
Types of Home-Based Answering Services
How to Obtain Clients
Your Home Office
10 Easy Steps to Organizing Your Business
The Art of Networking
Marketing Your Business
Additional Tips for Success
Start-up Costs and How to Fund Them
Getting Help from the SBA
Financial and Legal Considerations
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Start-Up Costs and How to Fund Them

Most of the start–up costs of the phone answering service business has already been detailed in the previous text. If you do not have the money to start your business but feel certain it will be a success, try and raise money yourself to get the business off the ground.

The easiest way to obtain money fast is to talk to your friends and relatives about it. Getting them to invest in your idea will be an easier sale, perhaps, than talking to com­plete strangers about it. The downside is that if the business fails for any reason, that relationship may never be the same. 

If family and friends are not potential investors, you must look outside this familiar circle to other candidates. There are two types of investors to seek: those who wish only to put money into the business hoping for a return, and those who wish to contribute both money and talent in exchange for an equitable share of the profits. 

This latter individual would be considered an active partner while the former investor would be more of a silent partner. The active partner would share the duties of the business with you, put up some money and thus own a percentage of the business equal to their time, talent and investment. The silent partner may put up the entire amount needed but gives you a share of the profits since you are doing all the work of running the business. 

Partners can own whatever share of the business all parties deem fair; there are no set guidelines here. There are individuals known as venture capitalists who are con­stantly on the watch for potential lucrative new businesses to invest money in, with an expectation of a large return. You can advertise in the paper as seeking venture capital for a phone answering service business and even list the amount of money you are seeking. Then, when contacted, the real negotiations will start. 

You will be expected to provide a potential investor with information about your background and qualifications to run a phone answering service business. You should have a detailed marketing plan already worked out along with revenue and expense projections to show your potential investor(s) what they can expect for a return on their investment. The more prepared you are, the better likelihood of attracting the money you need to get started. 

You could also try to put up the cash yourself and be a 100% owner. Review your personal asset and liability situation to see if enough money can be raised to initially fund your start–up costs. Insurance cash value, savings, sale of goods you could do without, credit card advances, even a second mortgage are all ways to personally raise money for your business venture. You must decide if this is the right way to go. Do you believe your business can be a success financially? If so, there is money out there for you to find so you can turn your dream into a reality.

The other option for you may be a small business loan. Do you have a good credit rating? How well do you know your local banker? 

Again, you must have an exceedingly high belief that your business will take off since loans have to be repaid. If you are unable to raise the money you need any other way, a small business loan may be your best bet to acquire the capital you need to get started.

Getting Help from the SBA 

The Small Business Administration has made it easier to apply for smaller loans today. If you are seeking cash for $50,000 or less, the paperwork required has been diminished significantly. 

What’s more, your local community banker may be able to approve the loan person­ally without having to send it to the SBA. The SBA is guaranteeing the loan so local banks are more apt to lend money to new ventures as well as established ones.

You will have to put up at least 25% of the cash you need. The SBA will not under­write 100% of the venture. But, given the relatively low start–up costs for a phone answering service, you may not need more than $50,000 and can likely rise up to $12,500 personally in order to obtain the other $37,500 from the SBA. This would give you 100% ownership in your business with only the loan to be paid back.

The SBA has several other types of financial assistance programs, too. For potential small business owners that do not have adequate credit to obtain a loan through the usual bank channels, the SBA can provide the funds through several different loan programs. 

Your small, community banks are the firms that generally work closely with the Small Business Administration to provide these dollars to people in their area. Women and minorities are especially considered under a number of different SBA loan programs. 

Some of the special circumstance loans that are available are economic opportunity loans, handicapped assistance loans and displaced business loans. These are all programs to help disadvantaged individuals obtain the money they need to get a good idea off the ground. 

Applications for loans will require much the same data, as you would have prepared for a venture capitalist or any other potential investor in your business. Your background and qualifications, your marketing plan, revenue and expense projections and the need for the services you provide will all have to be discussed thoroughly with the loan officer before you can expect any loan approval. A good credit rating is helpful in obtaining the loan. If you have a history of paying back what you owe, chances are you would pay this loan back, too. 

There are a number of Small Business Administration locations near you. Click here for a list of regional offices and development centers that can assist and direct your application for a SBA loan.

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