Computer Store

[mavroxur]

Good point, water cooling stuff does not depreciate much, ditto with fans, but are there enough customers to support a business?

That, and the fact you'd be venturing into retail sales at that point. Unless you have mega buying power and can deal directly with suppliers, you'd be hard pressed to be competitive on pricing. It's easy these days to jump on the web and get things with free shipping and great prices at places like Newegg. It would be next to impossible to beat someone on pricing like Newegg. The frequently run things on sale below cost to draw customers. A successful small business model in the computer service industry these days is going to be based on labor revenue.

 

[13thmonkey]

That, and the fact you'd be venturing into retail sales at that point. Unless you have mega buying power and can deal directly with suppliers, you'd be hard pressed to be competitive on pricing. It's easy these days to jump on the web and get things with free shipping and great prices at places like Newegg. It would be next to impossible to beat someone on pricing like Newegg. The frequently run things on sale below cost to draw customers. A successful small business model in the computer service industry these days is going to be based on labor revenue.

But lets say you need $5000/month from your labour (to cover wages and diagnostic kit, location, taxes etc.), you have 20days*7.5hrs = 150hrs in which to make that, assuming that specifc material expenses are covered at cost, then you need to be charging £33.3/hour, however if you are only 66% (makes sums easy) utilised then then you'll have to charge $50/hour. A windows install takes 2hrs? that'll be $100 please + the license cost. HDD install 15mins, $12.5 on top of the drive itself.

I've considered it in the past, and it doesn't make sense, in fact $5K/month is probably light and should be closer to 7/8 to properly cover taxes, insurance etc. unless you can offset those costs by profit from equipment sales then you can't provide the service, however you can't get the volume to provide the equipment sales with significant buying power...

 

[mavroxur]

But lets say you need $5000/month from your labour (to cover wages and diagnostic kit, location, taxes etc.), you have 20days*7.5hrs = 150hrs in which to make that, assuming that specifc material expenses are covered at cost, then you need to be charging £33.3/hour, however if you are only 66% (makes sums easy) utilised then then you'll have to charge $50/hour. A windows install takes 2hrs? that'll be $100 please + the license cost. HDD install 15mins, $12.5 on top of the drive itself.

I've considered it in the past, and it doesn't make sense, in fact $5K/month is probably light and should be closer to 7/8 to properly cover taxes, insurance etc. unless you can offset those costs by profit from equipment sales then you can't provide the service, however you can't get the volume to provide the equipment sales with significant buying power...

Here in the US, the going labor rate in my area is US$75/hour (roughly £47). Even if we were only productive half the time, we could still easily clear $5k/month in just labor. Throw in a little extra revenue from hardware sales (not retail, but sales of hardware with repairs or replacements) and it's not hard to get by. A small operation doesn't need to employ a half dozen people and rent a super prime location for thousands a month.



Management, you're doing it wrong.

 

[dogman_1234]

What would be your unique selling point, the thing that will make people come to you, what makes you different, perhaps having no per-builts, everything is custom/boutique, but that takes time, and people want instant? or do they? you gotta figure out what people want and will pay extra for and provide that. Just doing what someone else has done is pointless, you'll be dividing the market between you and them, and you're the newcomer, you'll lose.

Go for extreme power, extreme silence, extremely cheap, but not all three, you don't have the buying power to compete with dell, or newegg, and every single bit of stock you buy will be depreciating as the next thing comes in, look at newegg/scan/ebuyer etc. they haven't reduced their prices on the sandforce SSD's yet, but they are selling SF2 SSD's for nearly the same price but they can't sell it for less than they brought it (perhaps they should they'd get something back at least) component shops are very capital intensive and can easily get caught out unless you want to de-stock on the rumor of next gen kit coming out.

Unique selling point in my area would be instant components/computers. I plan on having built computers in the shop as well a components. I know there are a lot of small businesses who need components and new computers every day. I estimate at least 120,00 people in my area,( 1-100 mile radius.)

That, and the fact you'd be venturing into retail sales at that point. Unless you have mega buying power and can deal directly with suppliers, you'd be hard pressed to be competitive on pricing. It's easy these days to jump on the web and get things with free shipping and great prices at places like Newegg. It would be next to impossible to beat someone on pricing like Newegg. The frequently run things on sale below cost to draw customers. A successful small business model in the computer service industry these days is going to be based on labor revenue.

Thing is, people must wait a couple of days or pay a hefty price for shipping. I know someone who buys newegg, but waits too long.

But lets say you need $5000/month from your labor (to cover wages and diagnostic kit, location, taxes etc.), you have 20days*7.5hrs = 150hrs in which to make that, assuming that specific material expenses are covered at cost, then you need to be charging £33.3/hour, however if you are only 66% (makes sums easy) utilized then then you'll have to charge $50/hour. A windows install takes 2hrs? they'll be $100 please + the license cost. HDD install 15mins, $12.5 on top of the drive itself.

I've considered it in the past, and it doesn't make sense, in fact $5K/month is probably light and should be closer to 7/8 to properly cover taxes, insurance etc. unless you can offset those costs by profit from equipment sales then you can't provide the service, however you can't get the volume to provide the equipment sales with significant buying power...

Operation is around 6,000/month. This includes everything. If I figure about 200 customers a month that is a needed 50 dollars a day. Figure that annually about 120,000 dollars a year, minus 72,000= 48,000. year.

 

[13thmonkey]

I don't have the heart to charge what you need to charge, but thats just me...

I'm not convinced that your USP is sound, as the depreciation on the masive amount of hardware will be in stock, unless you are really clever? Could you only use 4 mobo's 2 full size 2 micro/mini, 2 intel and 2 amd, and only use those mobo's then with a limited range of cpus and gpus you could make (in minutes with a driver install) small powerful and small low powered machines, again a limited number of cases, small and large (all nice looking, perhaps fractals), hence someone could ask for that case, with that processor and that gpu and you could put that together really quickly giving range and low stock levels.

In the next few months the 2700K will be released, if youare stuck with more than a couple of 2600K's on your hand they will have been devalued by $20-30 each which will be more than your margin. Give careful thought to this, by carrying only a couple and having an excellent relationship with newegg or similar so you are always on next day delivery then you can fake the stock levels.

 

[dogman_1234]

Ever heard of a store charging 160 dollars on an Intel Pentium E6500 dual core processor? Yeah, neither have I until I visited our only local vendor!

 

[13thmonkey]

but how many do they sell... any vaguely aware consumer would wait for delivery, they have to charge that, else the margins are too low. You want the local on-line shoppers to actively consider you, as they'll buy other bits and bobs whilst they are in. They'll never come in at those prices. Thats my opinion anyway.

There was a local shop near me, I want to buy from it, but all of the stock was in local wharehouse that served the online shop, so i'd have to wait, so i'd may-as-well order from my favourite on-line store and get it delivered. in the end the shop closed as they had lots of stock in the shop, but never what I wanted, I would have paid 10% for getting it 'now' but not to have to drive back to get it tomorrow, they didn't even have any decent thermal compound (which does not depreciate anything like as much as a GPU)

Good luck to you, but careful think about what happens when new variants come out, how much are you going to be holding, how do you minimise that, how do you get rid of it, i've been waiting for the 120Gb original SF SSd's to drop but they haven't. Can you get sale or return wth suppliers (I doubt it, but worth trying)

 

[dogman_1234]

I have mentioned before they sell their hardware fairly well.

I am also aware of how you guy are 'scared' for me on starting this. I do want to be successful, but I need to start a market research by asking questions. Any way I can do this?

 

[13thmonkey]

get the accounts of the companies that do what you are planning to do from the US equivalent of companies house, you'll be able to see how well they have been doing over several years, get the old yellow pages out and see how many are not around any more. If you think that people are going to come to you, get demographic data, compare that to current shop locations and be were the current shops are not, but make sure that the demographics show that there are enough people who earn enough around you.

could you also setup an internet cafe? serve coffee and snacks as well, so you have bums on seats, and income,if you charge $5/hour, and manage to get 4hrs/day out of it then after 15 days a $300 PC has been paid for, if for the remaining 11months then each PC would get you $300-400 in pure profit), 5 machines thats your first 2K/month. Given that is 80 hours of occupation per machine per month, thats 400 hours of occupation and someone buys $3 profit worth of drinks/snacks every hour (probably more) than thats another $1200 per month.

Then the hardware sales piece becomes a lot more feasible. Could you cope with a group of loud teenagers? (I couldn't ) But if you make it look right, very stylish perhaps, then that will encourage right behaviour, make it a social centre. But can internet cafes cope with the bundled data plans and smart phones?

 

[mavroxur]

I don't have the heart to charge what you need to charge, but thats just me...

I'm not convinced that your USP is sound, as the depreciation on the masive amount of hardware will be in stock, unless you are really clever? Could you only use 4 mobo's 2 full size 2 micro/mini, 2 intel and 2 amd, and only use those mobo's then with a limited range of cpus and gpus you could make (in minutes with a driver install) small powerful and small low powered machines, again a limited number of cases, small and large (all nice looking, perhaps fractals), hence someone could ask for that case, with that processor and that gpu and you could put that together really quickly giving range and low stock levels.

In the next few months the 2700K will be released, if youare stuck with more than a couple of 2600K's on your hand they will have been devalued by $20-30 each which will be more than your margin. Give careful thought to this, by carrying only a couple and having an excellent relationship with newegg or similar so you are always on next day delivery then you can fake the stock levels.

I have the heart to charge $10 below what the rest of the shops in my market charge. As far as the soundness of my plan, it's worked good enough to keep me in business since 2004, and shows no signs of slowing down. There isn't much need to keep massive amounts of inventory on hand. You need to partner with suppliers/wholesalers that are close to your business. For example, we deal with a supplier that's about 120 miles from our shop. We can get things next day, and they come via UPS ground, so it's usually free to do so. If you rely on massive inventory levels, then you're going to be screwed. Not on processors though. Memory is where the volatility will kill you. RAM can swing all over the chart overnight. One major memory maker announces a surplus, and the cost of memory drops through the floor across the board. One Chinese factory burns to the ground, and it goes through the roof. Even rumors of one OEM buying up all available stock, and you have a speculated shortage coming up. It takes nothing to swing the price. You learn to not keep much RAM in stock. Just a few kits to cover 90% of the systems out there, and call it good. Specialty high performance RAM, server RAM, or higher density kits, we just special order and have them the next afternoon. We hardly ever have someone coming in the front door asking for a bleeding edge processor, so there's no reason to stock them. It can be here in 24 hours when the occasional person wants one.

 

[13thmonkey]

So you can make it wor, I am glad to hear it, hopefully dogman will be too

 

[dogman_1234]

I have the heart to charge $10 below what the rest of the shops in my market charge. As far as the soundness of my plan, it's worked good enough to keep me in business since 2004, and shows no signs of slowing down. There isn't much need to keep massive amounts of inventory on hand. You need to partner with suppliers/wholesalers that are close to your business. For example, we deal with a supplier that's about 120 miles from our shop. We can get things next day, and they come via UPS ground, so it's usually free to do so. If you rely on massive inventory levels, then you're going to be screwed. Not on processors though. Memory is where the volatility will kill you. RAM can swing all over the chart overnight. One major memory maker announces a surplus, and the cost of memory drops through the floor across the board. One Chinese factory burns to the ground, and it goes through the roof. Even rumors of one OEM buying up all available stock, and you have a speculated shortage coming up. It takes nothing to swing the price. You learn to not keep much RAM in stock. Just a few kits to cover 90% of the systems out there, and call it good. Specialty high performance RAM, server RAM, or higher density kits, we just special order and have them the next afternoon. We hardly ever have someone coming in the front door asking for a bleeding edge processor, so there's no reason to stock them. It can be here in 24 hours when the occasional person wants one.

How did you start up your business? What are some tips to operate?

 

[nashir]

WOW! Computer store. Going on. I always stay with you.





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Dry cleaning in Grand Prairie Texas

 

[x Heavy]

You will do well to have a Electrician lay out your lighting via LED's and similar tech.

The 12 rooms in my home have all replaced the old style Incadesant bulbs that will be banned in the US starting Jan 1 2012 (Creating a very lucrative black market on Ebay... hint hint) with lights that put out equal candlepower but pull so little that theoratically I can run the entire home off a computer PSU.

I might just try it one of these days. But it would be a thought to step up to 120 volts from 12.

No more 300 dollar electric bill. Just 50 in the cooling season and less than 30 during winter.

You may wish to use tax credit to become a exporter of power to the grid for income using the sun off your roof.

That way it will drive down the costs of running your store to the max possible low floor. And you probably will see less overhead on your cash flow.

 

[dogman_1234]

So, I have estimated everything:

30,000 people im my area. 120,000 in a 100 mile radius.

Start up will be 300,000 USD.

Figure:

300,000/30,000= 10 dollars per person charged. If I can get about 6,000 people annually, that can break me at about 300,000 in 10 years. How does that sound?

If I get 6,000 annually, that is 500 per month, or 5 per day @ 10 dollars each.

New Figure:

5 customers @ 50 USD= 250 USD

250 USD x 20= 5000 USD/month

5000 x 12= 60,000/ year

60,000 x 10= 600,000 USD

 

[13thmonkey]

if out of those 30,000 people (assuming that is all people of all ages), then that would be about 10,000 families, so 10,000 'kids' of which maybe 5,000 would be of PC buying age, of which perhaps 1/10 would be interested at an enthusiast level, the other 9/10 perhaps in a need pc for school basis. Of the family groups there's perhaps 50% of them that care enough to buy things.

So thats 500 enthusiasts at perhaps 4 'needs' per year, and 4500 users at 1 'need' per year and another 5000 families at perhaps 1 need per year.

So thats 2000+4500+5000 = 11500 needs per year. How may shops in your area? 3? so assuming an even split (steady state in 2-3 years time) thats abut 4000 visits per year, assume a split of 50:50 between small and large sales, small sales geneating $10 of profit (profit is all that matters turnover is irrelevant) large sales generating $100 of profit.

So $20,000+200,000 = $220,000 of profit per year, as a potential. Divide this by weeks in year, = 4400 profit per week, assuming that this is at a profit rate of 20% then you need to be carrying $20,000 of stock to service this assuming you only have in stock precisely what they want. If you carry 10 items for each item that you sell then this might be $200,000 of stock, and therefore at least $200,000 of startup capital, interest (not capital) payments on this would be 20,000/year at 10%, which is about 400/week + repayments, all of which would eat into the $4,400 profit.

So I suspect that after rent, interest capital repaymemts, tax etc. you'd be ending up at around $2000 profit/week. All of which could be your income. However it only takes the sales assumptions above to be out by a bit and that could become just $1000/week. I'd suggest you model the fixed costs vs variations on the income and see just how marginal it is.

If you want PM me with your email addy and i'll see if I can knock together an example, with some variables tht can be changed.

I'm behind you on this, but i'd hate to see you go into it not understanding the likelihood of there being an issue.

 

[dogman_1234]

What I need to do is research my local area for potential customers. Any way I can get hard data form the area residence and form the major city just miles away form us?

 

[HugoStiglitz]

competing with big business's on hardware supply is a loosing battle.

however i have seen and know of many very successfull MOBILE service business.
they start with fixing home computers and move up to small business & such

no rental on expensive retail space. mobile phone and only limited stock + a car or van needed.

 

[dogman_1234]

The only 'big box store' we have is Best Buy, and they are FAR AWAY! Plus, expensive.

Another thing, people do not want bloat ware. If I offer HDD/SSD with with either windows per-configured, or a blank drive, I think people will be more apt to buy my units. Plus, they won't be at risk of leaky capacitors!

 

[13thmonkey]

You should be able to order the accounts of any company from the local gov departments (well you can in the UK), that should give you an idea of thier turnover.

Hugo, good point, the question is how to be different, how to minimise fixed costs and offer better value, perhaps thats where you start and then once you've got a loyal customer base you grow into a fixed business, if that seems viable.

 

[dogman_1234]

I do not think US regs allow that.

Good idea, but I feel the US will not allow that.


What the first thing I want to do is create a target market analysis. Basically, have as many people take a questionnaire and fill in their response as to what they want to see, and customize my business after what the customer wants before hand.

 

[13thmonkey]

Are the localised facebook groups for your area? Enquire about a post card drop to 1000's of addresses, or better still businesses.

You can look at filings, here, and if you have a business you have to have filed.
http://www.sec.gov/edgar.shtml

 

[dogman_1234]

About the postcard thing: What if I were to have the local paper help me on that? You know, include a paper somewhere where a questionnaire would be visible to the reader.

 

[13thmonkey]

Possibly, but whats in it for them (the readers), why would they be bothered to do a questionaire, perhaps a competition, win a ipad3? get entered into a draw if you respond to the questionaire, it might cost you $500 for the ipad, and $500 to put out 1000 leaflets, but you'd get a high rate of return. Trial the questionaire on friends and family first, maybe 3-4 iterations of it, you want the best information you can get from it. Figure out what you want to know.

 

[dogman_1234]

Hey, I just checked out one of the local competitors. They charge 1000 for a full system with an i3-2100 system. wow.