Do you want to start call center business?

Are you thinking of opening a call center? There is no doubt this is a great business venture with immense potential. In the recent years, the telemarketing industry has been experiencing a steady growth of between 6.5% and 8% per annum. The quest for organizations to improve their customer service in order to outshine their competitors has compelled many firms to outsource their telemarketing to experts. This is a cost effective approach compared to investing in an in-house call center. To succeed, a number of issues have to be taken care of but you can be assured to recover your capital within the first three years.

Executive Summary

2.1 The Business

The call center will be registered under the name ListeningU, and will be situated in downtown Brentwood, Los Angeles- California. The call center will be owned and managed by Adam Bruno who is an expert customer service professional.

2.2 Management Team

Adam Bruno is a Customer Service professional who has worked in the customer care industry for more than a decade. Before planning how to create a call center, Adam worked for many top business companies across the United States and is an accomplished customer service expert.

2.3 Customer Focus

ListeningU intends to offer clients a one stop, modern and fully equipped call center with the latest telemarketing technologies to serve the Los Angeles business community.

2.4 Business Target

ListeningU intends to offer both inbound and outbound call center services to a wide range of clientele keen on outsourcing their call center services.

Call Center Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Adam Bruno is a customer care professional who has worked with renowned U.S brands that include JPMorgan Chase, Goldman Sachs, Wells Fargo and Citigroup. In the course of his career, he ascended to the position of a Customer Service Manager and took the lead role in structuring call center operations and overseeing all management related aspects.

3.2 Aim of Starting the Business

After having been in the career for long, Adams noticed that companies were spending a lot of time and resources to manage in-house call centers. In order to help businesses focus on their core operations, Bruno found it necessary to start a call center business to handle telemarketing services on behalf of clients.

3.3 How the Business will be Started

As a customer service expert, Adams understands what he needs to start the call center. To set his idea into motion, he has worked closely with business set-up experts to develop a financial roadmap for the call center. The following is financial data for ListeningU Call Center.

Call Center Business Plan - Startup cost

Start-up Expenses 
Legal$4,000
Consultants$3,000
Insurance$15,000
Rent$20,000
Research and Development$8,000
Expensed Equipment$22,000
Signs$3,000
TOTAL START-UP EXPENSES$75,000
Start-up Assets$0
Cash Required$80,000
Start-up Inventory$25,000
Other Current Assets$30,000
Long-term Assets$8,000
TOTAL ASSETS$25,000
Total Requirements$20,000
START-UP FUNDING$0
START-UP FUNDING$100,000
Start-up Expenses to Fund$30,000
Start-up Assets to Fund$32,000
TOTAL FUNDING REQUIRED$0
Assets$20,000
Non-cash Assets from Start-up$15,000
Cash Requirements from Start-up$0
Additional Cash Raised$60,000
Cash Balance on Starting Date$20,000
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$20,000
Investor 2$15,000
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$120,000
Loss at Start-up (Start-up Expenses)$55,000
TOTAL CAPITAL$60,000
TOTAL CAPITAL AND LIABILITIES$40,000
Total Funding$110,000

Services for Customers

ListeningU Call Center is focused on offering professional telemarketing services to different types of clients. When planning how to open a call center, the business is focused on offering the following services.

  • Offer customer service that includes handling inquiries on behalf of clients
  • Carry out Market research and surveys for clients
  • Provide first-level help desk support
  • Assist in business development by helping clients with lead generation, database management, debt collection and message services.

Marketing Analysis for Call Center Business

For ListeningU Call Center to meet its market obligations, a detailed market analysis was carried out to help the business establish itself in the industry and adequately serve the needs of clients. This call center business plan explains the strategy the business will rely on to attain its goals. Given the rising demand for corporate call center services, there is a great opportunity for ListeningU to meet its market objectives.

5.1 Market Segmentation

Given the increasing popularity of the call center industry, ListeningU understands the value of coming up with sustainable marketing strategies to acquire a larger market share. Being the second largest city in the United States, Los Angeles is a business hub with many corporates looking for quality call center services to support their business operations. Based on market findings, the call center intends to target the following potential customers.

Call Center Business Plan - Market Segmentation

5.1.1 Corporate Organizations

Corporate organizations rely on an infrastructure that allows seamless communication to achieve various business objectives. For this reason, every corporate entity needs a robust and flexible call center service that has the capability to accommodate business needs. With high costs associated with setting up, running and maintaining call centers, businesses now prefer to outsource their needs to professional call center companies.

The corporate sphere is large and ListeningU Call Center intends to target companies in various sectors such as banking, manufacturing, telecommunication and information technology among others. Organizations have to keep communicating with their clients, suppliers, business partners and other industry stakeholders. The call center business model will focus on reaching out directly to various corporate entities.

5.1.2 Advertising and Marketing Agencies

One of the main services offered by ListeningU is marketing and lead generation. Call centers play a major role in advertising and brand awareness which attracts marketing agencies intending to roll out advertising campaigns for various products and services. Thanks to investing in sophisticated and cutting edge technologies, the call center has invested in the appropriate infrastructure to support large scale advertising.

5.1.3 Political Parties

Political parties have been identified as a potential customer group to reach out to in this call center business plan sample. Political parties often conduct fundraising and campaigns which need a professional call center facility to handle all communication aspects on behalf of a client. Political parties always run elaborate campaigns in order to create awareness and outshine their competitors. For this reason, ListeningU Call Center stands a great chance to benefit from political parties.

5.1.4 Religious Organizations

With many religious organizations operating in Los Angeles, the demand for call centers is high as religious establishments are always in need to call centers to support various organization functions. Just like political parties, religious organizations engage in numerous fundraising and campaigns.

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Corporate Organization35%30,00032,00034,00036,00038,00010.00%
Advertising and Marketing Agencies30%25,00027,00029,00031,00033,0009.00%
Political Parties20%20,00022,00024,00026,00028,00012.00%
Religious Organizations15%15,00017,00019,00021,00023,00011.00%
Total100%90,00098000                106,000114,000122,00013.00%

5.2 Business Target

ListeningU Call Center is getting into a highly competitive environment considering there are numerous call centers in Los Angeles. However, this call center business plan template outlines the plan the business intends to use to acquire clients and propel business growth. It is costly to set up a fully functioning call center, but adequate strategies have been formulated to help the business fully recover its initial capital. After finalizing how to build a call center business and rolling out operations, the call center expects to recoup its initial investment in three years based on a projected 15-20% annual sales growth.

5.3 Product Pricing

While strategizing on how to start a call center business, Adam Bruno together with the assistance of experts has come up with a competitive pricing structure tailored for different services. At the beginning, the call center intends to offer various incentives to attract clients.

Strategy

When planning how to start a call center, you need to come up with a great business development strategy. Adam Bruno has engaged experts to formulate a call center strategy that will be instrumental to steer business growth. The following is ListeningU Call Center sales strategy.

6.1 Competitive Analysis

ListeningU has deployed the latest telemarketing technologies to boost efficiency and seamlessly handle multiple clients without compromising quality. After completing the procedures of how to build a call center, the business anticipates high competition considering there are numerous similar establishments in Brentwood.

6.2 Sales Strategy

For ListeningU to achieve its intended targets and create a call center which is popular with clients, the following sales strategy will be implemented.

  • Hire professional marketing agencies to help advertise the call center and teach out to corporate clients
  • Organize an official opening party and welcome top industry stakeholders to create awareness about the business
  • Do cold calling and email various potential customers to advertise call center services
  • Advertise on digital media platforms such as Facebook, Twitter and Instagram
  • Use local media channels such as Television and newspapers to advertise the business

6.3 Sales Forecast

ListeningU Call Center has put in place various sales strategies in order to meet its targets. The following is a forecast of sales for the business.

Call Center Business Plan - Unit Sales

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Customer service services500,000520,000540,000
Market research and surveys400,000420,000440,000
Help desk support300,000320,000340,000
Business development services200,000220,000240,000
TOTAL UNIT SALES1,400,0001,480,0001,560,000
Unit PricesYear 1Year 2Year 3
Customer service services$400.00$410.00$420.00
Market research and surveys$300.00$310.00$320.00
Help desk support$200.00$210.00$220.00
Business development services$150.00$160.00$170.00
Sales
Customer service services$300,000$310,000$320,000
Market research and surveys$250,000$260,000$270,000
Help desk support$200,000$210,000$220,000
Business development services$150,000$160,000$170,000
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Customer service services$5.00$6.00$7.00
Market research and surveys$4.00$5.00$6.00
Help desk support$3.00$4.00$5.00
Business development services$2.00$3.00$4.00
Direct Cost of Sales
Customer service services$250,000$260,000$270,000
Market research and surveys$200,000$210,000$220,000
Help desk support$150,000$160,000$170,000
Business development services$100,000$110,000$120,000
Subtotal Direct Cost of Sales$700,000$740,000$780,000

Personnel Plan

ListeningU provides diverse services in order to boost the company’s income. When starting a call center business, it is vital to focus on having a good personnel team to handle business operations.

7.1 Personnel Plan

The call center is owned by Adam Bruno who will be the overall center manager for the business. The call center intends to hire the following staff to enable the business carry out its operations.

  • Call Center Manager
  • Operations Manager
  • Two Marketing Executives
  • Five Customer Service Representatives
  • Successful candidates will undergo intensive training to understand procedures and expectations.

7.2 Average Staff Salaries

ListeningU Call Center plans to pay its staff the following salaries in the first three years of operations.

 Personnel Plan   
Year 1Year 2Year 3
Manager$50,000$55,000$60,000
Cashier$30,000$35,000$40,000
Administrator$28,000$34,000$38,000
1 Sales and Marketing Executive$30,000$35,000$40,000
5 Customer Care Representatives$90,000$105,000$120,000
Cleaner$20,000$25,000$30,000
Assitant Manager$40,000$45,000$50,000
Total Salaries$288,000$333,000$378,000

Financial Plan

ListeningU Call Center has formulated a financial plan that will steer the path to business success. To start call center business, Adam will use his personal savings and funds from two investors. A loan will be sought to help raise startup capital for the business. Crucial financial information for the call center has been shown below.

8.1 Important Assumptions

Financial forecast for ListeningU Call Center will be based on the following assumptions.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%12.00%14.00%
Long-term Interest Rate5.00%5.00%5.00%
Tax Rate12.00%14.00%16.00%
Other000

8.2 Brake-even Analysis

ListeningU Brake-even Analysis is indicated in the graph below.

Call Center Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even12000
Monthly Revenue Break-even$350,000
Assumptions:
Average Per-Unit Revenue$200.00
Average Per-Unit Variable Cost$2.00
Estimated Monthly Fixed Cost$400,000

8.3 Projected Profit and Loss

Profit and Loss information for ListeningU calculated on a monthly and annual basis is shown below.

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$700,000$730,000$760,000
Direct Cost of Sales$40,000$60,000$80,000
Other$0$0$0
TOTAL COST OF SALES$40,000 $60,000 $80,000
Gross Margin$420,000$460,000$500,000
Gross Margin %75.00%80.00%85.00%
Expenses
Payroll$300,000$320,000$340,000
Sales and Marketing and Other Expenses$5,000$7,000$9,000
Depreciation$4,000$6,000$8,000
Leased Equipment$0$0$0
Utilities$6,000$8,000$10,000
Insurance$2,000$3,000$4,000
Rent$12,000$14,000$16,000
Payroll Taxes$32,000$36,000$40,000
Other$0$0$0
Total Operating Expenses$230,000$260,000$290,000
Profit Before Interest and Taxes$55,000$65,000$80,000
EBITDA$10,000$15,000$20,000
Interest Expense$0$0$0
Taxes Incurred$15,000$20,000$25,000
Net Profit$120,000$130,000$140,000
Net Profit/Sales20.00%35.00%50.00%

8.3.1 Monthly Profit

Call Center Business Plan - PROFIT MONTHLY

8.3.2 Yearly Profit

Call Center Business Plan - PROFIT YEARLY

8.3.3 Monthly Gross Margin

Call Center Business Plan - GROSS MARGIN MONTHLY

8.3.4 Yearly Gross Margin

Below is the profit and Loss Analysis for ListeningU Call Center.

Call Center Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

Below is the profit and Loss Analysis for ListeningU Call Center.

Call Center Business Plan - Projected Cash Flow

The diagram below is a summary of subtotal cash spent, subtotal cash from operations, subtotal cash spent on operations, subtotal cash received and pro forma cash flow.

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$50,000$55,000$60,000
Cash from Receivables$8,000$10,000$12,000
SUBTOTAL CASH FROM OPERATIONS$58,000 $65,000 $72,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$58,000 $65,000 $72,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$20,000$22,000$24,000
Bill Payments$15,000$20,000$25,000
SUBTOTAL SPENT ON OPERATIONS$35,000 $42,000 $49,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,000 $45,000 $55,000
Net Cash Flow$12,000$15,000$18,000
Cash Balance$23,000$28,000$33,000

8.5 Projected Balance Sheet

The following is a Projected Balance Sheet for ListeningU Call Center that shows capital, assets, long term assets, liabilities and current liabilities.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$280,000$310,000$340,000
Accounts Receivable$20,000$22,000$25,000
Inventory$5,000$8,000$11,000
Other Current Assets$4,000$8,000$12,000
TOTAL CURRENT ASSETS$309,000 $348,000 $388,000
Long-term Assets
Long-term Assets$8,000$11,000$14,000
Accumulated Depreciation$12,000$15,000$18,000
TOTAL LONG-TERM ASSETS$5,000 $3,000 $1,000
TOTAL ASSETS$210,000 $270,000 $320,000
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$18,000$21,000$24,000
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$18,000 $21,000 $24,000
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$18,000 $21,000 $24,000
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$50,000$55,000$60,000
Earnings$120,000$130,000$140,000
TOTAL CAPITAL$218,000 $236,000 $254,000
TOTAL LIABILITIES AND CAPITAL$200,000 $210,000 $230,000
Net Worth$240,000$270,000$300,000

8.6 Business Ratios

ListeningU Call Center Business Ratios, Ratio Analysis and Business Net Worth are shown below.

 Ratio Analysis    
Year 1Year 2Year 3INDUSTRY PROFILE
Sales Growth10.00%24.00%60.00%6.00%
Percent of Total Assets
Accounts Receivable8.00%6.00%3.00%14.00%
Inventory6.00%4.10%2.30%15.00%
Other Current Assets5.00%3.50%2.00%35.00%
Total Current Assets95.00%105.00%130.00%60.00%
Long-term Assets-6.00%-12.00%-18.00%35.50%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities7.00%5.00%3.00%30.00%
Long-term Liabilities0.00%0.00%0.00%25.00%
Total Liabilities7.20%3.00%4.40%40.00%
NET WORTH90.00%85.00%120.00%30.00%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin70.00%72.00%74.00%0.00%
Selling, General & Administrative Expenses60.00%75.00%62.00%50.00%
Advertising Expenses3.00%2.00%0.50%5.00%
Profit Before Interest and Taxes22.00%25.00%28.40%3.00%
Main Ratios
Current1620242.6
Quick3033365.5
Total Debt to Total Assets6.00%3.00%2.40%45.00%
Pre-tax Return on Net Worth90.00%95.00%100.00%3.40%
Pre-tax Return on Assets45.00%65.00%55.00%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin12.00%17.00%22.00%N.A.
Return on Equity60.00%64.00%68.00%N.A.
Activity Ratios
Accounts Receivable Turnover6810N.A.
Collection Days100110120N.A.
Inventory Turnover202325N.A.
Accounts Payable Turnover151821N.A.
Payment Days232323N.A.
Total Asset Turnover3.42.41.2N.A.
Debt Ratios
Debt to Net Worth0-0.08-0.06N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$300,000$320,000$340,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales2.451.480.65N.A.
Current Debt/Total Assets8%6%4%N.A.
Acid Test323538N.A.
Sales/Net Worth3.42.61.8N.A.
Dividend Payout000N.A.