How to Start a Call Center

Start a call center by following these 10 steps:

1. Plan your Call Center
2. Form your Call Center into a Legal Entity
3. Register your Call Center for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Call Center
6. Get the Necessary Permits & Licenses for your Call Center
7. Get Call Center Insurance
8. Define your Call Center Brand
9. Create your Call Center Website
10. Set up your Business Phone System

We have put together this simple guide to starting your call center. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Call Center Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a call center?

The cost of opening a call center can be quite high, and 33 states also require a license to open one. Licenses may be free in one state, and several thousand dollars in another, so be sure to check with your state. Lease agreements may be as high as $12 per square foot, and workstations can cost up to $1,250 each to update with the right furniture, cables, and equipment. Annual costs for taxes and utilities will likely be around $6 per square foot. The good news is there are hundreds of abandoned call centers throughout the US, and they typically come with (sometimes heavy) discounts for new start-ups. You can often use the equipment that’s left behind too.

Alternately, you may want to convert a standard retail space, which will save up to half on rent. However, it will cost you more to equip (up to $2,000 per workstation). Generators can also cost up to $200,000 if your building doesn’t come with one. Average wages for call center employees are around $9-12 an hour, but you may want to consider investing more, as the quality of the workers will reflect heavily on your company and on the image of your clients. Labor will likely be about 80% of your budget.

What are the ongoing expenses for a call center?

Much of your spending will be done at the beginning, but you should keep the following costs in mind:

• Employee salaries
• General office supplies (including equipment replacement)
• Utilities and building fees
• Travel costs to persuade new clients
• Upgrading equipment (e.g., VoIP technology, etc.)

Who is the target market?

Call centers are looking for companies who don’t have the resources to start a call center on their own. Between equipment costs, hiring employees, and managing high call volumes, most companies aren’t prepared to run a call center the way it needs to be run. Their needs are best left to a company that specializes in providing high-quality service that will boost their revenue and retain their customers.

How does a call center make money?

Call centers need to determine whether to charge per staff hour or per call. Because call times can be erratic, it may be best to structure it per staff hour. A call center company may take the wage of their workers, and multiply that number by four to estimate the cost of equipment, lease payments, etc. Typically, international companies may charge $.35 per call or $8 per staff hour, while US companies may charge closer to $1 per call or $25 per staff hour.

How much can you charge customers?

It depends on the type of industry you’re targeting. General customer support for a clothing company will require a very different skill set than selling high-end equipment to orthodontists. You can charge more for highly specialized labor, and you can justify your rates if your company is effective. Do not necessarily look to undercut your competitors if it means sacrificing on quality.

How much profit can a call center make?

According to firstresearch.com, US call centers bring in a total of approximately $21 billion annually, with an average revenue of $4 million.

This exact numbers are based on the margins of the contracts you bring in, but typically you can expect to start building profit after you’ve secured several major clients. Remember that this is a competitive industry, and you will need to be able to offer something special in order to gain a competitive edge.

How can you make your business more profitable?

Adding more services is the best way to bring in profit. Consider selling further services to clients, such as video, targeted campaigns or additional support calls.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your call center is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

33 states require a special license to operate a telemarketing / call company. To find out more about licensing requirements in your state, check out the Telemarketing Laws page from sba.gov.

Service Agreement

Call center businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your call center business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Certificate of Occupancy

Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a call center.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
• If you plan to purchase or build a location:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for you business’ location to ensure your call center will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Those hoping to own and maintain a call center will need to understand the subtle art of customer service, upselling, and straight sales. As more of our communication becomes automated, it’s the human touch that will stand out. However, because call centers are easily outsourced to other countries with much lower wages, there will be a need to balance the rates of each call. Owners must be business savvy and no stranger to networking.

What happens during a typical day at a call center?

At first, owners will likely be heavily focused on advertising and finding new clientele. There will be a decent amount of cold calling and networking. As clients build up, owners will be able to focus more on ensuring clients are happy, hiring the right managers and agents, and looking for cost-effective ways to hit goals.

• Find and maintain an inexpensive space
• Buy all relevant equipment

• Write scripts for agents
• Handle client complaints
• Listen to calls for quality assurance
• Create schedules for employees
• Determine what markets to target next
• Stay ahead of emerging technology

What are some skills and experiences that will help you build a successful call center?

The biggest skill an owner requires is the ability to foresee their clients’ needs before they realize they have them. Owners will need to have some experience in sales and advertising to get more eyes on the call center’s services.

Owners need to be upbeat and enthusiastic even when under pressure, and quick on their feet to put out fires throughout the day. They should also be interested in new technology that comes out in the market, and open to integrating new services (meeting software, video technology, etc.) into their platform if it will improve customer experience.

What is the growth potential for a call center?

Call centers have the potential for unlimited growth when they provide valuable service to customers. Call centers may choose one particular niche of the market (such as high-end shoe sales), or they may open themselves up to something more general, like healthcare marketing. A call center business must establish their name as the go-to source for educated agents who can handle tough questions and situations.