bother fixing their old system? They are people of means and see no reason to trifle with a dusty old piece of junk. Flash forward a few years; the home equity line of credit has been drained, the real estate bubble has popped, and the dusty piece of junk that will cost $100 to repair starts looking good.
If you don’t have the ability to tap into this type of need, and your only revenue stream is component sales, it is monumentally harder to stay afloat. You might need to adapt to the market conditions, but you can survive. Businesses that don’t have that capability are dying all around us while we prosper and expand because we have a business that services people in both an up and a down economy.
1. The Computer Business during a Boom
Of course, if the economy is doing well, people have money to spend and a computer business can make high profits. People buy new, high-end gaming machines, companies want expensive high-capacity servers, and businesspeople start shopping for the best laptops available. If you are in business during this economy, you can find that custom computers can routinely make margins as high as 30 to 40 percent. This means that on a $2,000 gaming system, retailers can make as much as $800 on one sale! During a booming economy, the computer business will realize the following:
• Customers choose to replace instead of repair broken computers. Customers often don’t feel like investing $150 into an old computer when a new computer is only $400. Plus, they’ll often give you the old one if you transfer their information to the new computer.
• Customers may bring in older, working machines and request a full rebuild of the computer (replacing all the interior parts to upgrade the machine).
• Customers consider fast computers a “need” instead of a “want.” Businesses want bigger, better computers and servers to make their employees “faster.” Individuals want better machines to allow them to play games, edit videos, and, in general, have a faster, better experience.
2. The Computer Business during a Bust
When the economy is doing poorly, people cut back. They start looking at ways to save money and repairing computers is often far less expensive than buying new machines. This means that while other businesses are watching their customers dwindle, sales plummet, and foot traffic reduce, a computer repair business actually starts to grow! This is what the business looks like during an economic recession:
• Customers choose repairs before replacement computers. If the customers feel they can spend $150 and get their computer running “like new,” that is worthwhile compared to spending $400 or more to buy a new computer.
• Customers choose to upgrade one or two parts on an old machine. Sometimes these modifications (e.g., additional RAM, bigger hard drive) are less than $100 and will make the old computer as good as new for the customer.
• Customers buy lower-end refurbished systems. When people are looking to save money, refurbished computers fly off the shelves while the new ones gather dust.
3. A Business That Grows in Any Economy
Computer businesses that typically repair systems as well as sell computers can survive in booming or busted economies. Because we own a business that can grow in any economy, while most businesses were feeling the pressure, we were expanding. We opened a second location and later that year also began giving back through our Computers for Soldiers program. Not bad for a business during a recession!
What’s even better about the computer business is that it has the opportunity to expand and grow depending on the services you offer. If you start getting business clients, you can grow your business to include maintenance plans and eventually handle the IT needs of businesses all over your area. Or, if you enjoy rebuilding machines, you can get into refurbished systems and sell online, in a retail store, or even become a wholesaler or recycler. In the computer business, there are so many ways to expand and grow that it is all up to you how you go about it!
If you want some personal guidance before you jump in, you may want to contact SCORE — Counselors to America’s Small Business! This group specializes in helping small businesses get off the ground, grow, and handle challenges. It is a great place to get some free advice and find lots of useful ideas and assistance. (www.score.org)
4. How Much Can You Make?
Your revenue depends on many things, including, but not limited to, number of hours worked, location, skill set, services offered, competition, and name recognition. Let’s look at some examples.
4.1 Part time: Owner-only business
You’ve probably seen a part-time/owner-only business on Craigslist or other online classified ad websites. The owner may work a full-time job and do a small amount of computer work on the side. There is no dedicated phone line for the business but even if there is, only one person answers it. This is the most common of the part-time computer businesses and it can be a very nice source of additional income.
This type of business has a few regular customers and they all are serviced by the owner. There are no full-time employees and this one-person shop can handle 10 to 20 customers a week with most of them on the weekend. The rate these types of owners charge is usually less than a full-time operation, but they can still make $30 to $40 an hour! If they can up sell a few pieces of hardware, they can make $600 to $800 a week! For a part-time gig, that’s pretty good money, but they are tied to their customers and can never get a break.
4.2 Full time: Owner-only business
If the business owner is a dedicated full-time employee, he or she will be able to take on many more customers. In general, it would be possible to have as many as three or even four on-site customers in one day — especially if some of the work is completed either remotely or at his or her business (or home) location. Add that to the other work brought back to the house or place of business and he or she can make a very nice living!
If you can multitask, you can do well in this kind of setup. For example, if you’re the only one working, you get up in the morning, start the virus removals going, maybe start updating a few PCs, then head out. You work as quickly as possible, get a few customers taken care of, and then head back to your base of operation. Run more antivirus tools, maybe start a wipe and reload, then head back out. Take care of a few more customers, bring back the PCs that are too difficult to deal with and work on them. If you do this and build a solid list of clients, you can do very well, but you will work seven days a week.
When you’re the only person in your business, people think of you as their computer person. You’re not a firm with whom they deal, but you’re the person on whom they rely and if you can’t help them out, they take it personally. It’s important to set boundaries and let people know from the start when you’re available. Stick to that and set pricing accordingly. Never underestimate how much your time is worth. In this business model, you’re the linchpin for many companies and time given to one person can be time stolen from another.
4.3 Full time: Business has employees
Once a business expands to be big enough to employ others, your income is only restrained by the opportunity for work. A business owner can add employees as the work grows and will be increasing his or her income with each new employee! As long as the owner is careful to only add employees when they are required the business can continue to
