Once you have made the decision to start your own answering service business you will need to find a way to cover the start-up costs. If you are starting a small home-based operation with just some dedicated phone lines and individual phones, you may be able to cover the expenses yourself. The phone company will allow you to break up the initial installation costs over a period of several months and hopefully you will be able to make enough from the business to cover that expense each month. You should consider applying for a small business credit card and this should be sufficient to cover the cost of the telephones and basic office supplies you will need.
If you are going the route of a larger-scale business with a switchboard and employees, you may need to consider a small business loan. You will need to show the banker a written business plan in order to qualify for a small business loan. Hopefully, you have done your homework and know the probability of your business succeeding, because the banker will be carefully scrutinizing this information before he or she approves your loan.
You may also be required to provide collateral, which means something of value that the bank will own if your business fails and you are unable to repay your loan. Oftentimes, this is a home which can be a very frightening prospect, so you should be absolutely sure your business can succeed before you move in this direction.
Another option is to look for an “investment angel”. These are wealthy people who will invest their own money in your business, but they usually have particular requirements as to what type of business they will invest in. They are, of course, looking to make a return on their investment and they will also want to be shown evidence that your business is going to succeed.
Another source of start-up capital for your answering service business is the Small Business Administration. They have streamlined the loan application process for small businesses and provide guarantees to banks that offer small business loans under $50,000. You will need to provide 25% of the start-up capital to be considered for one of these loans.
Your next option would be to try to raise the money yourself. You can try to get friends and family to invest in a portion of the business and make a promise to repay them within a certain period of time with interest. Of course, if the business fails this could put quite a strain on your relationships with those you care about.
Another option, if you own your own home, would be to put a second mortgage on it to raise the capital. This again is risking your own home, but if you have enough equity and can get a reasonable payment, the risk may be minimized.
The fact is that if you are serious about starting your own answering service business, you will find a way to finance it. Whether you need to start small and add equipment and employees as you can afford them or just go for it and get the loan, where there is a will there is a way.