How to Start an Electronics Business

Thursday, March 27, 2014

How to Start an Electronics Business

In this, the technological age, there are new gadgets and electronics coming out every day. Having the latest in electronics is all the rage - HD, iPods, Blueray and Bluetooth. If you're interested in getting into this technological craze by starting an electronics store, follow these steps. Start by making sure you're well-educated in business policy and procedures by taking online classes.

Steps to Be Taken Before Starting an Electronics Business.

An electronics business provides a variety of mechanical products and parts to consumers, including cell phones, televisions, computers, peripherals and components. If you plan to open this type of business, it's important to prepare yourself with information so that you won't suffer the same fate as large electronic stores that failed like Tweeter and Circuit City.

Instruction:

Step 1

Get your financing in order. Before you can start an electronics store, you need to ensure that you have sufficient financing to do so. You may want to use some of your personal savings to do this, but make sure you can still survive if your business were to fail and you were to lose this money. You can also approach your bank about a personal or small business loan. You will need to have a good business plan prepared to present to them. They will want to see that you have already invested time and effort into your electronics store before they invest one cent in you.

Step 2

Find a store or building. Your electronics store will need a place to call home, and this isn't a decision to be taken lightly. The location of your store is closely linked to how successful it will be. Choose a location that is in a high traffic mall, or on a high traffic street. A spot where crowds frequent is your best option for ensuring these is constant flow in and out of your store. Secure a lease on your selected location (or buy the property, if you're confident), and get to work transforming it to look like an electronics store.

Step 3

Hire some help. You won't be able to start an electronics store alone. You will need to go through the interview and hiring process to find sufficient staff for your electronic store. Look for people with interests or expertise in electronics. Your customers will appreciate working with people who know what they're talking about. If you hire someone that has no previous experience with electronics, make sure that he is properly trained before sending him out onto the sales floor.

Step 4

Purchase store fixtures and inventory. You will need shelving to store your electronics on. You might be able to find some of this second hand or at a recycling depot. But you will likely need some specially made storage as well. Decide on the layout of your store and then purchase shelving to suit it. Then get to work acquiring your inventory. (This is where your initial financing will really come in handy - it won't be cheap to stock your store). Your suppliers will likely send you some signage as well, and this will help you to add color to your store.

Step 5

Advertise. You want your grand opening to be a huge success, and you can ensure this by advertising and through word of mouth. Take out an ad in your local newspaper and offer incentives to the first customers in the door. Have lots of sales going on during the first few weeks that will work to draw customers in. And don't underestimate the power of signs and gimmicks out front of your store. Anything you can do to make people notice your store will result in more people coming in for a peek. That's how you make your profit so find ways to get customers into your electronics store.

Step 6

Open with a blast. On opening day, make sure your staff is prepared and excited. You want the vibe to filter through to your customers so that everyone excited about your electronics store opening. Be prepared for a busy day. And take time to appreciate the results of your efforts to startan electronics store.

Now you're ready to start your business. Just remember, it always helps to keep your skills current with regular refresher courses in business management. You can now take these classes online, so you can continue to work while enhancing your education.

Examine Other Electronics Businesses

Before you start an electronics business, examine and understand the business models of existing electronics businesses. This includes the average price markup charged on goods, strategies for customer satisfaction, and managing supplier relations. You need this information to set your own store policies and prices competitively. Compare successful electronics outlets with those that have closed or failed. You can download detailed profiles on established electronics businesses (e.g., Radio Shack, Best Buy) at such websites as Allbusiness.com and Hoovers.com. Business case studies are available from Harvard Business Publishing's website (see resources).

Create a Competitive Business Plan

Due to the competitiveness and high risk of opening an electronics retail store (10 major chains failed between 1986 and 2007 alone), it's imperative that you create a complete business plan that focuses on your competitive advantages. Use the research you gather from examining case studies and business profiles, as well as any of your own personal experience in electronics, to demonstrate why your electronics business will survive. For instance, if you've managed an electronics store, you'll have knowledge of the inner workings of this type of retail business and you might have an advantage over other new stores.

Raise Funds

An electronics business requires a significant capital investment, so raising funds should be a top concern in the planning stages. If you'll be opening up a brick-and-mortar storefront, you'll need to put up money for various initial needs, including inventory, the store lease, store fixtures, storage space, advertisements and employee wages. For an online business, you need to factor in website creation and maintenance. You can start the process of raising funds by contacting private investment firms and lenders. You must present your business plan to possible investors or lenders, fill out an application and prove your credit worthiness as well as your experience in the field. You should also start building up your personal coffers and talking to family and friends.

Find Out Requirements of Electronics Suppliers

Before you lease space or spend money on your business, you need to investigate the terms and conditions of various electronics suppliers and distributors on the market. You should also call well-known manufacturers of electronic products to find out the requirements for establishing a relationship. This may include a minimum order amount, a business license to prove you are a state-recognized business, and references from other business owners. A distribution representative at the company is the best source for this information. Some manufacturers limit the number of electronics stores they will contract with directly.

Reference

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1 comment:

Electronics BusinessDecember 11, 2013 at 11:21 AM
Electronics, Electronics Business, How to Start an Electronics Business
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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Thursday, March 27, 2014