Competitors, sometimes they’re a pain and other times they make you think about the way you do business. For the most part I’m on pretty good terms with most of mine; many large retail technology repair centers send work my way because they don’t consider me a threat. It seems like I intimidate the smaller ones who like to point out flaws in how I run my business.
Last week each of my stores received a series of calls from a competitor asking if we stock a list of very specific items. Some of the items I keep in inventory, others I can’t justify why I’d want to keep on hand. I look at inventorying much the same way a grocer keeps tabs of the expiration dates on dairy items. If they sit too long the items have no value.
I learned early on about flipping inventory as soon as possible. It didn’t take a business degree from a prominent school for me to learn that products kept on my shelf quickly depreciate to a value much less than what I paid. In the early days of not turning my inventory quick enough I lost a ton of money to technology that was a generation or two old.
Over the past fifteen or so years I’ve worked hard to develop relationships with distributors that can ship and supply items within a few days. I find vendors with warehouses close to my shops that actually fulfill items sooner rather than later. From a pure business perspective this may mean my margins are smaller, but I’m able to move a job out my door sooner which translates into cash flow.
One of the biggest blunders businesspeople in the technology industry make is buying on credit. Fees accumulate very rapidly on borrowed money and rapidly cost more than the value of the item. In other words, if I bought $1,000.00 in parts on credit I could owe $1,200.00 on an item valued at $900.00 when it finally sells. It doesn’t take long before I’m upside down in debt.
Large chains can absorb a loss because they buy in huge volumes and make their profits from the first 80% of items sold. When an item becomes out of date or technology changes the big stores can liquidate those items by reducing prices. Small stores, because of our purchasing power, simply can’t afford to sell items for less than what we paid.
In previous articles I’ve talked about high margins on certain items like cables and software. Some items, like these, are easy to inventory in quantity and because they’re commodities can be kept almost indefinitely. There are exceptions to that rule and the proof is in dusty old boxes on the back shelves of my stores.
Every businessperson makes mistakes and even though I’d like to think I’m pretty infallible I’ve been known to make a few. Due to misdiagnosis or simply ordering an incorrect part we end up with a few excess components. I’ve learned to incorporate those parts into discounted systems or they end up being liquidated online.
Owning a technology repair company is more than simply understanding how an iPad, computer or game system comes apart. I’m constantly juggling vendors and comparing lead times while I decide if an increased parts cost is worth the investment. A huge part of how I manage my businesses is owed to my competitors who keep me in check by coming to me for occasional bailouts.
(Jeromy Patriquin is the President of Laptop & Computer Repair, Inc. located at 509 Main St. in Gardner. You can call him at (978) 919-8059 or visit www.LocalComputerWiz.com.)