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The following are hot links to the Telephone Answering Service association, magazines and TAS broker for this industry.

To link to the national Answering Service association, click here. www.atsi.org - To link to Connections, a national TAS magazine, click here. www.connectionsmagazine.com - To link to a TAS broker, click here. www.tasmarketing.com - The complete names, addresses and phone numbers are located at the end of this article along with other pertinent companies associated with the TAS industry.

Now is an exciting time to start a Telephone Answering Service business, whether it be a new start-up venture or a full-fledged, seasoned operation. The opportunities are endless in this ever-changing, multi-faceted business. In 1987, there were 4,200 bureaus billing $900 million per year. In 1995, there were 4,100 businesses billing over $2.4 billion, which signifies that although the industry is declining in numbers, it is dramatically increasing its billing. This fact is due to many of the buyouts currently happening in the industry along with the many new money-making avenues that are now available. But in talking about starting a Telephone Answering Service (TAS), there are three starting points that one may consider: The first would be an Entry Level answering bureau. This would be a start-up business from scratch that would require a small capital investment to start. They would utilize a paper-based system for answering calls (hand written messages vs. typing them into a computer) and offer a basic answering service.

The second type of entrepreneur would be someone who has an existing business such as a paging or alarm monitoring company who would like to complement his or her business with telephone answering. Let's call this type of start-up venture Start-Up II.

The last type of entrepreneur who may be entering the industry would be someone who is buying an existing service. By the way, it is always cheaper to buy a service than to start one from scratch. These buyers are divided into two groups: 1. Existing Owners, who are buying TAS accounts only for impact and rolling those accounts into an existing bureau, and 2. New Buyers, who purchase the business as a going concern and either wish to run the business themselves or operate it as an absentee owner.

So lets address these three areas:


A prerequisite for starting your answering bureau from scratch is to ask yourself three simple questions: 1. Do I like answering telephones and taking messages? 2. Am I a "people person" who likes to deal with people and the problems/rewards that go along with it? 3. Is my timing right and do I have enough capital investment to last while the service is being built up?

There is always going to be a demand for telephone answering. 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 revenues. Realizing this, today's successful business person wants the personal touch of a friendly, professional "telephone secretary" answering their phones for them.

The professional telephone secretary can pass along the proper messages to the different callers, take messages, get clarifications and even set up meetings, and schedule appointments. In many instances, businessmen come to think of the operators at their telephone answering service as an extension of their business.

To get started you'll need an initial investment of about $5,000 to $10,000 for a paper-based operation with facilities plus working capital. Paper-based equipment can sell on the used market for $1,800 to $4,000 and new for $8,000 to $10,000 for a four-trunk system (which would handle around 200 customers). It is possible to purchase a one- trunk used system for as low as $500 and then add on to your equipment as your service grows. (For a list of TAS manufactures, click on connectionsmagazine.com) In a paper- based operation, when a call comes in, you would write the message on a piece of paper, time stamp it and then put it in the customers message slot. Then, when the customer calls in, you would simply deliver the messages over the phone.

But before any acquisitions, you should do a market survey to determine how many customers you can generate in your area. If you are in a small community, then you should call potential clients such as doctors, plumbers, funeral directors, towing companies, apartment complexes and the like to inform them of your intentions to start an answering service to get their interest level. If your survey is positive and you have the means to get started, then here are a few tips for the beginner.

In setting up your own facilities, whether it be out of your home or a small office, keep your costs in line with a realistic view of your first year's anticipated income. Remember, there will be very little walk-in traffic and most of your customers will sign up for your

services over the phone. It is important to secure a business site because when you order your phone lines, the phone company will want to have an address to verify that there is enough cable pair (phone lines) to serve the location. In the beginning, it is recommended that you have anywhere from two to four DID (direct inward dialing) lines and at least two business lines. You will then need to order DID numbers, which either come in blocks of 20 or 100 depending on which state and phone company you use. Here's how DID works: when a new subscriber comes on to your service, they order call forwarding from the phone company and you then assign them one of your DID numbers such as 344-1234. When they wish to leave their office and have you answer the calls, they call forward to their DID number, in this case, 344-1234. When a call is forwarded, the central office of the phone company transfers the call plus the last three or four digits of the DID number, in this case, 234 or 1234, to your service. Your DID equipment then recognizes this number that you have assigned to that particular client and brings up the answer phrase and pertinent information. That is how you know who the call is coming from.

So if you were to order four DID lines and 20 DID numbers, that would mean that you could have 20 customers and could receive up to four calls at a time. Never allow your customers to use your DID as a number that they put on a business card or advertise in the yellow pages. If this client doesn't pay, you will continue to receive calls for them on that number even though you have re-assigned it to another user. If they do not have a phone number, such as a traveling salesperson who visits your territory occasionally, then they should get a remote call forwarding number from the phone company. They own that number and can have it call forwarded to your DID number.

Next, you should check with the Yellow Pages to see when they close for the next issue since a good majority of your new customers will come from this source. Once you have done your survey, chosen a name for your company, decided on a location, picked out your equipment and ordered your phone lines, you should be ready to order your business cards, stationery, furniture and all of the incidentals that will be needed for your bureau. Remember, you will need a carousel or message rack for your client's messages.

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 business of their own. Every salesperson is a prospect: people who work on a 24 hour "on-call" basis and repair service business owners such as elevator maintenance companies, electricians and locksmiths. There are other kinds of services that will be interested too, such as ambulance companies, towing services, cable TV companies, and customer complaint departments of virtually every business in your area. By all means, don't forget the doctors, dentists and other professionals. You may want to design a flyer for your business and target a certain segment of your potential customer base such as real estate agents. Re-write your flyer so it pertains to the particular industry that you are addressing. Be sure to send your flyer to those names and companies that are listed in bold in the White Pages of the phone book as they are good leads.

The average rates to charge for your service should be based on the industry average for

your area. You neither want to charge too little nor price yourself out of the market. Industry standards are approximately $.80 per minute, which will be hard for you to determine with paper-based equipment. To find out what your area averages are, simply cold call your competitors to see what they are charging. An example would be $75 for a specific number of calls--usually 70 to 75--with a surcharge of 40 cents for each call beyond that quantity. Other calls, such as wake-up calls, patches or cross-connects (patching a call from your caller to your customer), pages and reminder calls for appointments, are usually billed on a "per-call basis at about $.50 (or whatever the market will bear). Every time your operator does something for a client, there should be a charge involved. When answering services first began with cordboards, they would charge a flat rate with unlimited calls because it was much easier for billing purposes in that they didn't have to keep track of the number of messages per client. But when answering service equipment became more sophisticated and bureau owners started counting calls, they realized that they were losing money from the customers whose phones were ringing off the hook, and they were not being fair to the individual who only received several calls per month.

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 alarm monitoring, paging and wake-up services to 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. You will learn through experience how to staff your bureau during check-out times, holidays, etc.

Generally, a metro population of 35,000 will support a telephone answering service grossing $50,000 per year; 75,000 to 80,000 population will be needed for $100,000; and 150,000 population for $200,000 per year or more.

Once you are ready to go, consider the attitudes and feelings of the people who will be working long hours for you. Invest in some cheery paint for the walls, non-glare lighting, carpeting for the floors with static mats for the computers. Look around for good office furniture, including chairs, and buy or lease only what is absolutely essential. A pocket calculator and a PC will work fine until you get the business running on a profitable basis.

You should keep the customers message slips for totaling at billing time, so it's a good idea to have each operator file them in your customer folders as they finish their shift. Retention of these message slips for at least 30 to 90 days is a good policy. You may find a customer will want to check a message received or double-check his billing against your records. Preprinted message pads save time, accuracy and clarity in message-taking. You should have a plentiful supply available and within easy access to your operators. A supplier of message pads should be located in the various trade publications.

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 use 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.

Each time a customer signs up for your service, you should have them 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. In order to cover any disconnect charges, it's also a good idea to state that a full month's payment must be made for any partial month's usage. You'll probably want to stipulate that the first and last month's base charges are to be paid up front at the time of service approval in order to enhance your working capital situation. You always want to bill in advance for the basic service, and in arrears for message units or overcalls. It is also not unheard of to charge a one-time set-up fee for inputting them into your system.

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 ATSI, the Association of TeleMessaging Services International. 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 your 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.

You may elect to start a niche bureau which caters to daytime clients only. This will relieve you from having to staff your bureau 24-hours a day plus weekends. Remember, if you want a 24-hour, seven-days-a-week, full-service operation, it will require at least three full-time operators plus at least one relief operator--and don't forget about commissioned sales people.

Ideally, you should try to hire people with telephone experience. 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 your customers 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 image at all times. Remember, your service is only as good as your worst operator.

Teach your operators to answer the phones with a "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. Also, be sure they ask the caller for the correct spelling of his or her name.
  • You should also have your "difficult to pronounce" clients' names spelled out phonetically. There is no faster way to lose customers than to mispronounce their names.

  • You can start your inexperienced people at minimum wage with your experienced operators making more with time and experience on the job. 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.

  • Selling your service--building an ever larger customer base, adding on new features--is the name of the game for real success. You've got the Entry Level start-up information, and from here on, the rest depends on your own ambition.


  • The basic information of how to start a bureau is listed in Entry level. If you need information regarding how to order your DID trunks or how to price your service, etc., then read this section.

  • You currently have a business that is a 24 hour operation and would like to use your current employees to enhance your cash flow. There are many businesses like yours including paging companies, alarm monitoring and call centers who have a staff and location but only need another type of business and telephone answering seems to fit that need. So what do you have to do to open up an answering service?

  • Since you already have a cash flow and trained employees, it would be advantageous to start out with state-of-the art, computerized equipment. If you want to start out small, then read the previous section on Entry Level. But if you really want to get into the exploding world of Telemessaging, then we would recommend paperless equipment for the following reasons.

  • Paperless TAS equipment allows you the ability to do the following: Have the customer information appear on a CRT screen with extra pages of info available. Distribute the calls evenly among the operators and give them access to the customers' messages with a simple key stroke. Access up-to-date information on call counts, operator statistics, billing information, etc. Automatically deliver messages to clients through alpha page, fax pick-up, fax-on-demand or e-mail. Hook up a voice mail system for message delivery, which will cut down on operator time and enhance your bottom line. Purchase sophisticated software packages to enhance features offered by your system, such as order taking and one number dial. Answer calls off premise for the disabled or in another location for cost control. Take advantage of T1 telephone lines and 800 service.

These plus many more features are made possible by using paperless equipment. There are several major manufacturers of TAS equipment that are listed and advertise in Answer magazine, published by ATSI, the Connections Magazine and the Communicator. (Addresses, phone numbers and Web sites are listed at the end of this article).

To get started you will need an investment of between $25,000 and $200,000 depending on the number of operator positions required and the level of sophistication and software needed. In the used market, these prices would drop to between $7,500 and $30,000.

Like the Entry Level TAS owner, you will have to look into ordering some DID trunks and numbers. You can start out with four DID trunks and 100 DID numbers. We would recommend that you reserve several blocks of DID numbers for expansion. Another point to consider is Yellow Pages advertising. Try to coordinate the opening of your business opening with the publication of the new phone books.

Since you already have a customer base, it would be a good idea for you to create some inserts to put into your billing that goes out to your current customer base. It is also helpful when first starting out to do promos such as, "A free month's service if you recommend someone who signs up for the service."

When setting up your equipment, remember that you would like your employees to be able to accomplish both tasks of, monitoring alarms and answering telephones at the same time so design the workspace area to accommodate both.

Having a computerized, paperless system can be a real asset to your business. Once you have become familiar with the system and what it can do, you will probably want to join the users group that is using your equipment. The TAS industry has approximately 10 such equipment user groups, each of which meets regularly to discuss the problems and solutions that participants have found with the equipment and write up a wish list for the manufacturer to work on. You can see what other users are doing with their systems and learn new ways of marketing your service using your particular product.

Another way to learn about the industry and socialize with your peers is to attend meetings set up by the regional associations, the Business Communication Services International (BCSI) opxpo and of course, the national convention and expo sponsored by the Association of Telemessaging Services International (ATSI). Information on these meetings is located in Answer, Connections and The Communicator magazines.


1. Existing Owners buying accounts only

It makes a lot of sense for existing TAS owners to buy the customer base of their competitors

instead of spending a lot of money on advertising and sales people to put on new customers one at a time. Since the buyer already has the location, staff and equipment, it is more feasible to purchase just the accounts and roll those accounts into the existing business. The best scenario for purchasing accounts would be to have the accounts in the same central office of the phone company as that of the purchaser. Then the purchased customers could keep the same DID (call forwarding) number and the buyer would just switch them over to new DID trunks. If the buyer is across town, then new DID numbers will have to be assigned to the customers. If a customer base is purchased by a buyer who is out of state, the customers may forward their calls on 800 DID numbers (or 800 numbers on a T1) which are the same as DIDs only forwarded to 800 numbers. Another option for long distance buyers is to use what is called a T1. Basically, the buyer leases a phone line from the phone company going from point A to point B. Equipment called channel banks are bought and installed at either end of this telephone line. This equipment has the ability to compress 24 talk paths into one phone line thereby giving you, in essence, 24 lines from point A to B. Now it becomes cost justifiable to purchase a sizable amount of accounts in far-off locations. What you have to do is compare the cost of the equipment and phone line to that of the monthly billing of the proposed acquisition to see if you can cost justify the purchase.

In most cases, an answering bureau is cash heavy but has little collateral, making it difficult to borrow money from the bank to use for the acquisition. A bank likes to see buildings, land or something that they can attach value to; however, in the answering service business, the TAS has one major asset, its customer list. This list is predictable into the future and drives a future net cash flow. That cash flow has a net present value and, therefore, one can arrive at a value as shown in the valuation chart shown below. You are buying profitability and future cash flow. In most cases, it is mainly a multiple of cash flow (profits) that drive the value of a TAS... not a multiple of revenues (monthly billing). But in purchasing the accounts only (customers only formula below), there is value even though there may not be profits. Even if the seller is just breaking even, the new owner will not be burdened with the sellers' debts. The only costs for the buyer are the service debt for the accounts, phone lines to move the new customers and some additional equipment with staff to service those new accounts.

Average TAS Selling Price To determine average selling price, multiply the TAS's total monthly billing amount by the number corresponding to the TAS's location, type of business or business situation (e.g., a distress sale).

I. Customers Only Average Low High
Small City 4.3 4 5.5
Big City 5.5 5 6.7
Distress Sale 3.2 3 3.8

II. Customers and Equipment Average Low High
Small City 4.7 4.4 5.9
Large City 5.5 5.9 6.4
Paperless/Voice Mail 7.4 6 8.9
Distress Sale 3.8 3 3.8

III. Large Service Average Low High
Large Service 12 9 15

The average drop-off ratio for buying new accounts is 20%. That number may be decreased through several factors. One way is for the seller to stay on for 30 days to help with the transition and hand-holding process of those accounts that need help with the change. This is especially true if you are buying a small number of accounts that have been pampered by the previous owner. Another is for the buyer and seller to draft a joint letter to the sellers' accounts stating that the two businesses are merging for the benefit of the customers. In the letter, say that the new company will be better able to serve the customer with better and faster equipment, voice mail, fax and e-mail services, alpha dispatch along with less hold-time waiting for their messages due to the speed and sophistication of the equipment. This way the customer feels that they are getting a better deal for their money and will not start looking around for another service. Of

course, this would not be possible if they were going from a paperless environment to a paper-based system, but this is rare in our industry. If the buyer is going to move the customers out of state, change their DID number, change the operator answering their calls, give them a new call-in number for messages and bill them from a different location, then they are going to lose customers. People hate change. The more change you put them through the more customers you will lose.

An important factor to consider in the purchase of new accounts is how they are being billed, especially if you are moving the account a great distance. Beware of purchasing services that charge a flat rate for their service. You may not be able to justify their traffic flow for the amount of money charged. The average billing structure is to charge a monthly fee for a predetermined amount of calls and then so much for overcalls. Make sure that you find out if they charge on a per-call or a per-message basis, because there is a difference. The best way to bill is by the minute. That way when the operator logs on to that account, the clock starts running.

If you are a buyer, you will want to check their call volume and number of phone lines used to service those accounts. That way you will be well prepared and staffed for the additional inflow of traffic to your location. Another item to check is if they have any voice mail or paging accounts; many times you will also be able to roll these into the purchase price. Check to verify that all of their customers are using call forwarding. If they have some hardwire accounts, you will have to convert them to call forwarding in order to transfer them to your service. It would be wise for the seller to convert them before thinking about selling. Also, check to see if any of the sellers' accounts are using the DID number that the seller issues to them. Sometimes a client will not have a local telephone number and will want the service to provide them with one of their DID numbers so that they may use it for their business cards or Yellow Pages advertising in that area. This is a no-no and will only cause you trouble down the line insofar as selling your business and reusing that number for another customer if your present customer leaves the service. If that client decides to leave or not pay then you have a number that can no longer be used.

A way to get around this dilemma is to have your new client order remote call forwarding in their name and then have it call forwarded to your DID number.

Is the seller tied into a lease they cannot break? Have all of their employment taxes (which includes federal, state, workmans' comp and unemployment) been paid? Do they have any liens against the business? Have you filled out a supersedure form from the phone company taking over the responsibility of the seller's telephones and Yellow Page advertising? All of these items must be considered and verified before the closing.

Once you have bought this group of accounts, you will need time to input the account information into your system as well as ordering the appropriate number of phone trunks to handle the volume. Make sure that you give yourself enough time for this process. It may seem simple, but three to four weeks would be a minimum, since it may take the phone company that long for your new trunks. You may want to consider hiring the employees from the seller since they are familiar with the accounts and you may not have to retrain them unless you have

different TAS equipment. If they are coming from a paper- based environment, you will want to make sure that they have typing experience, especially if you have paperless equipment.

Most buyers elect to keep the business numbers of the seller along with the Yellow Page advertising. This business has spent a long time building up their reputation and establishing a presence, so why not capitalize on it? I've seen several answering bureaus that have only one location, but many phone numbers and different ads in the phone book. When a prospective customer "lets their fingers do the walking" through the Yellow Pages, it gives you a definite advantage over your competition.

When buying customer accounts, the buyer would like to pay as little down as possible and stretch the payments over a five year period. Of course, the seller would like all cash. An average would be 20% to 30% down with the balance due between two to five years depending upon the size of the purchase. Some buyers will offer more than the asking price but will pay a percentage of the receivables over a period of time. For example, if you were billing $10,000 per month and asking 6 times the monthly revenue or $60K, then a buyer may offer you $80K and pay you 50% of the receivables over 16 months. $5000 X 16 = $80,000. The important question in this formula is, are they going to guarantee you the $80,000 even if it takes longer than 16 months to pay you or are you receiving 50% of the revenues for a 16 month period? You have to figure that there is going to be some loss so make sure of the wording in your contract. Cash sales do happen occasionally which usually lowers the price of the business.

Another important item to consider is what is called a retention clause. Basically stated, it means that if I am the seller, I will guarantee that you will receive X number of accounts billing X amount of dollars. Of course, the buyer would like this and the seller would not. The argument for the seller should be,if I sell these accounts to you and you lose them because of poorly trained operators, then that is not my fault and you should pay for them. The argument for the buyer is, how do I know that these are all good paying accounts that are still on service and why should I pay for something that I never receive? They are both correct. This contention is negotiable and may be worked out by offering the seller a certain multiple of monthly billing. Then, whatever the buyer receives is what they are paying for.

Another problem arises concerning the accounts receivable. Typically, receivables go to the buyer so they may have a steady cash stream in which to operate the business. But in some instances, the seller may say that they have worked for that money, so it is theirs. This can be resolved by stating in the offer that it includes the accounts receivables or offering an amount for the accounts and an additional amount for the accounts receivable. This way the seller feels that they are getting paid for them. Sometimes the seller will sell them for a percentage on the dollar because the buyer most likely will not be able to collect all of the receivables. If the seller keeps the receivables, it is not a good idea for both of them to bill the customer for payment. The question arises that when a payment comes in, does it go to the seller for a past-due account or to the buyer for services performed? It can get pretty sticky. Any account that is 90 days past due is not an account and should not be considered as part of the sale.

If you are the seller, make sure that you have plenty of documentation to back up what you are

selling. This would include bank statements to verify your billing, a profit and loss statement and a balance sheet along with three to five years of tax returns. The more documentation you have, the better and faster the sale will go. It is always easier to expand your business through acquisitions as long as you do your homework, verify what you are buying and give yourself enough time for the transition.

IIIB. Telephone Answering Service Buyers 2. New Buyers to the Industry

You've seen an ad in a newspaper or trade publication with a telephone answering bureau for sale and wondered what it would be like to get into this industry. Your first question should be, do you want to run the service as an owner/operator or as an absentee/owner? Lets discuss these two options separately.

Owner/Operator When purchasing an existing TAS bureau there are a few key items that you should address. One of the main questions to ask yourself is, should the present management stay, especially the manager. You are going to need help with understanding the day-to-day operations of the business, scheduling of operators, upkeep of the equipment, etc. If the bureau that you are buying does not have a manager, then make sure that the seller will stay on for a period of time to fill you in on all the details. It is important not to make any radical changes when you first take over the business. The staff will be nervous as it is, so try to keep the business running as usual but keep your eyes open for areas of improvement. If you are new to the business, hiring a consultant to evaluate what you have purchased could be valuable. In fact, you may want to consider having an expert evaluate the business before you buy it.

In evaluating a business, take into account the TAS equipment manufacturer and age of the equipment that is servicing the bureau: Are you going to be able to continue on with the present system? Is it feature-rich with options for your customer base such as alpha dispatch, voice mail, fax and e-mail delivery? What kind of software does it come with and is the system upgradable? Is it on a service contract and does it come with a spare parts kit? If the equipment is old and outdated, then the price should reflect that fact. If it is brand new is the seller going to pay off the lease or are you going to assume the payments? These are just a few questions concerning the equipment.

There are a few tricks in making your business more profitable. After you have settled into your new business, start to incorporate a 28-day billing cycle. This will give you an additional month's revenues for the year. You will also want to incorporate any new features that will cut down on your operator labor, since that is going to be your biggest expense. A well-run answering service will generate a 30% profit. Your labor should run you around 40% with 10% going to phones and taxes and 20% for administration. Installing a voice mail system for message-delivery should

reduce your labor by at least 15% to 20%. Instead of having to staff up for your busy times, which incurs additional labor, the messages for your customers have already been delivered to the voice mail so there are no highs or lows in your staffing. You are further ahead anytime you can deliver the messages to your customers. The three most convenient ways are voice mail, faxing them to their office, or delivering them to their alpha numeric display pager. Some bureaus even have the capability to deliver the messages by e-mail.

There are three basic ways to price your services. The first is the old way that bureaus used because of the equipment and to save labor which was to price the service on a flat-rate basis. The customer would be charged a flat rate of, say $45 a month for unlimited calls. If the customer was receiving a substantial number of calls, then the owner would simply increase the rate. The flat-rate system saves labor by not having to count the calls at the end of the month; however, it usually restricts your ability to make extra money. The second, and most popular way to bill is to charge a rate of, say, $85 a month for 70 calls and then to charge approximately $.40 for overcalls, patches, pages, etc. This method is preferable because it can be used by paper-based as well as paperless equipment. Of course, different packages may be established, such as live answer with voice mail dispatch or a service with a pager for different customers' needs. With this method, it is customary to bill the basic service in advance and the message units in arrears. The third and most profitable way to charge is by the minute. This will require a paperless, computerized system with this capability. With this method of billing, you are able to offer a low monthly rate, for example, $39 per month, with a per-minute charge of, say, $.60. Every time the operator logs on to that account, the clock starts ticking. So, if the customer wants to check in for messages live and chit-chat with the operator, then they are paying for her time. By far, this is the most fair and profitable way to charge for your service.

As a new buyer, you should be prepared to put down at least 30% on a business. This is the norm but not the rule. If a service is in distress and the owner just wants out, you may be able to pick it up for a percentage of the receivables per month with nothing down. And then again, if a service has sophisticated equipment, a good staff with large billings and ample profits, then you may have to pay all cash. There are as many variables as there are services.

Of course, your best advertising is word of mouth; the second is an ad in the Yellow Pages. You may also elect to hire a sales person or do some direct mail advertising. Some bureau owners use their existing customer base for referrals. In your bills, simply put a stuffer advertising a free month, or something that will entice your present customers to bring you some new business.

Absentee Owner If you are purchasing an existing business that is run by an absentee owner, then all you have to do is prepare an EBIT (earnings before interest and taxes) to figure out what your profits will be, plus the assets at book value to make sure the numbers add up to verify that what you are getting is what they are advertising. Check the staff, especially the manager, to see if he or she is trustworthy and can run the operation with little supervision. Verify that the software on the equipment has been updated and the bank deposits add up to their billing statistics.

We would suggest that you use your CPA to validate the income statements, balance sheets and

tax returns. Your attorney should look over the purchasing contract. Most of the other items that you should check on have been covered above. Remember, the rules for buying a business are 1.) never to fall in love with a particular business, and 2.) always be willing to walk away from a deal.

There is all sorts of help out there if you need it. The beauty of this business is that it is almost recession-proof due to the diversity of its client base. When one market segment is in a lull, another one picks up. And, usually when a company starts to downsize, they may fire a secretary or receptionist but hire an answering service to pick up the slack. So, if you are looking for a business with a steady cash flow, diversity of customers and a good profit margin, then the Telephone Answering Service business is for you.

To join the national Telephone Answering Service Association and receive all of the benefits as well as the Answer magazine, please contact:

Association of Telemessaging Services International, Inc. (ATSI) 1200 19th Street, N.W. Suite 300 Washington, D.C. 20036 (202) 429-5151 Fax (202) 223-4579 e-mail: atsi@sba.comInternet: http://www.atsi.org/ -

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