Starting Your Own Home-Based Answering Service Business

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Isabel is a seasoned online entrepreneur managing several information-based websites for small businesses and home-based entrepreneurs.

Starting a home-based answering service business can be a lucrative venture, especially in today’s fast-paced world where businesses need to be available around the clock.

It is relatively inexpensive to set up and can allow you to earn thousands of dollars each year without having to leave the comfort of your home. A one-office operation can generate gross revenues of as much as $150,000 upwards in a year, depending on the number of telephones or switchboards in operation and the number of calls taken. 

In a world where businesses are constantly looking for ways to improve customer service and streamline operations, the demand for answering services has skyrocketed. Whether you’re a stay-at-home parent looking to start a side hustle or an entrepreneur with a vision, a home-based answering service can be a rewarding venture. In this guide, we’ll explore how to get started, grow your business, and provide top-notch service to your clients.

This guide will walk you through the essential steps to kickstart your own home-based answering service business and turn it into a thriving enterprise. It is your chance to talk— and earn money doing it! 

Why a Home-Based Answering Service Business?

The need for efficient call handling is on the rise, as businesses seek to enhance customer satisfaction and focus on their core operations. With the proliferation of e-commerce and remote work, home-based answering services have become essential.

The integral role played by the telephone as a business communication tool accounts for the growing importance of answering service businesses. All businesses, whether a physician’s private practice, a small construction company, or a conglomerate, rely on the telephone as one of the fastest and most reliable communication tools in their businesses. 

This business can, therefore, have a wide range of potential customers. Anyone with a telephone and a busy schedule can become your client, although small businesses are emerging to be a very good target market. 

An in-home telephone answering service can be a real lifesaver to a small business.  Many small businesses have neither the time nor the means to take incoming calls during business hours when they are out on jobs — yet those calls represent the very lifeblood of their business! They cannot afford an office; much less a secretary, but they certainly need those phone calls. Unless they can find a reliable and affordable answering service, they will probably have to do without (or ask people to call them only after 7 PM) or use an answering machine (which has a whole set of disadvantages).  

The best prospects for an answering service business are those businesses and professionals that are “on call” 24 hours a day, such as doctors, and repair service business owners like electricians and plumbers, among others. 

Ironically, technological advancement is what pushes this exciting opportunity. Fancy, complex phone–answer systems have left customers talking to computer-generated voices, leaving messages on “voice mail” and pressing numerous telephone numbers to work their way through to conversing with an actual human being. 

While these systems “free” people up from the phones in a business, they frequently frustrate clients and potential customers. There is no guarantee that a client will leave an important message on the answering machine, and this could be a missed business opportunity. A lot of people simply do not like to talk to a machine. Unable to easily reach a human voice, many individuals simply go elsewhere for the services they need. There is also the possibility of a mechanical breakdown. More importantly, however, the answering machine cannot rely on messages, sound interested in the caller’s problem, or estimate when the call can be returned or when the service might be performed. 

Fortunately, employers are recognizing this problem and solving it by contracting people to answer the phones when they cannot do it themselves. That personal touch you can offer can mean the difference in obtaining or keeping a client. As a professional answering service business, you can take messages, deliver specific messages to callers, provide basic information, clarify the intent of calls, and even arrange meetings with customers. 

home-based answering service business

Starting Your Home-Based Answering Service Business 

The needs of a business for an answering service can vary considerably. The basic answering service takes incoming calls on behalf of business people who are temporarily or routinely not available during normal business hours. A company may need a phone to be answered all day, part of the day, after hours only, or 24 hours a day. You can enter this profession at any level you choose. The amount of equipment you will need to get going will also fluctuate depending on how much time you want to devote to your home–based answering business.

The basic answering service takes incoming calls on behalf of business people who are temporarily or routinely not available during normal business hours. Most often, businesses need their phones covered during an “extended” work day, say 8:00 A.M.– 8:00 P.M., with an answering machine taking over the other, less likely, 12-hour call period. Twelve hours can be a long day if you are going it alone, so you may wish to solicit businesses that generally are looking for phones to be answered from 9 a.m. to 5 or 6 p.m. This makes it more likely for you to do the job yourself and work it easily into your family’s schedule, too.

Once you identify your work hours, you can begin the task of soliciting businesses to contract with you. Before embarking on this important effort, you should establish a goal of how many companies you want to represent. You can certainly take on more than one company if all you are doing is answering the phone. 

The number of clients you take on will dictate how you will set up your service. The client can either use a phone company service to have their number ring at your location, or they can advertise your number during certain hours. 

The easiest and most inexpensive way to begin is to have a separate phone line and phone for each of your clients. You would then mark each phone with the company name as an identifier for you when the phones begin to ring. Installing separate phone lines should run less than $200 each. You will also pay basic monthly charges for each phone. This should average about $35-50 per month. If you are buying actual telephones, these can be acquired inexpensively at local stores. This is the best route if you are going to work with ten or fewer businesses. 

However, if you intend to take on more than ten firms, leasing a switchboard from your local telephone company will make your operation more cost and space-effective. A switchboard can accommodate a substantial amount of business activity for you.  

Before buying all these phones and contracting with businesses, check with the phone company to see how many extra lines you can obtain. There may be a limit in your residential neighborhood. How many clients you can take on will depend on the number of lines you can install. You might consider opening up an office in a nearby commercial area, where the number of lines you need can be accommodated. However, this is beyond the scope of your home–based answering service.

The amount and type of equipment you obtain will be dictated by your ambition and your budget. It can be as simple as individual phone lines or as complex as computer screens that flash messages or record instructions for you to convey.

The more sophisticated the equipment, the more money you will have to spend. For $25,000, you can purchase one switchboard with 25 lines and the trunk line cable from the telephone company.

Of course, the more business you can handle the greater the financial reward. This is something you will have to decide for yourself. If this is low–volume, extra money kind of work, spend as little as possible and take on only one or two clients. If this is to be your new career, then consider the larger investment to handle a high volume of calls.

Before setting up all the equipment, it is necessary to consider expansion options even at the start-up phase. If possible, choose a permanent location as moving equipment and offices can be very costly. Utility companies normally charge penalty fees when answering services relocate.

If you are working with small to medium-sized businesses, you probably will not need the latest and greatest phone system to handle the work. The option to install numerous phones is to lease a switchboard from your local phone company. Find a convenient space in your home to set up your work area, and clear a space for the switchboard. Once set up, it is costly to move, so make your home “office” choice wisely when a switchboard is involved.

The switchboard can handle up to 100 incoming lines, but you need only activate the actual number of lines you intend to use. This large number of lines gives you great flexibility in the service you can provide.

Switchboards offer a variety of extras, including room for another operator if your services demand the work of two people, and a secrecy switch to secure the phone lines for your clients. Read the operating manual thoroughly. Better yet, attend training sessions provided by the local phone company, if available. 

The key to your success does not rely solely on the equipment. Your answering service business is providing important customer service for a company. As such, your voice and congenial manner provide a greater value.

Your phone “personality” is the main key to your success. The better you are at handling people on the phone, the greater the number of services you can offer, from straight message–taking to complete customer service.

Your grammar must be sound, and your diction easy to understand. To improve in these areas, there are many self–improvement courses available through local community colleges and other learning outlets for a nominal charge.

start a home-based answering service business

Types of Home-Based Answering Services

Now that you have identified the system and volume of business you are trying to acquire, let us review the types of home–based answering services you can provide.

Businesses have a variety of phone needs, depending on their size and complexity. The phone can save them time and money in communicating with their customers.

Answering services come in various forms, from virtual receptionists to after-hours call handling. Understanding these options will help you tailor your services to your target market. They may be looking for any of the following services, which you could provide: 

  • Incoming Message Services, both during and after normal business hours; 
  • Complete Answering Service where customers believe they are calling the actual business office; 
  • 800 Number Service; 
  • Order Taking Service, where customers call in to order a specific product or service they have seen advertised; 
  • Call Forwarding Service, where the business forwards calls to you only when their personnel leave the office; 
  • Message Delivery Service, where you not only take messages but also call people for your business client; 
  • Voice Mailboxes, where you have lines that record messages but also call people for your business client; 
  • Beeper Service, where you take the call and then page the client via a beeper
  • Computerized Telemarketing, where you hook up a computer to a standard phone and program it to dial telephone numbers to help a business prospect for clients or to advertise; 
  • Appointment Service, where you call a list of individuals furnished by a business to set up appointments for the firm’s salespeople;
  • Phone Sales, where you are calling on behalf of a business to sell a specific service; and, 
  • Surveys, where you call designated people to obtain answers to an opinion survey. 

All of these services are possible via the phone. You do not have to offer every single service, simply the ones you can comfortably perform. The phone skills required differ widely depending on the service. Once you select the services you wish to provide, you can begin looking for clients. 

If you plan to handle medical calls, familiarize yourself with HIPAA regulations to maintain client confidentiality.

How to Obtain Clients

The closer you are to a large metropolitan area, the greater your potential for in­­come in a home–based answering service. However, small towns are also in need of your services. Many of the businesses may be owned and run by a sole proprietor who spends the bulk of the day outside the office and away from the phone.

Virtually anyone who works away from his or her business might need an answering service. Salespeople, repair services, people on call (like towing services), survey organizations, and firms that might use the computer–based automatic dialing system are all potential clients to whom you can offer your phone services.

The phone book, the local newspaper, the small “Pennysaver” type of publications, and community bulletin boards are all places where you can find the type of business most likely to be interested in your service. This will give you a solid local list with which to begin your prospecting.

The businesses that can utilize your ability to advertise for them using the phone are substantial and include:

  • Retail stores 
  • Credit agencies 
  • Restaurants 
  • Wedding services 
  • Modeling schools 
  • Furniture Stores 
  • Employment agencies 
  • Collection agencies 
  • Financial service firms 
  • Hotels 
  • Dance schools 
  • Carpet cleaners 
  • Car washes 
  • Video stores 
  • Travel agencies 
  • Pet services 

You will probably start with a few message service contracts, requiring only a few lines, but you could easily work your way up to dozens of lines and services. Remember to ask your early clients for referrals to others whom they may feel could use your service. Your existing clients are the best source of leads!

woman on a phone - home-based answering service business

Your Home Office

Setting up the business in your own home is a matter of knowing how much business you intend to do. If your goal is to generate some extra cash in addition to other work you do, you will only want a few clients and a few phones.

Select a room in your house for you to answer these phones. The room should be comfortable, adequate in size, and able to support several phones. You may want to use an area in which you can arrange a long table to be set up with the phones arranged on top, and the wires underneath. 

If you take on a switchboard, you may still be able to work out of your home. The switchboard will require space and a floor strong enough to support its weight. Your phone company representative can indicate the structural strength necessary to accommodate a switchboard in your home. 

If you anticipate having a vast number of clients, or your residential area will not accommodate the phone lines you need, you may wish to seek out a commercial space to rent. Generally, 350–400 feet should be sufficient space to get started. Current national office vacancy rates are running around 15–17%, so there should be good deals on rent out there for you. The appearance of the building is not very important since you are a phone business—your clients will call, not visit!

In addition to the room for the phones or switchboard, you will want to have some workspace. Many telephone answering services also contract for other jobs to keep busy while the phones are quiet. Services like envelope stuffing, typing, order filling, ad­dressing envelopes, or bookkeeping can all be done while operating the phone lines. Maximize your time wisely!

Brightly colored walls, proper lighting, carpeting, and cheery prints for the walls can make the working atmosphere one in which you (and any employees you might hire) will prosper. Employees will be necessary if you are trying to operate your phone service for lengthy hours. A 24–hour service will require at least three to four employees.

Other employees will help give you a break from the phones. In addition, you can use “downtime” to your advantage by making calls to obtain more clients. It is hard to call people if you are on the phone for twelve hours each day. 

10 Easy Steps to Organizing Your Answering Business

1. Obtain the proper equipment for your business.

Make sure the phones or headsets are easy to use. If you use a table and chair, make sure the seat is comfortable and easy to sit in. Obtain a message “rack” with slots to place your clients’ messages so that when they call in you will have them handy to read.

Install a time clock so that you can punch in the time when the message was taken. Both the message rack and time clock should be within arms-length so you do not have to leave your chair—and the phones! Discount office supply stores can provide these items inexpensively.

2. Make it easy to record basic message information.

You can buy message slips from your discount office supply store or you can use scraps of paper that you cut up for use.

Whatever the vehicle, make sure there is room to write down the customer’s name, phone number and any message. You should also leave space for the date/time and to whom the message will be addressed. Have plenty of pens handy! Do not run out of ink. 

3. Have an organized system for your messages.

Once written, the message should be filed in the message rack to read later to your client. Once you have passed the message along, mark “SENT” on the slip and then file it in a folder marked with your client’s name. Save the messages for at least a month (or longer, if the client requests). 

4. Use index cards or create a database to record basic customer information about each of your business clients.

This information should be kept handy and given to customers if necessary. Knowing all about your clients’ businesses will make you more effective on the phone. 

5. Price your services competitively, keeping in mind your monthly expenses.

Add your expenses up on an annual basis like the basic monthly phone charges, equipment, and office supplies, and divide the total by 12 to determine a monthly overhead cost.

The revenue you generate must exceed this amount each month to make a profit. The average rates you can charge for your services can range from $30 to $50 per month, the specific price related to the basic monthly phone charges you must pay in your area.

Determine a base number of calls that you can accept under your standard rate (50, 75, 100). For any calls you receive over that in a given month, bill your client on a per-call basis (.25, .50, .75). You can contact competitors and find out what they charge to determine what your price range should be if you are not sure of the rates you want to set.

6. Contract for your services formally.

Put together a standard contract for both you and your client to sign. You could choose to use a standard contract form or engage an attorney for this task. The contract should have a minimum length to it, like 6 or 12 months, with options to renew it at expiration. You need to plan on a certain amount of business and income and you cannot do that without a minimum service contract.

7. Select a business name that is descriptive but not limiting.

If you are not incorporating, you can use your name in the company title if it is simple and easily pronounce­able, such as “Marge Dean’s Telephone Services” or, better yet, “Marge Dean’s Telemarketing Services”, which encompasses more tasks in a potential client’s mind.

If your name is difficult to say, consider using the town name, as in “Dallas Tele­marketing Services”. Since that may already be taken, you can also go generic as in “Diversified Telemarketing Services” or “Associated Answering Services”. Keep it simple and adaptable. 

8. Select the type of business you want to be.

Incorporation carries the most prestige but it is not always the most practical choice for a very small business. You can always start as a sole proprietor and work your way up as the business expands.

A sole proprietor is the simplest form of business structure, although you are personally liable for all business debts. A partnership will be necessary if you have someone else sharing the profits and expenses of the business with you. An accountant and/or an attorney can illustrate the advantages and disadvantages of each entity and help you determine what course to take.

9. Obtain enough supplies to launch your business.

Be well–equipped with the basics: pencils, pens, note paper, index cards, paper clips, rubber bands, and staplers. These supplies should be purchased in quantity as higher volume purchases allows you to save. Plus, it reduces the risk of a possible work stoppage due to inadequate supplies. Do not forget a ledger notebook to record revenue and ex­penses. Also, include a calendar to note important dates.

Order business stationery and envelopes along with business cards. Remember, you are trying to create a positive, professional image. If you wish, hire a graphic artist to design a logo for your business. This should appear on the card, letterhead, and envelope. Order blank paper of the same color as your letterhead to write letters or memos longer than one page.

Shop around for a print company. There are often “specials” that printers run to attract business, usually on items like business cards and stationery. Your initial order will be more costly because of set–up charges to put your information on plates to print. Once done, however, it is inexpensive to order reprints when your supplies dwindle. 

10. If your business outgrows your house, shop around for a good location.

Don’t consider moving out of your “home” office unless you’ve redone your expense calculation, divided it by 12 and see that your new monthly expenses can be eclipsed by your revenues.

If you decide to find an office, consider sharing a space with other professionals, where business needs like a photocopier, fax, receptionist, etc. can be shared among the occupants. You will still have your own private office, but it will save dollars to combine other resources.

Shop for office furniture to get the best price possible. Check the newspaper for notices about bankruptcy auctions and Sheriff’s sales where you can often obtain nearly new, higher quality equipment for little money. You will need a desk, table, filing cabinet, chairs, typewriter or computer, calculator, book/utility shelves and a wastebasket to get started.

The Art of Networking

To be successful in your business you must develop a network of contacts. These are people you know who can provide you with a favorable introduction to potential clients. The more people in your network, the better the prospects for success. With an increasing number of contacts come numerous opportunities to offer your services to people who may well be interested in contracting for them. 

Network constantly until it becomes a routine part of your business. Every person you come across with has the potential to be helpful to your business in some way. Most people are complimented by your faith in them as a contact person since it emphasizes the influence they can provide. Networking is a reciprocal process. If you are seeking someone’s help to obtain a lead, you must also be prepared to assist your contact in the same way.

Use your business card to introduce yourself where possible, perhaps at a social setting or at local meetings. Appear as a volunteer booth attendant with your company T-shirt or hat. Another inexpensive advertising gimmick is to donate a prize of, say a month’s free answering service for the community charity auction or drawing. Join organizations! Kiwanis and Rotary meet every week, with new members (and prospects) coming in all the time. Chamber of Commerce meetings also hold some potential to meet other business owners in the area. These are the people you want to meet since an answering service business may be important to them. 

Do not be afraid to talk about what you do. When meeting someone new, the conversation inevitably turns to the type of business you are in, so describe it with the enthusiasm you have for it. You do not need a resume. Your card and your voice are more valu­able in networking. 

Your immediate and extended family is the best initial source of networking you can have. Get in touch with your local relatives, explain what you are doing and see if they can provide leads for you. Past business associates, college friends, church members and other individuals in organizations to which you already belong can be great sources for prospective clients. 

If you play golf or tennis, talk to your partners. Consider the people you see regularly— post office, hair salon, cleaners, gas station— all of the normal daily activities encompass some form of business that could use your service.

Once you have made a network of contacts, stay in touch with them. A birthday card, a newspaper article of interest, and a note about a promotion–all of these are ways to communicate with your network people when you are not asking for names. You are creating the opportunity, however, for future business.

Marketing Your Answering Service Business

While networking can be an effective marketing tool for you, it is not the only way to put your name and services in front of a potential client. Further, many individuals do not like the practice of networking and would prefer to solicit prospects in another way. 

Marketing is a collection of activities that helps you to obtain business. These actions may involve advertising, direct mail, press releases, public appearances, promotional flyers, or brochures. Your services will not be contracted unless people know about them. This is where marketing is useful. Marketing should create an image for you, preferably one that is professional and encourages individuals to look further into what you have to offer. 

Marketing is also about understanding what your base of potential clients is and where they are located. Narrowing down your scope of marketing to concentrate on the people most likely to contract for your answering service requires thoughtful analysis. For example, you could begin by focusing on sole proprietors at first. These are people most likely to be working away from their business and in potential need of phone help. 

There are numerous media outlets to advertise your services. It costs money to advertise in newspapers or to send brochures out to targeted potential customers, so gauge your budget accordingly when selecting your marketing outlets. Radio and tele­vision advertising also carry a price, but can be very effective in reaching a broad number of people. 

Your marketing pieces — whether your website, brochure, advertisement, or commercial – should convey the importance of your business, the list of services you offer, and the reasons you provide your services. 

Brochure Marketing

A brochure can provide a professional image for you while serving functionally to explain the services you provide. It should be simple in appearance and easy to read and absorb. Be informative without being wordy. Anticipate and answer the questions someone might have about your type of business, such as how many hours per day your service will take calls. 

The brochure layout is usually a six-panel, front, and back 8 1/2 X 11 inch sheet of paper. The panels include:  

  • A cover indicating your business name, address, telephone number, and logo; 
  • First inside panel describing your business and who a good prospect for your services would be;
  • The middle inside panel should list your services and a brief description of each; 
  • The third inside panel should provide a list of testimonials from others who have used your service, or, if new, from network contacts willing to describe your phone voice, organizational skills, and reliability and put their name and business next to their quote; 
  • The middle outside panel should contain a brief biography of yourself and your credentials along with any partners or other employees you may wish to highlight; and 
  • The final outside panel will be designed as a self–mailer with your return address on it. You will mail the brochure using this panel as your envelope.

You should write the copy for your brochure, but get some help laying it out from either the graphic artist who designed your logo or the printer who will be printing the marketing piece. Using two colors and a minimal design should keep the price of producing these mailing brochures very reasonable. The brochure can also be used as a hand­out piece. It adds credence to your business venture and lifts you above those others who do not bother investing the money in this important marketing tool. 

Advertising

Advertising can also put your name and service out to a variety of people. A classified advertisement offering your services may initiate some phone calls, but a larger display advertisement is more likely to draw your potential prospect’s attention. Your advertisement should be written to attract the eye of the reader. The headline is the most critical part of the piece, and this will either invite the reader to keep reading or to go on to the next page.

Your key service is to help a business avoid losing money by having that personal contact when someone calls their office. This concept is what your headline should incorporate, such as “How to Make Your Business More Profitable” or a similar theme.

People buy most often for emotional reasons. You are selling a service. Thus, the advertisement you create must have an emotional pull that can convince a person to call you for more information. An advertisement simply listing your services will not generate the response you want and need. However, if the emotional enticement is to help a business financially, to provide that human touch in a mechanized world, you will have a better chance of attracting potential clients. 

The remainder of the advertisement can list some details about you and the services you provide, but the headline remains focused on emotion. Certainly, you can continue with the emotional copy throughout the piece, mixing in some of the important details. The better story you tell, the better your response. However, the headline will cause people to read the story. A poor headline will send most readers elsewhere and a good story will remain unread. 

Be positive! List the benefits of working with you, not the disadvantages of passing up your services. The headline should concentrate perhaps on SAVE THOUSANDS OF DOLLARS TODAY rather than AVOID LOSING THOUSANDS IN YOUR BUSINESS. There are professional ad agencies and copywriters who can assist you in getting it right. It may be worth the price to put an ad together that generates substantial response rather than saving the money, writing the ad yourself, and seeing little or no reaction to it. 

The most effective ads tell us enough information, but leave the reader curious to know more, thus inviting the person to call in. Once you have the person calling in, you have an excellent chance to turn that prospect into a client. After all, it is your phone voice and manner that you are trying to sell, isn’t it? Here, the individual will get a first-hand chance to see how their clients will be handled should you strike up a deal.

Run your advertisement in your local newspaper or other smaller community publi­cations. Try radio advertising. It is a cost–effective way to reach people you may never get to contact otherwise.

Direct Mail Marketing

The other marketing option for you is direct mail. You can generate some incredible responses here, but if you are going to undertake the expense of a direct mail operation, you should certainly secure some assistance from professional copywriters to get the most “bang for your buck”. Postage costs alone are high with direct mail so you need an effective piece.

Direct mail is tricky because you must get your message across with a minimum of words. The direct mail piece is meant to entice a prospect into calling for more information. Stay focused on this. If you try to do too much, few (if any) people will read your piece and respond.

The importance of immediate action must be emphasized. The piece is meant to motivate the prospect to act now, today — not tomorrow, next week, or next month. Effective wording can accomplish this motivating technique. 

Direct mail can help you reach thousands of people you could not call yourself. It expands your capacity to reach potential clients and makes the most of your limited manpower and, possibly, resources. 

Look for a direct mail house that works with copywriters. There is a big difference between advertising and direct mail, so find an individual with direct mail credentials. You can write the copy yourself if it will effectively produce the type of piece described. 

If you intend to undertake the copywriting yourself, remember these basic principles:  

Headline! Headline! Headline! Your title opening or paragraph in your direct mail piece has to make people want to open it up and read further. Do not be coy! List a key benefit immediately! Get your prospect to turn the page! 

While listing your benefits, keep them at a reality level. If something sounds too good to be true, it usually is. People are wary today of others who over–promise, so as you highlight the benefits of your business service emphasize how you can offer all these benefits. Utilize the word “you” to let readers know they will be on the receiving end of the benefits.

Be as precise as you can. Give prospects tangible services and explain simply how they work. People are at the bottom–line today and want to make up their minds to pursue a service or not in a quick fashion. Specifics give people enough data to make up their minds and will usually help you to get a response. It will also not waste time for you and those who are not interested in your services.

Obtain some testimonials to use other people’s words, other than your own, to describe your benefits and services. Use complete names to indicate the authenticity behind the comments.

Make your copy conversational, easy to read, and simple. Words should be short. Sentences should be brief. Paragraphs should be concise. The copy should encourage the reader to act. If a reader understands the copy, the action you want (a re­­­­s­ponse) is more likely to happen. 

Incentives often motivate people to act immediately rather than procrastinate. If for a limited time (14 days, 30 days) your service can be obtained for less than the usual monthly rate, you have encouraged people to call in and take action. If they understand the service you offer and how it can benefit them, and if you add a feature such as an incentive to call NOW, you will probably increase your response by a large margin. Some people need that extra push. 

Guarantee your work. Offer a no–risk, 30-day money-back deal to try your service. If the customer is not satisfied, offer a refund. This will reassure the potential client and, since you have great confidence in your ability, you are not giving anything away since you know people will benefit from your services.

Your direct mail piece must sell you along with your services. In a phone business, you are the most valuable asset. People buy from people. The more satisfied a person is with you, the more likely the chance of securing a contract. 

In your spare time work out a sales pitch and call prospective businesses to inform them of your services. 

Note that unless you are especially adept at this, it is very wise to keep an outline in front of you at these times — to make sure you cover all the important points and that you have the answers to their questions handy. Your pleasant voice and professionalism will demonstrate how your service can serve their needs and help improve their business image. 

Marketing is a potpourri of potential activity. Create a marketing strategy and follow it through. You cannot help but generate several individuals interested in what you have to offer. Remember, too, that marketing is an ongoing process. You are always on the lookout for new clients. A constant stream of prospects— and financial security proves the value of continued marketing efforts for you!

Additional Marketing Tips for Success

Here are a few suggestions to attract prospects, save money, and generally launch a successful business venture. 

During the direct mail phase of your marketing campaign, an incentive was offered to bring in new clients. The lifeblood of any business is new people coming into it. What better way to encourage them than with a free promotion?

When you give something away, you can expect to find someone there to take it. This will also be true in your marketing solicitation. If you offer a reduced rate for some time, or a contract for five months and give the sixth month away free, you will entice people to take action. 

The irony of this situation is that the more you give away, the more business you will attract. If you sent a direct mail response out and obtained three clients who contract with you for six months at $50/month, you have attracted $900 worth of business. However, if a giveaway of the sixth month free doubles your response, you will contract six people paying for five months at $50/month, but increase your revenue.

You gave away six free months but increased your clientele and your revenue by doing it. In addition, you now have clients who are potential renewers when the contracts expire. You could also give away a gift to new enrollees instead of the month’s free service.

Several promotional companies exist that can help you select an appropriate gift and buy it at a bulk rate. Your giveaways can sometimes amount to only $4 or $5 per person, and you end up with six and twelve-month contracts as a result.

With incentives, offer something tangible and relevant to your business. Do not attach any strings. Make it a straightforward offer with no fine print. People appreciate, and are more likely to respond to, this type of offer. 

Another tip for success is to minimize your printing costs. Direct mail costs money. Brochures cost money. Business cards and stationery cost money. Take some steps to keep your printing bills within reason. 

Shop for competitive quotes. There are usually several printers in a given area, so you should be able to find three or four to bid on your job. If you are having business cards, stationery, and brochures done, do them all at once, and advise the printer to quote each job both separately, and combined. Often, a combined job can reduce your costs. 

Be specific about the job. Get all the costs upfront. If you want the printer to set the type, fold the piece, or whatever; be sure you have all this priced out first. 

Stick to standard sizes and colors. Avoid heavy paper stock. You do not have to use postcard stock, either. Give the printer ample time to complete the job. Rush work costs money and the costs will be passed on to you. 

Printing costs can eat up a budget quickly. The more homework you do up front, the less you will spend, and the more likely the piece will be done to your satisfaction. 

As you solicit additional business, your base set of clients can hopefully provide some solid testimony as to the value of your services. Securing these endorsements can be the foundation for a new marketing campaign to add new clients and “grow” your business.

You will likely have to ask for this feedback yourself. Most people do not take the time to write a letter, but most often simply comment to you personally about their pleasure with your services. So, ask them to put their thoughts down on paper. If someone has written, ask their permission to reprint it and use their name. Alternatively, you can initiate written comments by sending out a customer satisfaction form, which encourages comments from your clients. 

Whichever way you choose, these endorsements can help you obtain new business. 

Finally, do not overlook the outlets through which you can publicize your business— at no charge! It amounts to free advertising and you should be watchful for the opportunity this presents to tell people about your services without increasing your marketing budget.

News releases about your business can generate some publicity for you. Many smaller newspapers publish a Business Section where new businesses in the area are noted and a few specifics spelled out. The newspaper will not have the information to print unless you send them a news release. 

Send your release with a cover letter to the city or business editor of your local newspaper, the managing editors of business trade publications, and the news directors for local radio and television stations. 

The cover letter should briefly state the positive aspects of your business and why your services would interest their audience. 

The news release is more formal and should be typed on one sheet of paper, double–spaced, and headed “NEWS RELEASE” with the day’s date. You should also list a “FOR MORE INFORMATION” header followed by your name, address, and phone number. The copy itself should be short and to the point, but with the same idea as an advertisement. The first paragraph should be your “headline grabber”, the idea of which is to get the reader (editor or director) to become interested enough to keep reading.

Emphasize the convenience of your service to small business owners who do not have an office and generally are out working all day. Do not be long-winded. Sell them on your basic idea. If they are interested in publicizing it, they will call you for more information.

Stress how your business relates to current news trends, such as the age of computers, which takes away, some of the human touch, and you’re trying to restore that so the customers of a business will be able to talk to a person rather than a machine. Make it newsworthy. You will have a better chance of getting the free publicity you seek.

start an answering service business

Start-Up Costs and How to Fund Them

Most of the start–up costs of the phone answering service business have 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 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 potentially 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, and 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 guarantees 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 to $12,500 personally to obtain the other $37,500 from the SBA. This would give you 100% ownership of 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 who 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 several 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 helps obtain the loan. If you have a history of paying back what you owe, chances are you would pay this loan back, too. 

There are several 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.

You are almost ready to start your new phone answering service business. Some financial and legal considerations will influence your business.

First, be sure to check with your local zoning office to be sure you can run a home–based business if you intend to start in your own home. Your answering service business is not a high customer–traffic business, so it should not be a problem, but check anyway as you may need a specific permit to operate your business. It should only involve an application but could require a hearing, too.

You may have to have your home inspected to determine if it meets business–type regulations for health, building, and fire codes. If it does not, you will have to make the necessary modifications to operate the business out of your home. These alterations should not be major.

Check with an accountant concerning the tax–deductibility of a home–based business. The Internal Revenue Service is more careful in checking these deductions today. In general, the amount of space in your home devoted to the business is eligible for a deduction. That area must be used exclusively for business, however.

Once you determine the space involved, divide that into the total space in the house to obtain the percentage of your home used exclusively for business. That percentage will be applied to some of your usual house expenses like your electric bill. Keep a journal of expenditures for your business along with the corresponding re­ceipt. Record and file them by month for easy reference. Many of these expenses are deductible to your business up to certain specified limits. New tax laws can affect their deductibility, so it is best to keep up to date through an accountant.

As a self–employed business owner, you would be filing a Schedule C (Profit or Loss for Business or Profession) along with your regular 1040 form. Your accountant can brief you on other forms you need to complete during the year, too. There is usually an estimated tax payment to be made each quarter along with FICA and Unemploy­ment taxes.

Insurance will also be a necessary part of your business life. Some of the insurance is required. Health insurance is a familiar vehicle to cover hospital and medical bills. Check out Healthcare.gov to help you find quality, affordable health insurance.

Contact your state insurance department for more information about the programs in your area. Law often requires workers’ compensation. This coverage provides medical, hospital, and disability income benefits for on–the–job injuries or illnesses. This program is administered by each state individually and you should check with your state in­­surance department to see if you are required to carry this coverage. If you are the only worker, some states merely recommend rather than require the coverage be carried.

Liability coverage may also be a good investment for your business. This protects the business against liability for adverse actions that affect your client(s). If you incor­rectly record a message and that error results in the loss of business to your client, there is always the possibility of a lawsuit today. Liability insurance can be pur­chased to cover the threat of a suit.

If you have a company car, insurance will be necessary and the car must be de­signated for business use. This may or may not be necessary for a phone answering service business, but if you call on clients or potential clients, then you are using the car for business and may be eligible for a business tax deduction for a portion of in­surance payments on the vehicle. Your accountant can verify the deductibility of any item associated with a company–owned car.

If you are working out of your home, check your homeowners’ policy to be sure your property listing includes any business equipment you have such as phones or a switch­board. If you are operating the business out of an office you purchased, you will need to have hazard insurance to cover that facility separately.

Life insurance can be used to cover your life in the event of death. This money can be used to continue the business if surviving family members wish to do that.

Disability insurance should also be considered. This policy provides income to you and your family in the event you suffer an injury or illness (at any time, not just “on–the–job”) and cannot work. Many insurance companies do not offer this type of coverage to business owners who work out of their own homes but check with your insurance agent to see what he or she can find.

If you have a partner, you might also consider some type of buy–sell coverage so that if one of you dies or becomes severely disabled, the healthy owner can buy the interest in the business back from the one affected. Both life and disability insurance are available to fund this need.

Finally, you should also keep an eye on the day when you will retire from work­ing. Business owners can put money into various pension–type vehicles on a tax–favorable basis.

There are three common types of retirement plans for self–employed business plans: the Individual Retirement Account (IRA), the Simplified Employee Pension (SEP), and the Keogh plan. The IRA is a familiar vehicle that allows you to put up to $2,000 a year before taxes into a retire­ment plan. For many business owners, this amount is insufficient, thus other vehicles where larger amounts can be put away for retirement are more attractive.

A Simplified Employee Pension plan is similar to an IRA except you can contribute much more to it, up to 15% of your income but not more than $30,000 a year. That is significantly more than the $2,000 maximum pre–tax contribution under the IRA. The Keogh plan is similar to the SEP except that the contribution percentage can be as high as 25%, up to $30,000. Sole pro­prietors usually select this type of plan.

These retirement vehicles should be discussed with your accountant for advice on the best avenue to pursue. Not only do these programs serve as a source of retirement funds, but they also assist the business owner with reducing current tax liability. All business owners should review their options carefully.

FAQs (Frequently Asked Questions)

1. What is a home-based answering service business?

A home-based answering service business is a venture where individuals or small teams handle incoming calls on behalf of other businesses, providing services like call answering, message taking, and appointment scheduling from the comfort of their homes.

2. What equipment do I need to start a home-based answering service?

You will need basic office equipment, including a computer, phone lines, a reliable internet connection, and specialized software for call handling.

3. How can I market my home-based answering service business effectively?

Effective marketing strategies include building a professional website, utilizing social media, networking with local businesses, and offering competitive pricing.

You may need to obtain business licenses and permits based on your location and comply with industry-specific regulations, such as HIPAA for medical call handling.

5. How can I ensure client data security in a home-based answering service?

Implement robust security measures, use secure software, and educate your team about data privacy to protect client information effectively.

Conclusion

Starting a home-based answering service business can be a rewarding journey if you follow the steps outlined in this guide. By understanding the industry, conducting thorough research, and providing top-notch service, you can build a successful enterprise that meets the growing demand for reliable call handling.

You should now have all the information you need to determine if a phone answering service is the right business start–up idea for you. Good luck!

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