Starting computer repair business mistakes are not unlike any other business start up mistakes. Under capitalization, not planning for cash flow and operating costs, unrealistic sales and revenue projections, and no marketing plan, are all common mistakes.
Lets take a look at these mistakes as they apply to the computer repair business in particular. Computer repair businesses fall under the services category, even though many might sell some equipment both for replacement parts and new models.
Since start up and operating costs are the first areas most new owners try to address, that’s a good area to discuss first. It’s easy to overlook some of these start up costs until you actually start working in your business. That’s the number one mistake.
Start up costs can be very reasonable for a non-retail computer repair business. If you plan on going retail, you will need a pretty good chunk of money for the initial lease, build out, and signage. But we’ll save that scenario for a different article.
Since the owner/operator will be going to the client (instead of the client coming to a retail location), a reliable vehicle is a must. And with gas and vehicle prices being what they are, transportation costs should include fuel and maintenance in addition to the purchase or ongoing payment cost.
A good transportable tool kit, maybe some common repair parts, and other basic accessories are also necessary. You might even consider a smock of some type to protect clothing (I can’t tell you how many shirts I’ve lost to toner, dirt from shop areas, and other unknown threats).
Administrative costs should include items like cell phone, invoices, business cards, insurance (both health, auto, and liability), accounting advice and software, any local licenses, and reference materials (manuals, etc.).
We’ll break out any advertising or marketing costs due to the fact that they will be ongoing and not just start up requirements. Depending on the market area, and what methods are planned, advertising and marketing costs can be considerable.
The next biggest mistake falls under both the sales and revenue projections and operating expense and cash flow. These two areas go hand in hand due to the relationship. You cannot bill 100% of your time, end of story.
If you bill 60% of hours, you are doing well above the national average of owner/operator type businesses. There are several reasons, but the biggest is that you get to change roles many times during working hours. So figure on 35-40% billable hours. You can obviously work 60 hours (and I often do) so that 35-40% can represent more hours.
Along with the number of hours, due to the nature of the business, you really don’t know how many service call requests will come in during any period. After doing this for 30 years, I still don’t know. Of course the more long-term clients you acquire, the more ongoing activity you will have.
Cash flow can always be an issue. The more ongoing clients you get, the more you will carry receivables. Short quick service calls (under $200) should be invoiced and collected on the spot. Larger and ongoing projects should be billed upon collection and if you offer terms, make sure you can live with them.
It’s very easy to get to a point where you get to spend office time chasing receivables. It’s not fun, and takes away from billable hours. You can also get burned from time to time. I offer terms, but only after a client has paid for the first time and established that the amount of work and billable hours will be worth the headaches.
And the third, and probably the most important to keep your business providing revenue, is a realistic marketing plan. You will need new clients every week, and should implement methods that are ongoing. The accordion effect is difficult to avoid in any small business.
That’s where you get too busy doing service calls and let your marketing efforts slip. When you get over the busy period, you sit there since you quit marketing and there’s a time lag to get new business. So no matter how busy you get, save some time for your ongoing marketing.
One way I’ve figured out to help overcome this situation is to have some flyers printed up that I send out everyday. When I go to a new service call, I jot down 10-15 businesses name and addresses near the new client. When I get home or before I leave for work the next day I grab the flyers and put the past days addresses and drop them in the mail.
And if you want to get a little more cost effective, you can wait a day or two until you have enough ready that you can use the lower bulk mail rate. Either way, you can’t go wrong if you adhere to this system.
Starting any small business is a challenge. The Computer Repair Business is no different. But it is one of the few service type businesses that you can start with a very small investment. The key to success is not making the common mistakes above.
Pay attention to details, be aware of the pitfalls, and try to compensate for the known problems. Having your own Computer Repair Business can be quite profitable if you can overcome these common mistakes.
Lets take a look at these mistakes as they apply to the computer repair business in particular. Computer repair businesses fall under the services category, even though many might sell some equipment both for replacement parts and new models.
Since start up and operating costs are the first areas most new owners try to address, that’s a good area to discuss first. It’s easy to overlook some of these start up costs until you actually start working in your business. That’s the number one mistake.
Start up costs can be very reasonable for a non-retail computer repair business. If you plan on going retail, you will need a pretty good chunk of money for the initial lease, build out, and signage. But we’ll save that scenario for a different article.
Since the owner/operator will be going to the client (instead of the client coming to a retail location), a reliable vehicle is a must. And with gas and vehicle prices being what they are, transportation costs should include fuel and maintenance in addition to the purchase or ongoing payment cost.
A good transportable tool kit, maybe some common repair parts, and other basic accessories are also necessary. You might even consider a smock of some type to protect clothing (I can’t tell you how many shirts I’ve lost to toner, dirt from shop areas, and other unknown threats).
Administrative costs should include items like cell phone, invoices, business cards, insurance (both health, auto, and liability), accounting advice and software, any local licenses, and reference materials (manuals, etc.).
We’ll break out any advertising or marketing costs due to the fact that they will be ongoing and not just start up requirements. Depending on the market area, and what methods are planned, advertising and marketing costs can be considerable.
The next biggest mistake falls under both the sales and revenue projections and operating expense and cash flow. These two areas go hand in hand due to the relationship. You cannot bill 100% of your time, end of story.
If you bill 60% of hours, you are doing well above the national average of owner/operator type businesses. There are several reasons, but the biggest is that you get to change roles many times during working hours. So figure on 35-40% billable hours. You can obviously work 60 hours (and I often do) so that 35-40% can represent more hours.
Along with the number of hours, due to the nature of the business, you really don’t know how many service call requests will come in during any period. After doing this for 30 years, I still don’t know. Of course the more long-term clients you acquire, the more ongoing activity you will have.
Cash flow can always be an issue. The more ongoing clients you get, the more you will carry receivables. Short quick service calls (under $200) should be invoiced and collected on the spot. Larger and ongoing projects should be billed upon collection and if you offer terms, make sure you can live with them.
It’s very easy to get to a point where you get to spend office time chasing receivables. It’s not fun, and takes away from billable hours. You can also get burned from time to time. I offer terms, but only after a client has paid for the first time and established that the amount of work and billable hours will be worth the headaches.
And the third, and probably the most important to keep your business providing revenue, is a realistic marketing plan. You will need new clients every week, and should implement methods that are ongoing. The accordion effect is difficult to avoid in any small business.
That’s where you get too busy doing service calls and let your marketing efforts slip. When you get over the busy period, you sit there since you quit marketing and there’s a time lag to get new business. So no matter how busy you get, save some time for your ongoing marketing.
One way I’ve figured out to help overcome this situation is to have some flyers printed up that I send out everyday. When I go to a new service call, I jot down 10-15 businesses name and addresses near the new client. When I get home or before I leave for work the next day I grab the flyers and put the past days addresses and drop them in the mail.
And if you want to get a little more cost effective, you can wait a day or two until you have enough ready that you can use the lower bulk mail rate. Either way, you can’t go wrong if you adhere to this system.
Starting any small business is a challenge. The Computer Repair Business is no different. But it is one of the few service type businesses that you can start with a very small investment. The key to success is not making the common mistakes above.
Pay attention to details, be aware of the pitfalls, and try to compensate for the known problems. Having your own Computer Repair Business can be quite profitable if you can overcome these common mistakes.
1 comments:
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