Seven Costly Mistakes Businesses Make When Buying Telephone Equipment

History 1911 � American Telephone and Telegraph (AT & T) acquire the Western Union Telegraph Company in a hostile takeover. They purchased stocks in the company covertly and the two eventually merged.

Companies have spent BIG dollars for the telephone equipment that some vendor wanted to sell them – not necessarily for what they wanted or needed.

If you are in the market now or will be soon to update your telephone equipment this report may contain answers to the questions you need to know before you make that capital expenditure. Armed with this knowledge you might just save thousands of dollars.

History 1874 � Principal of the telephone was uncovered.

Paying Too Little or Too Much

To start with, what should a new telephone system cost? In general, you should plan on spending somewhere between $450.00 and $850.00 per station installed. If you spend less than that, you’re probably buying something that you don’t want. Cheap never lasts. The pleasure of low price is often long forgotten after the pain of poor quality hangs on for many years. If the price is higher, you are probably buying something you don’t need.

History 1876 � Alexander Graham Bell invents the telephone, beating Elisha Gray by a matter of hours.

These numbers do not include specialty add on items like caller I.D., paging or voice mail. Those would increase the price. But this should give you an idea of what you’ll be spending. If you think you’re going to buy an 8 phone system for under $2,000.00 don’t fool yourself. If you find someone to sell it to you, I guarantee you won’t be happy because you’ll have bought an inexpensive, cheap problem waiting to happen.

History 1955 � Saw the beginning of the laying of transatlantic telephone cables.

All too often the customer will say ” I need 3 lines and 8 phones and the vendor is more than happy to provide a bid of just that. Some will even go to the length to fax you your proposal. Why do they work soooooo… hard?

If you’re in the manufacturing business or accounting business you probably know that business very well but how much can you know about telephones? It’s a shame that a business is sold what they asked for when that really isn’t necessarily what they need.

History 1936 � Research into electronic telephone exchanges began and was eventually perfected in the 1960’s with the electronic switching system (SES).

So how do you figure out what you need?

First and most simply … How many telephones will you need? Start with a floor plan of you facility. It can be a simple sketch of the rooms. Don’t have one? Some businesses have a fire escape plan, which is a good place to start, and it will serve for this purpose as well. Or you could just draw that sketch. It doesn’t need to be anything fancy. Just something that shows the different rooms and the basic structure of your facility. Now mark the location of each phone you will need so you can get an accurate count of the number of telephones. Don’t forget things like faxes, modems and credit card terminals. These could be noted by marking an “F” for fax, “CC” for credit card terminal or an “M” for modem.

History 1918 � It was estimated that approximately ten million Bell system telephones were in service throughout the U.S.

Now you know you need “X” number of telephones and “Y” number of peripheral devises (those faxes etc.).

The next step is to figure out what type of telephones you want to have at each location. To be candid, there are as many different types of telephones as there are type of cars. So how do you get a handle on which type of telephones you need at each location? You need to identify what the job of the telephone is at that spot.

“Some basic information on which to base your decision. “

History 1946 � Worlds first commercial mobile phone service put into operation. It could link moving vehicles to a telephone network via radio waves.

Does the phone need to show each line on it; or can you get by with one button with all the lines located under it? This depends on if you need to be able to go to a phone other than the one that was answered to see the lines and take a call off hold.

Speaker telephone (this might be used by someone who would review large or several papers while on the phone to keep their hands free. Another use may be for a conference room where multiple people might need to listen or talk as a group.

History 1877 � The very first permanent outdoor telephone wire was completed. It stretched a distance of just three miles.

Does the person use the telephone a lot and need to have a one-touch button on it for other individuals in the office? If so, how many? For example, an officer of the company might need a phone with a button for his / her secretary that would enable them to see if that staff member was on the line. It would also allow for one touch access to call that individual. A receptionist would need to have buttons for all the other people so they could transfer calls with the touch of one button. This might be in the form of a console with many buttons on it, or a manager or executive secretary might need a smaller version of the console with a few extra buttons for a smaller group of personnel.

History 1900 � First coin operated telephone installed in Hartford, Connecticut.

Is there a phone in a break or storage room where you want a way to communicate but that won’t be used a lot? This could be a less expensive type of telephone. Do you need to have a courtesy phone in a lobby or counter area for customers to use?

How many telephone lines (telephone numbers) does your business need? How many outside telephone calls do you want to have going on at once? It’s been proven that many businesses are over lined. If you have 10 telephone lines and really only need 9 that could be costing your company as much as an extra $400.00 a year. This is an area that you should discuss at length with a prospective telephone vendor. One time I was designing a telephone system for a doctor and she told me she wanted to have five phone lines for her new start up business. When I asked her how many people she was starting with she told me three. “How can three people answer five phone lines?” I asked. And that didn’t account for anyone being with patients. I informed her that if she had too many lines no one would ever call in and say, “Doctor Smith, you know when I call in I never have any trouble getting through.” People expect their call to be answered. In other words if she was over lined she would never know. She would just pay too much month after month. However, on the other hand if she didn’t have enough lines, people would complain about her lines always being busy and she could simply add more lines as needed.

History 1888 � Common battery system developed by Hammond V. Hayes, allows one central battery to power all telephones on an exchange, rather than relying on each units own battery.

Typically, if I were designing lines for a new business the ratio is one line for every two or three people. Ten people; five lines. Twenty people; ten lines. However, that isn’t always the case. In a factory, most people will be in the shop and not need to use the phone. But in a telemarketing firm almost everyone need to have a line. You can’t afford to have staff sitting around waiting to use the phone. But these are the exception, not the rule.

Price vs. Cost

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Often a business will use the bottom line price to make the final decision. This could be a costly mistake. Let’s be realistic. If price is the ultimate deciding fact, we’d all be driving cheap, unreliable, unsafe cars. But you and I know, there are a lot of fine luxury automobiles sold in this country. And there is a good reason why.

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We are all very aware of the massive amount of information we’re bombarded with about the importance of taking care of our hearts. So if you found out you needed to get a pacemaker, would you go out looking for the cheapest one you could find? Of course not. You would want the best doctor and the best pacemaker money could buy.

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Your business telephone system is the heart of your business communication to YOUR customers. Don’t you value them as much as you do your health? OK, almost as much. Remember your telephone is the heart of your business.

There was a small city government that was looking at two different telephone systems. One was a cheap system, the other a more expensive more reliable system. Of course the reliable system was almost twice the price of the other cheaper system. When the customer asked if the vendor offering the cheaper system could offer a 5-year warranty like the more expensive system she was told that his cheaper system would probably have to be replaced in five years. So the longer warranty was out of the question. Now can you see that the higher priced system is actually less costly because it would last much longer?

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“Could you be missing an important part of the equation?”

There is another part of the telephone equation that most equipment vendors will never even address. The network side. Let me explain. Lets say your looking at a telephone system that has 8 telephones. Earlier you heard me say you can expect your telephone equipment to cost you somewhere between $450.00 and $850.00 per station. If you have an 8-phone system that’s a bottom end figure of about $3600.00 and a top end figure of about $6000.00. That’s pretty much a given. Well if your business has 4 telephone lines you probably spend about $30 to $35 per line or $140.00 in reoccurring monthly charges on your telephone bill. If you have long distance bill of say $125.00 per month that’s a total reoccurring monthly bill of $265.00 or $3,180.00 per year. If you think you will keep you telephone system 10 years, okay let’s be conservative and say 5 years or 60 months, that means you have a network cost of $15,900.00.

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Don’t you think that the network side of your equation at least deserves a look? Wouldn’t it be a good idea to see if there is anything that can be done there to reduce some of the monthly reoccurring expense? Many vendors won’t even look at this side of the equation.

“Company gets sued because of their telephone system”

How could it happen? Isn’t it almost always true that if something could happen, wouldn’t it happen at the most inopportune time?

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A delivery truck looses control and crashes into your building. Thankfully no one is hurt but the impact does two things. The point of impact causes your power to go off and in the excitement of the loud crash a customer in you building collapses. You pick up your telephone to dial 911 to get emergency help and guess what, your phone doesn’t work. If you lose critical time this could result in a liability position for your company.

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You see, at your house the telephones are powered by the phone cord plugged into the jack. But on a telephone system you basically have a computer device that runs the individual telephones and without electricity your telephones won’t work. Therefore, isn’t it critical to have battery back-up on that system? Battery back-up is a way to keep your phones running even when you don’t have electrical power. This is often an overlooked part of a telephone proposal.

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OK, my story is a little stretch. So let me ask a more realistic question. If your power goes off and a customer calls your business what do they hear? Nine out of ten people asked that question say; ” The customer hears a busy signal.” Well, that does sound like a logical answer but losing power to your telephone system is the equivalent of unplugging all you phones at home and then having some one call you. What would they hear? … That’s right unending ringing. It would appear to them your business is closed. What if they then called one of your competitors and made a purchase from them? You could lose that customer for life. Can you afford to lose even one revenue call due to a short power outage?

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Caution: The Trunker

There is yet another area that can be hazardous to your telecommunication health. The one-man shop or trunker. There are telephone equipment sales companies that are run totally by one person. That’s right, one person who sells and installs telephone systems. Some of these guys drive up in their car and operate out of the trunk, thus the term trunker. Their overhead is lower because it’s just them. If you purchase a bargain telephone system from a company that is run by an individual like this, what is your service like if something happens to him. What if he goes on vacation and you need immediate attention? What if he’s installing a new system for someone else and your system goes down? It’s mind boggling that a business would risk their communications to purchase a telephone system from one person. Oh you might save a little on the front side, but the loss you could have down the road far out way the few pennies you kept. You need the assurance that your service needs will be met if something happens to your telephones.

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Comparing Apples to Oranges

Once you have all your bids in, how do you decipher what is what? There are only a few things that will relate across from one system to the next. The number of phones and lines is an easy one. You need to be careful about the types of phones and what they do. The only other thing that at a glance makes comparing easy is price and we’ve already discussed the draw back to using that as a major factor. One suggestion is to take your proposals; cover the prices up on them and then copy them and let a vendor or two that you trust tell you what the differences are in the bill of material. A way to eliminate this problem is to hire a consultant to draw up a request for proposal. Usually for a percentage of the purchase price a set of standards can be drawn up so all the vendors are quoting apples or oranges not both. This fee can be somewhere between 5 and 10% of the awarded bid price. But this can be money well spent if it keeps you from making a costly mistake in the purchase of equipment you will have to use for years.

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As you can see there are many areas to examine when getting ready to purchase a telephone system for your office. Can you afford to over look any of them? As a matter of fact, you should actually go through what is called a telephone interview with a potential telephone equipment vendor. Spend time having all your questions answered so you understand exactly what it is you need and so will your prospective vendors.

© Bower Income and Profit Systems MMIII All Rights Reserved.

James A. Bower is the Co-Founder and President of Bower Income and Profit Systems a company dedicated to enhancing business performance in many areas through tapes books and seminars. His presentations include sales, marketing, telephone skills, motivation, goal setting and achievement, telephone equipment and voice mail design and business organization for efficiency. He is an internationally recognized instructor and is the recipient of many awards in recognition of his successful efforts in assisting businesses create a more efficient environment resulting in maximum profits. He has had the opportunity to speak for groups as a large as 5000 and can get his points across to any size audience.

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James has been actively addressing business issues and solving business problems for over 30 years. He is available to make presentations to company staff or for individual consultation.

Contact James at 316-773-1994 or jbower1@cox.net

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