Start p Costs of a Home-Based Answering Service 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 com-plete 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 only wish 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 con-stantly on the watch for potential lucrative new businesses to invest money in with an expectation of a large return. You can advertise in the paper as seeking venture capital for a phone answering service business and even list the amount of money you are seeking. Then, when contacted, the real negotiations will start.
You will be expected to provide a potential investor with information about your background and qualifications to run a phone answering service business. You should have a detailed marketing plan already worked out along with revenue and expense projections to show your potential investor(s) what they can expect for a return on investment. The more prepared you are, the better likelihood of attracting the money you need to get started.
You could also try to put up the cash yourself and be a 100% owner. Review your personal asset and liability situation to see if enough money can be raised to initially fund your start-up costs. Insurance cash value, savings, sale of goods you could do without, credit card advances, even a second mortgage are all ways to personally raise money for your business venture. You must decide if this is the right way to go. Do you believe your business can be a success financially? If so, there is money out there for you to find so you can turn your dream into a reality.
The other option for you may be a small business loan. Do you have a good credit rating? How well do you know you 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’re seeking cash in the amount of $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 person-ally without having to send it to the SBA. The SBA is guaranteeing the loan so local banks are more apt to lend money to new ventures as well as established ones.
You will have to put up at least 25% of the cash you need. The SBA will not under-write 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 raise up to $12,500 personally to obtain the other $37,500 from the SBA. This would give you 100% ownership in your business with only the loan to be paid back.
The SBA has several other types of financial assistance programs, too. For potential small business owners that don’t 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 bank(s) are the firms that generally work closely with the Small Business Administration to provide these dollars to people in their area. Women and minorities are especially considered under a number of different SBA loan programs.
Some of the special circumstances 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 back—ground and qualifications, your marketing plan, revenue and expense projections and the need for the services you provide will all have to be discussed thoroughly with the loan officer before you can expect any loan approval.
A good credit rating is helpful in obtaining the loan. If you have a history of paying back what you owe, chances are you would pay this loan back, too.
There are a number of Small Business Administration locations near you.
The following is a list of regional offices and development centers that can assist and direct your application for a SBA loan:
NATIONAL OFFICE: Small Business Administration 1-800-827-5722
REGIONAL OFFICES: 60 Batterymarch St. 26 Federal Plaza Boston, MA 02110 New York, NY 10007 (617) 565-5590 (212) 972-5270
231 St. Asaphs Rd. 1375 Peachtree St., NE Bala Cynwyd, PA 19004 Atlanta, GA 30309 (215) 962-3700 (404) 347-2441
219 S. Dearborn St. 1720 Regal Row Chicago, IF 60604 Dallas, TX 75235 (312) 353-5000 (214) 767-7629
911 Walnut Street 1405 Curtis St. Kansas City, MO 6416 Denver, CO 60202 (816) 426-3316 (303) 294-7186
450 Golden Gate Ave. 710 Second Ave. San Fran., CA 94102 Seattle, WA 98104 (415) 744-6820 (206) 220-6500
SMALL BUSINESS DEVELOPMENT CENTERS Alabama Alabama International Trade Center University of Alabama at Brimingham 400 North Martha Parham Tuscaloosa, AL 35487 (205) 348-7621
California Export Small Business Development Center 110 E. Ninth Street, Suite A761 Los Angeles, CA 90079 (213) 892-1111 or (800) 371-1110
Export Small Business Development Center Satellite 300 Esplanade Drive, Suite 1020 Oxnard, CA 93030
Florida Florida Atlantic University P.O. Box 3091 Boca Raton, FL 33431 (407) 338-2273
Small Business Development Center University of Central Florida P.O. Box 2500 Building CEBA II Orlando, FL 32816 (407) 823-5554 University of West Florida College of Business, Building 8 Pensacola, FL 33251 (904) 474-2908
Georgia International Trade Development Center University of Georgia / Chicopee Complex 1180 E. Broad Street Athens, GA 30602 Small Business Development Center Kennesaw College P.O. Box 444 Marietta, GA 30061 (404) 423-6450
Small Business Development Center Clayton State College P.O. Box 285 Morrow, GA 30260 (404) 961-3440
Illinois Illinois World Trade Center Chicago 321 N. Clark Street, Suite 550 Chicago, IL 60610 (312) 467-0550
International Trade Center Bradley University, Lovelace Hall Peoria, IL 61625
Louisiana Louisiana International Trade Center University of New Orleans 368 Business Administration New Orleans, LA 70148 (504) 286-6978 Maine Small Business Development Center University of Southern Maine 96 Falmouth Street Portland, MA 04103 (207) 780-4420
Massachusetts Small Business Development Center University of Massachusetts Amherst, MA 01003 (413) 545-5580
Michigan Center for International Business Development Michigan State University 6 Kellogg Center East Lansing, MI 48824 (517) 353-4336
Mississippi Small Business Development Center International Trade Center Millsaps College Jackson, MS 39210 (601) 354-5201, ext. 407
New York Small Business Development Center State University College at Buffalo 1300 Elmwood Avenue Buffalo, NY 14222 (716) 878-4030
Small Business Development Center Rockland Community College 145 College Road Suffern, NY 10901 (914) 356-0381
Ohio Small Business Development Center 218 N, Huron Street Toledo, OH 43604 (419) 243-8191
Small Business Development Center Lake County Economic Develop. Lakeland Community College Mentor, OH 44080 (216) 951-1290
Oklahoma Small Business Development Center Rose State College 6420 Southeast 15th Midwest City, OK 73110
Oregon Small Business Development Center Portland Community College One World Trade Center 121 SW Salmon Street Suite 210 Portland, OR 97204
Pennsylvania Small Business Development Center Lehigh University International Trade Center 301 Broadway Bethlehem, PA 18015 (215) 758-3930
Small Business Development Center Gannon University Carlisle Building 3rd Floor Erie, PA 16541 (814) 871-7714
Small Business Development Center Pennsylvania State University at Harrisburg Crags Building Route 230 Middletown, PA 17057 (717) 948-6069
Wharton School of Business University of Pennsylvania Vance Hall, 4th Floor Pennsylvania, PA 19104 (215) 898-4861
Small Business Development Center Duquesne University Rockwell Hall, Room 10 Concourse 600 Forbes Avenue Pittsburgh, PA 15282 (412) 434-6233
Rhode Island Small Business Development Center Bryant College 450 Douglas Pike Smithfield, RI 02917 (401) 232-6407
Tennessee Small Business Development Center International Trade Center Memphis State University Memphis, TN 38152 (901) 678-2500
Texas North Texas Small Business Development Center International Trade Resource Center 2050 Stemmons Freeway, Suite 150 Dallas, TX 75258 (214) 653-1777
Small Business Development Center University of Houston 601 Jefferson Street Suite 2330 Houston, TX 77002 (713) 752-8404
South Texas Border Small Business Development Center University of Texas at San Antonio San Antonio, TX 78285 (512) 224-0791
Washington International Trade Institute North Seattle Community College 9600 College Way North Seattle, WA 98103 (206) 527-3732