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How to Start a Call Center

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Call Center

Fast Facts

Investment range

$36,050 - $100,100

Revenue potential

$1.095 million - $4.38 million p.a.

Time to build

3-6 months

Profit potential

$109,500 - $438,000 p.a.

Industry trend

Growing

Commitment

Full-time

Many companies outsource their customer service and telemarketing to call centers, which have multiple agents to handle customer calls. Outsourcing these services is very common, which is why the US call center industry is worth nearly $24 billion and counting. You could start your own call center — even a virtual one — and grab a share of this growing market while providing a valuable business service. 

But before you dial up your plans, you’ll need to understand how to start and manage a business. Luckily, you’ll find everything you need to know in this step-by-step guide, which will put you on the path to call center success.  

Step 1: Decide if the Business Is Right for You

Pros and Cons

Starting a call center has pros and cons to consider before deciding if it’s right for you. 

Pros

  • Provide jobs — Call centers need many employees
  • Good money — Charge hourly rates per representative provided
  • Large market — Many businesses outsource their call center functions

Cons

  • Ongoing training — New clients mean new systems to learn
  • High turnover — The industry has high employee turnover

Call Center Industry Trends

Industry Size and Growth

call center industry size and growth

Trends and Challenges

call center Trends and Challenges

Trends

  • Many call centers are adopting a remote or hybrid work environment, which allows them to choose from a larger pool of potential employees.
  • AI is being used in call center operations to streamline processes and route calls more efficiently.

Challenges

  • Employee turnover is a continuous problem in call centers, with new employees requiring onboarding and training, which demands resources. 
  • It’s difficult for call centers with many employees to control the quality of the customer service experience and agent productivity. 

Demand Hotspots

call center demand hotspots

What Kind of People Work in Call Centers?

call center industry demographics

How Much Does It Cost to Start a Call Center Business?

You can start a virtual call center for about $35,000. Costs include call center software and a labor and operating budget. Starting a physical call center would cost around $100,000. Costs include the space rental and an extensive computer system. 

There are call center management courses available to learn the necessary skills.

You’ll need a handful of items to successfully launch your call center business, including: 

  • Telephony system: VoIP (Voice over Internet Protocol) systems are usually used
  • Headsets
  • Furnishings (for physical call center)
  • Computer system (for a physical call center)
  • Call center software
  • Network hardware and servers
Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150–$200$175
Business licenses and permits$100–$300$200
Insurance$100–$300$200
Business cards and brochures$200–$300$250
Website setup$1,000–$3,000$2,000
Space rental$0–$5,000$2,500
Computer system$1,500–$25,000$13,250
Call center software$3,000–$6,000$4,500
Labor and operating budget$30,000–$60,000$45,000
Total$36,050–$100,100$68,075

How Much Can You Earn From a Call Center Business?

call center earnings forecast

Call centers charge per call or per staff hour. Per hour is more common, and rates are about $25 per hour per agent on call. Your profit margin after all expenses should be about 10%. 

In your first year or two, you could have two clients and five agents on call 12 hours a day for each client (10 agents in all, rotating hours), bringing in $1.095 million in annual revenue. This would mean $109,500 in profit, assuming that 10% margin. If you increase your numbers to 40 agents working for four clients, you’d have an annual revenue of $4.38 million and make a breathtaking profit of $438,000.

What Barriers to Entry Are There?

There are a few barriers to entry for a call center. Your biggest challenges will be:

  • The startup costs of software and an operating budget
  • Breaking into a highly competitive industry
  • Finding employees to staff your call center

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
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Step 2: Hone Your Idea

develop a business idea

Now that you know what’s involved in starting a call center, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an Opportunity

Research call centers in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a call center that makes telemarketing cold calls or has customer service interactive voice response for incoming calls.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as operating as an inbound call center or an outbound call center.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine the Type of Your Services

Your services could be taking inbound calls for customer service, making outbound calls in response to customer service requests, or telemarketing services. Or all of the above. 

How Much Should You Charge for Call Center Services?

Generally, call centers charge $25 per staff hour. Your profit margin after software and labor costs should be about 10%. 

Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify Your Target Market

Your target market will be businesses that need to outsource their call services. You can connect with business owners on LinkedIn or find them on Google or Yelp and call them directly. 

Where? Choose a Location for Your Call Center

When choosing a location for your call center, consider the following:

  • Accessibility — Easy access to public transport and adequate parking
  • Labor market — Availability of potential employees and educational level
  • Cost — Affordable real estate and reasonable cost of living
  • Infrastructure — Reliable internet, telecommunication services, and stable electricity
  • Growth potential — Space for expansion and long-term growth
  • Time zone — Suitable for serving your target international markets
  • Amenities — Proximity to restaurants, banks, and healthcare facilities
call center business idea rating

Step 3: Brainstorm a Call Center Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “call center” or “customer service center,” boosts SEO
  • Name should allow for expansion, for example, “Virtual Call Center Solutions” over “Healthcare Call Center”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Discover over 280 unique call center name ideas here. If you want your business name to include specific keywords, you can also use our call center name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Call Center Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive summary — A concise summary outlining the core elements of the call center business plan, including its objectives, target market, and unique selling proposition
  • Business overview — A brief introduction to the call center, highlighting its mission, vision, and key business activities
  • Product and services — Clearly defined details about the specific services offered by the call center, such as inbound/outbound customer support, telemarketing, and technical assistance
  • Market analysis — Examination of the call center’s target market, including demographics, trends, and potential for growth, to inform strategic decision-making
  • Competitive analysis — An assessment of competitors in the call center industry, analyzing strengths, weaknesses, opportunities, and threats to gain a competitive edge
  • Sales and marketing — Strategies for promoting the call center’s services, attracting clients, and building a strong customer base
  • Management team — Introduction to the key individuals responsible for leading and managing the call center, emphasizing their relevant skills and experience
  • Operations plan — Detailed insights into the day-to-day operations of the call center, covering technology, facilities, workforce, and processes
  • Financial plan — Financial projections, budgeting, and analysis of the call center’s financial viability, including revenue forecasts and expense estimates
  • Appendix — Supplementary information, such as charts, graphs, and additional data supporting the business plan’s key points

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose Where to Register Your Company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to call centers. 

If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state. 

Choose Your Business Structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your call center will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole proprietorship — The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General partnership — Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) — Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corporation — Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corporation — This refers to the tax classification of the business but is not a business entity. Either a corporation or an LLC can elect to be an S Corp for tax status. Here, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

types of business financing
  • Bank loans — This is the most common method but getting approved requires a rock-solid business plan and a strong credit history.
  • SBA-guaranteed loans — The Small Business Administration can act as a guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants — A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and family Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a call center business. 

Step 8: Apply for Call Center Business Licenses and Permits

Business Licenses and Permits

Starting a call center business requires obtaining a number of licenses and permits from local, state, and federal governments. Several states require call centers to have a specific call center license. Check with your state for requirements.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your call center business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability — The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business property — Provides coverage for your equipment and supplies.
  • Equipment breakdown insurance — Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation — Provides compensation to employees injured on the job.
  • Property — Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto — Protection for your company-owned vehicle.
  • Professional liability — Protects against claims from clients who say they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP) — This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential Software and Tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Twilio, Genesys, or Nextiva, as your call center platform to manage clients, teams, and productivity. 

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, FreshBooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences of filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop Your Website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

  • Professional website and SEO — Build a comprehensive website that showcases your call center capabilities, optimized for search terms relevant to businesses seeking customer service solutions.
  • Social media engagement — Use LinkedIn to engage with business professionals, share client success stories, and enhance your B2B network.
  • Professional branding — Develop a cohesive branding strategy that reflects the professionalism and reliability of your call center services.
  • Direct outreach — Implement a targeted outreach program to connect with potential clients interested in outsourcing their customer service.
  • Content marketing — Produce white papers and ebooks that discuss the advantages of call center outsourcing and offer tips on enhancing customer service.
  • Industry insights blog — Regularly publish blog posts that provide insights into customer service trends, case studies, and actionable business tips.
  • Client testimonials and case studies — Highlight successful partnerships through detailed client testimonials and case studies to build trust and credibility.
  • Trade shows and conferences — Actively participate in relevant industry events to network with potential clients and demonstrate your service offerings.
  • Open house events — Host events at your call center to give potential clients a firsthand look at your operations and discuss tailored solutions.
  • Partnerships with business service providers — Form strategic alliances with other business service providers to offer comprehensive solutions to clients.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your call center meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your call center business could be: 

  • Prompt, reliable, and friendly customer service guaranteed
  • Outbound telemarketing with proven results
  • Your customer service with maximum courtesy and professionalism

Networking

You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a call center, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in call centers for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in call centers. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a call center business include:

  • Center agents — handling customer calls
  • Center manager — scheduling, accounting
  • Marketing lead — SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Call Center — Start Making Money!

Running a Business

Call centers save businesses a lot of money, and they also make a lot of money. Running a call center is complex, but if you have a passion for great service, you could start a virtual call center for a reasonable investment and soon be doing booming business!  

Now that you understand the entrepreneurial ins and outs, it’s time to start dialing up success. 

Call Center Business FAQs

How profitable are call centers?

Call centers can be very lucrative. The key is to find quality center agents that will provide a great customer service experience for callers.

How do I find and hire the right employees for my call center?

You should seek employees with customer service experience and any other required experience, just as tech experience. Who you hire will largely depend on the kind of clients you have.

How do I find clients in a call center?

Your best bet is to call potential business customers directly. You can also find leads on LinkedIn by networking with business owners. 

What is the growth potential of a call center?

A call center is limited by space unless you open multiple locations. If you’re willing to continue to expand, there’s no limit to how big your call center business could grow.

What are the most effective ways to measure call center performance?

Customer surveys are the best way to measure performance. You should also track the time it takes for calls to be answered. 

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How to Start a Call Center