Posts Tagged ‘deals’
Computer Shop
Tuesday, August 2nd, 2011
Computer Shop Business Model is Fundamentally Flawed
If you are starting a small computer shop, you need to understand an important reality – you can’t build your business on short-term services and one-shot deals if you want to stay profitable. You need to focus on ways to attract the attention of those prospects that will be interested in long-term services if you really want to build a profitable, sustainable business.
Many that start small computer businesses get it all wrong. They think they need to emulate huge companies that provide services to tens of thousands, or even millions of customers and clients per year in order to stay in business. These misguided retail start-ups focus on quantity of customers rather than quality clients, and find themselves with incredibly price-sensitive short-term customers and very low profit margins. As a result, these shortsighted newbies struggle to make ends meet and eventually go out of business. Now if you want to succeed as an owner of a small computer shop, make sure you focus on long-term relationships with clients that will pay you high rates for on-going services and appreciate your level of expertise.
Why? Because the traditional business model for computer retailers frankly hasn’t been viable for a very long-time. Clinging to this fundamentally flawed approach to operating your business can be very hazardous to your long-term… even short-term survival.
The following 3 tips can help you fulfill the important needs of steady, high-paying clients as you build a business plan for your computer shop.
- Focus on Proactive Maintenance Services. Are you tired of hearing from your customers only when something breaks … and finding out the problem had to be fixed yesterday? If you want to really fulfill the needs of clients that will be with you long term, you must get out of fire extinguisher mode and move into the role of proactive network manager. This means you need to build your shop around proactive maintenance services rather than just dead-end, low-margin one-shot deals.
- Explain the Real Cost of Downtime. Before your prospective clients can really be sold on the value of long-term relationships and on-going maintenance, you will have to help them estimate and understand the real cost of their downtime. Your computer shop should be armed with the skills to calculate downtime realities for each and every client. To figure out this cost, simply take a prospective client’s net income or bottom line last year, then divide that figure by roughly 250 business days and 8 hours per day. So, as an example, if your small business client had a net income of $1,000,000 last year, your client will lose $500 ($1,000,000 divided by 250 business days, divided by 8 hours per day) in net income for every business hour of downtime…. or $4,000 per business day or $20,000 per business week. And a $1,000,000/year small business is a relatively small business. When you present these numbers to your prospective clients, they will be far less likely to object to a small investment each month to keep you on call and protect them against technology emergencies that can leave them high and dry.
- Weigh Costs vs. Benefits. As you start your computer shop, be ready to weigh the costs of downtime and the benefits of on-going relationships. Properly planned, designed and installed networks are generally very reliable. But as you try to sell a potential client on the benefits of proactive network maintenance, you need to steer the conversation towards a cost/benefit analysis. First, quantify the concrete benefits you’ll provide to your clients – i.e., proactive planning and maintenance, emergency and after-hours service at no additional cost, etc. Then present a monthly recurring cost based on your estimated labor billing and required service margins. As an example, you might be able to profitably deliver services at $500 – $1,000 per month based on a two-year commitment. The real deal clincher will come however when you start to discuss the cost of doing nothing to prevent downtime (you can go back to that quick calculation in tip #2). When you’re talking about even as much as a $1,000 per month investment from your client and they know they stand to lose thousands of dollars a day if they don’t have a reliable computer professional on call, they will see clearly how hiring you will still make them come out ahead. And don’t forget to bring along your testimonial letters and case studies that validate your marketing message.
In this short article, we talked about 3 tips to help you base your computer business on fulfilling the needs of steady, high-paying clients. Learn more about how to start a computer shop and attract great, steady, high-paying clients now at http://www.ComputerShopSecrets.com
Copyright (C) ComputerShopSecrets.com All Rights Reserved
About the Author
Joshua Feinberg is the author and editorial director of the Computer Consulting Kit Home Study Course, which helps computer consultants, VARs, integrators, solution providers, and managed services providers get more of the best, steady, high-paying small business (SMB) clients.
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