Start & Run a Computer Repair Service (Start & Run Business Series) (2012)
10
Vendors
There are many types of businesses at which you buy products from a few large vendors and payments and credits are easily handled. However, with computer repair and retail, you may find yourself working with other small businesses to purchase products such as used computers and outsourced repairs. Therefore, how you pay for things often becomes as important as where you buy them.
One of the worst things that can happen to a business’s profitability is theft. It wastes your money, causes you unnecessary stress and problems, and makes it more difficult to meet your commitments. It is even worse when this theft happens from business partners. Unfortunately, not every business partner is scrupulous.
There are a few ways that you can research new business partners:
• Better Business Bureau: One thing that the BBB gives you is information about a company’s complaint status. Not all reputable companies have an A rating. Sometimes, businesses may have complaints that they aren’t aware of. If you think the business you want to work with is in this category, let them know about the outstanding issues and see if they can resolve them and improve their rating.
• References: Some companies constantly burn bridges. Asking for references gives you a chance to speak with some recent customers. What is amazing is that not all references will be positive. Many people are candid when they are providing references and you may learn more than you would expect.
• Internet references: Another place to look for vendor feedback is on the Internet. To find reviews, just type the vendor’s name in Google with the word “review” or “feedback” or “complaints.” These searches will usually help you find information about the companies that you are thinking about working with.
Unfortunately, even companies you have done business with in the past can have problems in the future. Rarely will they let you know they are in trouble. For years, we ordered our check-in forms from the same company. They were a small shop that provided low prices even if they did take a little longer to deliver the forms we ordered. During our last reorder the owner asked us to pay by check instead of our usual credit card payment. We had talked a few times and it seemed reasonable. Credit cards can be expensive for the vendor (taking up to 5 percent of a sale) and our order was around $500. Since we had been ordering from them for years, we sent them a check. At first it seemed fine. They gave us an estimated delivery date and the check cleared. After that, the relationship soured. First, there were delays, excuses, and problems. Finally, they stopped taking our calls and didn’t even pretend we were getting the product anymore. When we looked them up on the BBB their rating had dropped dramatically and they now held an “F” rating. We never got our forms and just wrote it off as a bad debt.
1. Finding Vendors
Finding vendors used to be one of the more difficult parts of running a small business. You needed to apply to the vendor, get credit lines, etc. However, with the advent of the Internet, there are many large retailers that offer pricing at or near wholesale. Sometimes their deal prices are so low and oftentimes coupled with free shipping so that they often meet or beat our wholesaler pricing on routers, monitors, operating system disks, etc. Some retailers for you to check out include club stores (e.g., Sam’s Club and Costco) as well as Internet technology resellers (e.g., Newegg and Overstock).
Other retailers may seem like a good deal, but they are often not. Avoid products for resale at dollar stores (the quality is too low and sometimes the price is too high), Wal-Mart (your customers probably already shop there and may notice), and large office supply stores that often sell their custom brands for less.
If you are looking for custom parts, one of the best places to start your search is eBay. Just be sure to check the following before bidding:
• Figure out the final price after shipping: Sometimes shipping costs more than you think.
• Check the “ship from” location: Some parts are shipped from overseas and will take weeks to arrive.
• Check the seller’s reputation: If the seller hasn’t sold a lot of parts, or if it isn’t highly rated, avoid it. Some people sell “untested” parts as tested and then just offer a return policy. Dealing with vendors like these can become time-consuming and frustrating for you and your customers.
• Read the warranty information: Do they accept returns? What amount of time? Your customers will expect at least a 30-day warranty, so look for a solid warranty from your vendor.
1.1 Industry wholesalers
There are many wholesalers in the computer industry and their prices vary. As mentioned before, sometimes, even online retailers can beat wholesalers’ prices these days. However, if you want to check out a few large wholesalers, you may want to try the following companies:
• Ma Labs (www.malabs.com): To see pricing you will need to get a login and an assigned salesperson. Ma Labs carries most computer parts.
• Tech Data (www.techdata.com): Another parts supplier.
• Printer Essentials (www.printeressentials.com): This is an ink wholesaler in case you choose to carry printer ink as part of your offerings.
There are other local wholesalers that may specialize in used computers. One way to find these vendors is to join wholesaling networks. These networks can help you get in touch with companies in your area, which will reduce your shipping costs dramatically.
Note that the least expensive place to get used Notebooks is through a local wholesaler. Usually these individuals have relationships with large corporations and buy the computers in bulk. They then go through the machines, fix them, and resell them, this time with loaded, clean operating systems and warranties. Finding these resellers may be as easy as looking on Craigslist or a local directory.
1.2 Vendor terms
When a company offers you terms, it means that you can purchase its products and services and then have a period of time (the term) in which to pay it back. Usually, the term is about 30 days, but sometimes, it can be 60 or even 90. The benefit of terms is obvious; you can stock your store and pay for your stock from the sales. However, the risk is if you don’t make the sales you expect, you still have to pay the bill.
While it is nice to have the flexibility that terms provide, it is also a good way to increase debt quickly. In the years since the economy slowed, getting terms has become much more difficult.
2. Building Your Own Computers
If you are interested in selling prebuilt computers for your customers, the best way to go about this is to build them yourself. Since you will need to warranty the computers you build (we offer a one-year warranty with an option for the customer to purchase an extended warranty for up to three years), you’ll want to know they’re built right. To that end, ensure that you have high-quality parts that are less likely to fail.
To price these machines, build in a 20 to 30 percent margin on any new computer sales. If you offer computers for less than this, you may have problems when you try to complete warranty repairs.
However, if you are a small shop, do not build multiple computers at once. Generally, keep a two-week stock on hand. Remember, you can upgrade the machine as needed or downgrade it if necessary.
3. Auctions
Auctions can be a place to find low-priced computers or they can be a place to get taken advantage of. In general, if you are newly entering the computer field, stay away from auctions. If you have extensive diagnostic experience, you may be able to purchase items at an auction. Just be aware that the best systems are not usually sold at auctions. Many computers are sold this way because the original owners know the machines are missing hard drives, have bad motherboards, and no usable RAM.
4. What to Do If You Are Taken Advantage of by a Vendor
There are many different ways that you can try to get your money returned or a problem resolved. However, it is always easier to prevent a problem than to try to resolve it later. Here are some ways to try and recover your money:
• Escalate the issue: The best way to begin is to call the company and try to work out a resolution. Depending on the problem, you may be able to be compensated even if you can’t get your money back. Some vendors have return programs, others will issue a refund, and still others will give you credit toward your next purchase. Most companies will try to work with you and if they can’t, asking to speak to a manager or supervisor may get you the desired results.
• Stop the payment: Depending on the type of problem you have, you may be able to stop payment to the vendor. For instance, if a vendor has taken payment and has not provided the product or service, this is a great way to handle the problem. This is the easiest to do when you have paid by credit card. You can simply call your card company and let them know what has happened. They will be able to reverse the charges and give you your money back. If you paid by check, your bank can stop the payment as long as the check hasn’t cleared. Of course, if you paid by cash or wire transfer, you will not be able to stop the payment.
• Better Business Bureau complaints: Lodge a complaint with the Better Business Bureau (BBB). If the vendor will not handle your complaint to your satisfaction, you have the opportunity to lodge a complaint with the BBB. While this will work to escalate your issue with some companies, if the company already has a poor BBB rating, it will probably not respond.
• Small claims court: If you have a complaint against a business in your area, it may be possible to take it to small claims court. Of course, this gets more complicated for businesses outside of your area or when purchases were made over the Internet.
• Civil lawsuit: When a company defaults on a contract, it may be possible to contact a lawyer and make a more formal complaint. Of course, the cost associated with the lawyer’s fees and the difficulty getting the money back may make this option financially prohibitive.
When will you get your money back? The truth is, you probably won’t. Sure, there are many ways to request your money be returned, but getting your money back may prove to be a very difficult situation. If the company refuses to work with you from the beginning, odds are good it doesn’t intend to resolve the situation. As a result, you may find that it can take more time, money, and effort to get your money back than you really want to spend.
You may want to “get even” but as a business owner, this may not be in your best interest. Problems like these can easily escalate and be more costly than they are effective. That said, it may be possible to get some publicity around your issue to prevent it from happening to others in the future. For instance, although it isn’t likely to resolve your problem, it may be valuable to let others know about your problem. News agencies, local papers, and the like may be interested in companies that are systematically providing poor service. While it won’t get you your money back, it will give you the opportunity to prevent it from happening to others and may give you a bit of satisfaction.