How to Start a Small Business Selling Computer Parts

Tuesday, June 25, 2013

How to Start a Small Business Selling Computer Parts

Computer parts include memory chips, hard disks, flash cards, external storage devices, monitors, cables, input devices and various accessories. The computer industry is very competitive, with small players and established big names going after huge worldwide demand. You can sell computer parts from a physical store, an e-commerce store or an auction site. Parts resellers, small computer manufacturers and owners looking for quick upgrades are some of your potential customers. Starting any small business requires a business plan and adequate financing.

Step 1

Estimate the market size, using statistical data from the U.S. Census Bureau and industry sources. The total addressable market, which is the universe of potential customers, for a small industrial town is going to be different from a college town. You might need to stock parts for desktops in one market and laptops in the other.

Step 2

Identify the potential customers. If you are planning to buy and sell new and used motherboards, memory modules and other parts, your customers are likely to be mostly computer users looking for simple upgrades or small computer vendors who assemble and sell custom computers. If you are planning to sell and service computers as well as parts, your customer mix will include households and businesses.

Step 3

Analyze the competition. There is significant demand for computers, but there is also no shortage of suppliers. There might be several small and large stores supplying parts in your market, in addition to the online vendors. If several vendors are competing for household customers, turn your attention to the small and medium enterprise market -- the real estate broker, the physician, local schools and medical centers. Upgrading existing systems is usually a more cost-effective option than buying new hardware and software systems.

Step 4

Select a location for your store. If you are starting out as a home-based reseller, design a simple search-enabled e-commerce site that lists the parts you have in stock and provides an easy-to-use order entry form. If you are planning to sell parts, new and used computers and provide in-store support services, find a store close to your target market. For example, if you are aiming at the small-business market, find a location in an office building or a business park.

Step 5

Plan a pre-opening marketing blitz. Depending on your budget, invest in newspaper ads, online ads and radio spots to generate customer awareness. Follow up with personal contact, which includes knocking on office doors, dropping off fliers in the neighborhood, sending out press releases to local media outlets, aggressively promoting the store on blogs and social media, and networking at community events organized by the local chamber of commerce and other business groups.

Step 6

Manage costs by starting small. It is better to establish a reputation for superior customer service and quality with a few customers before making expensive long-term commitments. For example, if you start by upgrading one real estate broker's office in a business park, he is going to be a reference for other brokers, lawyers and insurance professionals in the area. Word-of-mouth promotion does not cost anything but it brings in new and repeat business.

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About the Author

Based in Ottawa, Canada, Chirantan Basu has been writing since 1995. His work has appeared in various publications and he has performed financial editing at a Wall Street firm. Basu holds a Bachelor of Engineering from Memorial University of Newfoundland, a Master of Business Administration from the University of Ottawa and holds the Canadian Investment Manager designation from the Canadian Securities Institute.

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1 comment:

Selling Computer PartsFebruary 24, 2014 at 8:56 AM
Computer Parts, Computer Parts Business, How to Start a Small Business Selling Computer Parts, Selling Computer Parts
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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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Tuesday, June 25, 2013