Good Calls Ring in profits with your own telemarketing business

Q: I want to start a telemarketing business, but I don'teven know how or where to begin. What are the most important thingsI need to know?

Name Withheld

A: Larry Kaplan is president and CEO of Northbrook,Illinois-based Tele Business USA, an award-winning firm that hasprovided telemarketing companies with professional services formore than 20 years:

So you think you want to be in the telemarketing business.It's hard to overlook an industry that has grown between 25percent and 50 percent a year for the past 10 years, has made a lotof people very rich, and seems to have no end in sight in terms ofdemand.

However, going into the telemarketing business takes more thanjust renting some office space and installing a few telephonelines. The days of easy money and great response rates are over.Good account managers don't work for less than $40,000 to$45,000 per year, plus benefits. State and federal regulations,privacy issues, and just the fact that many people feel theyalready get too many telephone calls have given the telemarketingindustry a negative image.

Most of the people who have become tremendously successful withtelemarketing services got into the business before 1990, whenthere was a large influx of companies into the industry. Most ofthem fell into the business as a result of a part-time job. Maybethey were making phone calls as a means to an end, sellingsomething or doing surveys; maybe they got a request from abusiness contact for telemarketing-type services.

There is no standard way to get into this industry and no easymeans of determining demand for your services. But if, despite thechallenges, you still want to start your own business, thefollowing 10 suggestions should set you on your way:

1. Become educated about direct marketing. Telemarketingis a direct marketing medium, just like direct mail, with the samerules and principles. There are numerous books available aboutdirect marketing and telemarketing to use as resources: Jim Kobs,Ed Nash, Murray Roman, Steve Edleman, Art Sobzcak and JoanThrockmorten are just a few of the experts who have publishedhelpful books on the topic.

2. Read the trade journals. Teleprofessional,Telemarketing and Call Center magazines provide anexcellent understanding of the marketing, management and technologyissues that are necessary to know if you are going to be in thetelemarketing business. There are also professional networks thatare a great source of contacts and information.

3. Investigate the American Telemarketing Association (ATA)and the Direct Marketing Association (DMA). There may be alocal ATA or DMA chapter in your city; call them to find out how tobecome a member.

4. Get experience. Work a minimum of six months makingcalls for a professional telemarketing service or for an in-housecall center if there is no telemarketing service in your area. Youneed to understand firsthand the difficulties of this job, howit's managed and what kinds of people make it successful.

5. Research the market for telemarketing opportunities.Are there businesses or organizations in your community that needhelp setting appointments, selling subscriptions, raising funds orselling advertising space? These commonly get outsourced totelemarketing firms. What are they willing to pay, and what kind ofsupport do they need? Consider whether mailing list development,direct mail and product fulfillment are needed to make your servicework.

6. Determine who your competitors are so you candifferentiate your service from theirs. Despite the trendtoward outsourcing, outside telemarketing services handle less than10 percent of all telemarketing. This means your primarycompetition is more likely to be an in-house call center ratherthan an outside service bureau.

7. Read the prospectuses of as many publicly tradedtelemarketing companies as you can. Include the companiessupplying equipment and services to the telemarketing industry.This helps give you an excellent overview of the companies'clients by in-dustry, management, market position and future growthstrategy, as well as their earnings statements and balance sheets.Telemarketing is very much a numbers game; to win, you need to knowthe numbers.

8. Talk to telemarketing consultants. You can find themin the ATA directory, trade magazines and through your localtelephone company. The major long-distance carriers can be a goodresource for almost every aspect of this business since they allhave on-site call centers and work with outside call centers aswell.

9. Consider the pool of available employees. What is thejob market like in your area? Who might be available to make phonecalls, and when can they work? What is your competition forpart-time help? How will you hire, train, manage and motivate youremployees?

Labor costs tend to be high in this business. For example, outof the $30 to $40 per hour you might charge a client for yourservice, $8 to $15 of that goes to each employee you have makingphone calls. Another $15 to $20 goes to overhead, management, thephone companies and administration--leaving you with less than an$8-per-hour gross profit. You will need a financial cushion to payfor hiring and training, and you will probably have to outsourcethe additional support services, such as scripts and productfulfillment, that your clients may want from you.

10. Give yourself time. Expect that it will take at leastfive years to grow your business big enough to weather major clientlosses, economic trends, 200 percent annual employee turnover, andthe learning curve you'll have to scale to gain experience andknowledge of direct marketing, database marketing,telecommunications, personnel management, and all the variousadministrative and sales tasks that you and your employees willhave to perform. Good luck!

Q: I own a few small businesses (a recording studio, a retailmusic store and a mail order music accessories business), and Iwant to advertise these companies on the Internet. How do I goabout this, and what do I need to know to get the most effectiveresults?

Name Withheld

A: Rosalind Resnick, author of The Internet BusinessGuide: Riding the Information Superhighway to Profit (SamsPublishing), is president of NetCreations Inc., a Brooklyn, NewYork-based Internet software and marketing company:

To effectively market your businesses on the Internet, the firstthing you need to do is to set up a Web site. The cost for thiswill vary greatly, depending on the size and complexity of yoursite. Some companies spend millions of dollars building a Web site;others do the whole thing in-house for as little as $1,000.

Unless you opt for the do-it-yourself route, it will cost$10,000 to $15,000 to hire a skilled Web design firm to create orscan in the graphics for your site and code the text and picturesin HTML ("hypertext markup language," the code thatenables words and pictures to be visible to Web users). You'llalso need to pay a small monthly fee to host your site on anInternet service where users can find your page.

Once you establish a site, you'll need to promote it.That's because most people who surf the Web use it as a giantYellow Pages directory. But unlike the real world where there'sgenerally a single directory for an entire city, there are hundredsof directories on the Internet that list Web sites. The best way tomarket your Web site is to plaster your site's addresseverywhere--in newspapers, in advertising, even on the sides ofbuses.

For a cost-effective way to promote your site, considerregistering it with the hundreds of search engines, directories,"what's new" lists, "what's cool" listsand publications that actively solicit new site announcements onthe Internet. These include Yahoo!, InfoSeek, Lycos and Excite, toname a few. Generally, there's no charge to get listed in thesedirectories, though you may want to pay an Internet marketing firmto assist you because doing it yourself could take a considerableamount of time. The services hire people to surf from site to site,typing information into the data-entry forms on each directory orsearch engine. Automated services use computer programs toaccomplish the same goal, inviting marketers to visit their site,fill out a series of forms, and click on buttons to post Web siteinformation to several hundred search engines and directories.Expect to pay $50 to $500 to have a service handle this for you,depending on the level of promotion you desire.

Another promotional vehicle is targeted direct e-mail. Similarto direct mail, this simply means sending electronic"pitch" letters to Internet users who are interested inthe products and services you offer. NetCreations Inc. (http://www.netcreations.com/postdirect/)uses a direct response service to host more than 1,000 electronicmailing lists on topics as varied as music, real estate, food andwine, business, Web design and yoga. These lists contain the namesand addresses of Internet users who have signed up to receivecommercial messages about these topics.

Make sure to use only lists of users who want to receivemail--otherwise, if you send unsolicited junk mail, don't besurprised when you get bombarded with angry e-mail messages!

Contact Sources

American Telemarketing Association, 4605 LankershimBlvd., #824, North Hollywood, CA 91602-1891, (800) 441-3335;

Direct Marketing Association, 1120 Ave. of the Americas,New York, NY 10036-6700, (212) 768-7277;

NetCreations Inc., (718) 237-1624, rosalind@netcreations.com.