sole traders - whats your business plan for the next 12 months?

[16k_zx81]

Im finding this is an interesting time for my business. There are a couple of issues that are concerning me that Im trying to gear up for next year. The reason for this post is to see how other sole-traders are seeing the current challenges, and about strategies for growing/developing your business in the next 12 months.

The first thing thats concerning me is the continual drop in price of laptops. Historically we could charge what we needed to for laptop repairs. Now, there's increasingly an anthem of 'not sure whether its worth fixing" from customers as they are aware they can often replace for not much more than the cost of the repair. It seems to me this is a trend which will continue as hardware prices continue to drop, and the question which occurs to me is how to make income from these repairs if we need to continue to shave money off the prices we do them for.

My response to this is that I am thinking of getting into smartphone and tablet repair. It appears that a lot of business owners are moving in this direction, and while this doesnt 'solve' the problem of laptops becoming cheaper and more 'disposable' when they break, it does provide an alternate income stream to cover some of the gap thats appearing when customers opt to replace instead of fix. The current issue for me in adopting these repairs is sourcing the parts at a price that will make my service competitive with businesses that are already established in this work.

The second thing that occurs to me is the increased useability of operating systems and what I think will be a resulting decrease in need for "tech support", as peripherals and associated software becomes more user friendly & easier for end-users to set up and operate. Windows 7 has definitely made the desktop PC more manageable for end-users, I think, and my impression from what I have seen of Windows 8 is that this trend will continue. In short, I think the demand for 'domestic tech support' will likely decrease, and I anticipate that I will need to fill this gap with more technically-oriented work, (ie, 'higher-skilled' technical work).

As a response, I am looking towards the small business sector, particularly in regard to small networks, NAS, cloud, etc, and plan to get some additional skills in this area to move my business in this direction. Next year I will look at certification specifically for skill-development so I can better service small businesses and move further into this area.

Sorry for the long post, but I think this is a complex issue. There has been a lot of discussion here about how things are changing - I am aware of a diverse set of opinions regarding the shape this will take. This question is not so much about the theory of where we are heading, but how people see the themselves responding to a rapidly moving market for products and services.

So, what do see as the current challenges to your business, and what do the next 12 months look like for you?

 

[RichmondTech]

The first thing thats concerning me is the continual drop in price of laptops. Historically we could charge what we needed to for laptop repairs. Now, there's increasingly an anthem of 'not sure whether its worth fixing" from customers as they are aware they can often replace for not much more than the cost of the repair. It seems to me this is a trend which will continue as hardware prices continue to drop, and the question which occurs to me is how to make income from these repairs if we need to continue to shave money off the prices we do them for.

My response to this is that I am thinking of getting into smartphone and tablet repair. It appears that a lot of business owners are moving in this direction, and while this doesnt 'solve' the problem of laptops becoming cheaper and more 'disposable' when they break, it does provide an alternate income stream to cover some of the gap thats appearing when customers opt to replace instead of fix. The current issue for me in adopting these repairs is sourcing the parts at a price that will make my service competitive with businesses that are already established in this work.

I had a customer today that was thinking about doing a system restore on their desktop. It's a low-spec machine and we were kicking around the idea of just replacing it. Either way, I'm doing labor with a system restore or a new PC setup. I get a sale either way. With the prices of equipment coming down, the only people that aren't making any sales are the ones that are only asking for the repair.

I had another customer ask me about fixing their laptop screen so I quoted a price. "Well for a little bit more I could buy a new one." "Yup, and I'd be happy to set it up for you too. What would you like to do?" Again, I'm getting a sale either way. I'm actually raising my service rates next year.

While tablets and smartphones are great, you're at the tip of the spear in our industry. It will still take awhile before all the new trends filter down to businesses and consumers. Only a small percentage of my customers even have a tablet (I don't myself). It will still be a few years before I look at tablet / smartphone repair as a viable repair service. I actually want to cut the number of services I have and focus at being the best in what I provide. Too many people focus on going wide and trying to capture as many customers as they can instead of going deep and being the best at what you do.

 

[1aComputerServices]

Got to sell them value added products/services and get a sale or business no matter what.

 

[TopLevelComp]

I'm moving away from residential computer repair as a whole. The market is saturated with pizza techs, and the unemployment rate here (Sitting at 15%) is such that the people are willing to hire the pizza tech and balk at my prices.

I'll be focusing on SOHO/Small + Medium sized businesses. I have enough business clientele that I can have referrals, and also have them as references. I'll begin focusing on complete maintenance contracts, as well security for the businesses that need them, including RFID readers, updating the production areas to include Wi-Fi and work station computers to track the stages of production for the management and customers. I've had a few businesses talk about it but I never really gave it much thought until now.

 

[geeknz]

This problem has been on my mind recently too.

However I take comfort in the fact that we are aware of it and are making plans to deal with it. The worst thing we can do is stick our heads in the sand and believe that the current forms of computer systems will be around forever.

A few conclusions that I have made so far:

Up until recently I have neglected hardware sales (such as new laptops etc) because I want to remain 'unbiased' as a repair technician. In many ways though it is crazy not to sell new systems because (assuming you are doing a good job) customers trust you implicitly. There is also good profit to be made and can lead to setups and other services too. If you are an ethical person there is nothing wrong with selling hardware as well. Plus if you only sell good quality hardware to begin with then the chances of customers coming back for warranty claims is minimal.
By just adding hardware sales my bottom line looks much sweeter.
I agree with Richmond- whether people fix or buy new we can benefit and give the customer value either way.

I suspect also that even though Windows is evolving there will always be bugs and problems with it... just look at the amount of Windows Updates that continue to pour in from Microsoft HQ every day.

Another thing... for me, and I suspect many of you reading this - virus removal or security threats represent a large portion of our work. The antivirus software industry is now worth billions of dollars worldwide. There are some very happy shareholders who make sweetloads of money that don't want to see things change. Call me a conspiracy theorist if you want... but I think the viruses will keep coming from 'somewhere' and will therefore keep knowledgeable techies in business.

Something else that was brought to my attention by a trusted and well respected friend in the IT industry, was that over time domestic homes will become more and more integrated with all sorts of gadgets and computers. What this will also include are more sophisticated networks within the home. All of this will require somebody who has a good broad working knowledge to come in and 'sort it out' when things go pear-shaped.

Lastly, like you 16k_zx81 I am thinking more and more about that SOHO space - the small to medium business which may not necessarily need a full-blown server anymore.. perhaps just a good NAS box for files combined with a Google Apps account for mail etc and also some cloud storage for files using dropbox or sugarsync. These SOHO businesses offer more regular, consistent income for us. And till now I have NOT given them enough attention... I must be a slow learner.

That's my 20 cents!

 

[parker.casey]

Alternative income streams such as a web host reselling platform are a good idea. Something to hedge against a slow day. Also, it helps to keep in constant contact with your customers, and get repeat business from courtesy calls. I'm strongly looking at offering a free class just to keep foot traffic up.

 

[DCGPX]

To keep going!!!

Besides that my aim now is to focus on remote support and target SOHO more, backup strategies being the selling point

 

[MobileTechie]

My plan is to do more B2B and less residential. I want to get some kind of small premises and, if the B2B gets going, get an intern to start with residential.

I want to sell more maintenance agreements and virus plans etc. I.e. more regular income.

I agree that usability of OSs, the dominance of the cloud and the final acceptance by manufacturers and developers of the fact that 90% of people just do about 3 things with their computers will mean much simpler computing and less need for our services. However, whilst this includes businesses (so less servers etc), they are driven by competition and so still need decent service. So that is where the ever dwindling pool of money lies as far as I can tell. But I could very easily be wrong.

 

[Tony_Scarpelli]

I think that there are currently more repair shops, in a lot of areas, than there needs to be to take care of customers. Or in business terms there is over capacity that needs to be consolidated. About 2-3 months ago Interpol, FBI and software Alliance with Microsoft's help closed down some Ukrainian servers responsible for the propagation of about 40% of virus, fake security and such. I have seen a 25-40% drop in calls since then. My local friends and competitors tell me that they are seeing the same thing.

The demand of these sites temporarily bought us some time and maybe some as of yet unknown virus group will come down the pike helping to pickup more sales giving us another 6 months of reprieve. (Sounds sick to wait for such a bad thing as virus to come help us out financially).

Consolidation happens naturally as people fail and find other work, big businesses buy smaller guys out closing them down or people take on jobs outside of tech as the economy improves. Generally bad operators, people who don't make a profit in good times, go first but not always. Could be someone is just caught without a war chest in savings. So if you can hold on you might just make it. In each market, metro it will be a slug-fest between survivors to see who wants it the most. I predict the survivors likely spending all their equity or savings to survive, the losers walking away penniless and finding work someone where else.

In my two markets Kansas and California, now everyone is dropping prices which makes it worse as you only get 3-4 customers a day (half of the number in years past) and end up charging each of them half of what you did 2 years ago. So if you are lucky you are making 1/4 daily sales of 2008/2009. Unfortunately all your expenses are more now than 3 years ago.

So it is tough. I just had a NEW competitor drop in to say hi who opened a competing PC sales and repair store 1/2 mile from me. He was a Tmobile sales guy who lost income from the competition in his market/industry and thought adding computer repairs would be a great idea and bolster his income. When I explained the dynamics in Wichita, I thought he was going to cry as he spent his last $69k to setup shop. So to answer another op in another thread last week "no they do not do any market research."

Long story short:

I have recently began taking business clients again. I have not done many servers since 2000. I probably have $4k per month average in business to business revenues which is very nice to help replace a small part of what I lost in the retail break fix business. Luckily, I had the MCSE experience to jump in and take that business. I am also looking for new Cabling jobs-Cat 5/6 as that is quick good money.

I am also working on updating my hard drive data recovery skills. I do not see it as a saving grace but all forms or revenues are welcome and who knows what will allow us to keep our doors open if things get worse?

We are now working on iMac, Ipad, Iphone (our most new addition). We do component repair on laptop motherboards (for the last three years).

I have a very large competitor spending $18k per month on TV ads who has 8 stores. Local business Contacts tell me that he is not breaking even but he is in a death march to save his company. He lowered his prices about six times over the last two years and today the price is 1/2 to do repairs of anyone else in the area, so in the last 30 days since the new phone books came out everyone has met his price. Now, not only are there fewer customers due to the economy, more competitors to divide the revenue pool, but we charge less to those who do make in in our doors. I had my AA call around this week and there is one repair price in the whole city(of all the carry in retail shops). I've never seen this before in 18 years.

It is a fight to keep your doors open until this guy gets his lights turned off, until the economy recovers, until the next new group of viruses come out and give us all a shot in the arm.

My brother is a programmer and he seems to think there is no shortage of people wanting small programs developed. Unfortunately, I can't do that and its not a skill easily picked up out of the blue. It goes well in some network engineer jobs but no so much in my break fix business. It also seems many people are willing to spend on website SEO or development.

I am considering doing Surround sound Theater installations.

I'd recommend that anyone who thinks that their market is contracting and having more competitors enter at the same time, they move aggressively to reduce rent, fixed costs, labor where possible by cross training employees, downsize economize automobiles so that you can do what you have to do in any circumstance. If you can reduce personal expenditures so that you can pay yourself less salary that would be helpful as well.

Good Luck

 

[16k_zx81]

A very informative post, Tony. Thanks so much for those insights!

 

[Tony_Scarpelli]

I usually tend to be much more optimistic and for the last 26 months watched as the economy and sales spiral downward. Sorry to sound bleak it is just that we need to take real stock in the current state of affairs to make it through to the end. I'm thinking marathon of minimal expenditures.

I've not moved as quickly as I could have to cut expenses as I thought the state was temporary. However, I suspect that this is the new normal volume of sales and the only thing to make things better is for competitors to close. That could take some time.

Just like farmers have a few years to a decade of bad times and then a boom time, I think we are in a down cycle industry wide. I do however think that their will be a light at the end of the tunnel for those who choose to fight it out and stick it out.

I am considering some tactical moves to sell one or both of my homes and buy a couple of commercial properties so that I do not have monthly rent. I might even get one mixed use shop with living arrangements in the same building.

 

[altrenda]

Great question and discussion.
We are in a rapidly changing Technology business. We aren't plumbers where the basics are the same as 25 years ago. If we don't change, we will be left behind. There are opportunities out there, but you have to work to find them.

The days of building a business on Windows XP viruses and Blue screens is coming to an end. Computers, like cars, are becoming easier for novices, and more reliable. And any reasonably intelligent person can Google or Youtube a solution to many of the common problems.

But, around here there are car repair shops almost on every corner, the good ones with more work than they can handle. And good tech guys are the same.

For Laptops, you need to be able to handle Macs. The user base is increasing, mostly from less sophisticated users running away from the problems they had with XP. They are buying $1100 Macbooks instead of crappy $400 HP's and don't consider them disposable. I get a lot of work just from being able to speak OS X, and I am working on being an alternative to standing in line at the Genius Bar. I will take their computer to the Apple store in the mall and speak to the Genius for them, even if they have Applecare.(for a fee).

The other growth area is networking. More and more homes and small buinesses need to share files, music, movies, automate backups, etc. And everyone needs reliable wifi coverage for their smartphones, Ipads, laptops. A single wireless router from the cable or phone company won't cut it.

Times are tough, but I've found we have to constantly change with the technology and the times to survive.

(sorry for a long first post)

 

[1aComputerServices]

I am considering doing Surround sound Theater installations.

This has been very lucrative for me but generally picks up around the holidays and then nose dives after that. Diversifying is essential.