Choosing Your Stock - Start & Run a Computer Repair Service (Start & Run Business Series) (2012)

Start & Run a Computer Repair Service (Start & Run Business Series) (2012)


Choosing Your Stock

Although many technicians will tell you they hate selling, computer business owners love sales. Selling merchandise is often more profitable than selling service. For instance, if a customer completes a service with our business, the customer generally pays at a rate of $13 for 15 minutes of service. However, if the same customer purchases a few items, the sale can take only 15 minutes, but it could generate hundreds of dollars in profit. Therefore, every computer business should focus on having the products customers need and want.

The stock a store carries can vary from business to business depending on the customer base. Our store is geared toward customers looking for a bargain. We stock refurbished computers, affordable parts, and specialize in providing free diagnostics. However, just a few blocks from one of our stores is another small computer business retailer that specializes in gaming computers. That store sells high-end computers (a much smaller and more difficult market) and as a result, the store is stocked with large screen TVs, high-end monitors, and the latest graphic cards. Both types of stores have the right stock for their customer base, although there is a great deal of difference between the two. Therefore, as you read this chapter, think about your particular target market.

1. What Type of Stock Do You Need?

When we purchased our first computer store it was full of stock. The previous owners sold everything from CD cases that looked like stuffed animals to audio component cables and computer games. Five years later, we still have much of that original inventory. What’s worse is that we found that having a crowded store meant we had difficulty managing our inventory and our customers had a hard time knowing what we sold! Once someone even asked us if we sold computers! When we opened our second store, we sold hardly anything. The shelves had only our best-selling products and our entire investment was around $5,000. So, which is right?

Well, it depends on what type of store you want to be. In our case we decided to reduce our inventory to computer-related items only. When you are starting out, it is best to limit your inventory to items you know you can sell. Otherwise, you could wind up with lots of furry CD cases!

The items that we discovered are big sellers include:

• New desktops and laptops

• Refurbished desktops and laptops

• Monitors

• Product warranties (these can be third-party)

• Hard drives (laptop and desktop)

• RAM (DDR, DDR2, and DDR3 for desktops and notebooks)

• Optical drives (CD, DVD, Blu-ray drives)

• Printers and printer ink

• Peripherals such as wireless keyboards, mice, speakers, etc.

• Sound adapters (these use a USB slot to add audio)

• External hard drives and hard drive cases

• Virus protection

• Microsoft software including operating systems and MS Office

• USB flash drives

• Universal laptop AC adapters

• Backup power supply with voltage regulators

• Surge protectors and power strips

• Routers and network cards

• Graphic cards (we usually keep the most recent technology cards as well as one or two older models for repairs)

• Cables (Cat 5, HDMI, etc.)

2. Parts You Probably Shouldn’t Stock

As you are building your inventory it will be tempting to stock parts that are specifically focused on potential business clients. Items like RAID cards, server parts, oversized monitors, etc., are all tempting items to carry. However, you should keep these items as special order. After all, if a business client does need these items, you can always get them quickly (even if you have to buy them retail) but you can’t always return them to your vendor if you don’t sell them quickly.

Never buy more stock than you need for a month or so. Prices on parts change fast and new technology is constantly being released. Even if you are getting a great deal, it may not be worth buying too much of a product unless you are sure you can move it quickly. The last thing you want to do is be stuck with thousands of dollars of outdated parts!

3. Carrying New Computers

If you are going to sell new desktop computers, the most cost-effective way to do this is to build them yourself. Choosing the parts you use, the manufacturers, and the specs allows you to build systems that your customers will love, that will be profitable, and that won’t have many warranty claims.

When you start carrying computers, choose only a couple — maybe three — different price points. While this sounds limiting, it allows you to offer your customers a choice without creating mayhem. Offering too many models will cause confusion, increase your costs to stock inventory, and will sometimes hinder your sales.

At our store, we regularly carry only three desktop models and we describe them by price (since the specs change based on the market). During the economic boom, we sold computers for $899, $599, and $399. During the bust we sold computers for $599, $499, and $399. Although we can upgrade the $599 to become any type of custom system, we rarely do.

Laptops are more difficult to manage. In general, you will need to get your laptops directly from a wholesaler. Unfortunately, the prices at wholesalers are nearly the same as prices at outlet stores and online retailers. Further, if you don’t sell the laptops quickly, you will find that they become “old” technology quickly and, in a matter of months, they can be worth less than you paid. As a result, it is hard to be competitively priced and profitable with laptops. During the boom, we were able to sell laptops since the ancillary sales (e.g., warranties, laptop cases, mice) more than made up for the low margin on the computer. However, in today’s market where people buy fewer add-ons, we usually don’t offer new laptops for sale.

Check the prices and check the competition in your area. If you aren’t sure, you can always buy one laptop and see how quickly it sells.

4. Carrying Notebook Parts

There are only three parts of the Notebook that you want to keep in stock:

• Hard drives (keep about three sizes of SATA and maybe one or two IDE).

• RAM (a few sticks of older DDR and DDR2 RAM as well as newer RAM such as DDR3).

• Universal power cords (this is an unusual product because you can buy it in bulk since you can sell this same model for six months or more).

Some places stock other Notebook parts, such as custom batteries or custom power cords, but unless you have a very large customer base, this type of inventory is difficult to move.

Other more custom parts (e.g., motherboards, wireless cards) are almost never purchased in advance. Even large online sellers don’t usually buy these parts new. Most are recycled from older machines. Therefore, you can build an inventory. Every time a customer gives a laptop for you to recycle you can use this machine for parts, but make sure each component is thoroughly tested before it is sold. Other than that, you shouldn’t expect to carry proprietary Notebook parts.

5. Finding Used Computer Equipment

One of our biggest sellers in any market is refurbished desktops, laptops, and monitors. During a boom, customers buy these systems as “kid-friendly” computers that they don’t have to worry about (we once had a customer come in and buy one for each child). During a bust, customers buy these computers for themselves as an inexpensive way to get the technology they need to surf the Internet, create résumés, and get their work done. Either way, the low-end computers (less than $200) and refurbished monitors (less than $80) are popular selling items — if you can find a reliable vendor who sells them.