3 Ways to Fail in the Computer Business

Nobody wants to fail, but there are some very real traps you can run into in the computer repair business. In this article, I am going to point out three common ways to fail in the computer business.

Doing Everything Yourself

This is one of the biggest issues I see with new computer businesses. We are tinkerers by nature and we can figure out how to do just about anything given enough time. That’s one of the reasons why we become computer technicians.

The problem is that when you become a business owner, your time becomes much more valuable and you should only be focusing on the higher-end tasks that only you can do.

For example, many computer technicians choose to create their own websites to “save money”. If they decide to setup a WordPress site, they have to choose a web host, buy a domain name, setup a hosting account, create the databases, install WordPress, install a theme and learn how to tweak the theme to get the look they want. They then need to install the various plug-ins, learn the optimal SEO setup and more.  This process can easily take anywhere from five to ten hours.

If the technician charges $50 per hour, they didn’t necessarily save money. Instead they lost anywhere between $250 to $500 of time. They could have had a professional setup a simple website for less than this or they could have used something like Tech Site Builder for $19 a month (which took me less than half an hour to setup in my tests).

It’s best to outsource the work you aren’t experienced with and use those 5-10 hours to fix computers at $50+ an hour. If you aren’t busy yet, you can use that time to meet and greet potential clients which could potentially bring you in thousands of dollars of work.

I actually recorded a podcast that goes deeply into this topic and its well worth listening to, even for established businesses.

Don’t Look at Your Metrics

The technical definition of a business metric is a “quantifiable measure that businesses use to track, monitor and assess the success or failure of various business processes”. The more exciting definition is that allow you to figure out your “secret sauce” or “magic formula”. This is what businesses pay hundreds of thousands of dollars for when they buy into a franchise. The original stores recorded their metrics, figured out what works best and created a system that works.

In our business, a simple example of using metrics to figure out your optimal formula would be advertising in a variety of places you think will work. Then tracking not only how many new clients each source brings you, but also how much money they spend.

For example, you might get more new clients from advertising in the local “Dollar Saver” magazine, but the clients from the “Yacht Owners Monthly” magazine nets you more money overall. The Dollar Saver magazine sounds like it works better because it brings more clients, but it takes more work to make the same amount of money. With the time you gain from working less, you can use it to seek out more of the “Yacht Owners Monthly” types which brings you even more money.

Some of the key metrics you’ll want to track is:

• Sales revenue – Obviously you’ll want to know your overall position of income minus costs. It is wise to look at your sales revenue for each product or service you offer and find out which one makes you the most money.
• Cost to Acquire Customers (CAC) – Its important to know how much it costs to obtain a new customer from each source. It helps you learn how effective your advertising is and how high you’ll need to set your prices to make the job profitable.
• Lifetime Value of a Customer (LTV) – Repeat business is important in our industry. The more repeat customers you have and the more those customers spend, the higher
  CAC you can afford. For example, advertising in the “Yacht Owners Monthly” magazine may cost much more up front, but again you may find that they are more loyal and spend more over time. Which still makes it a better choice than the Dollar Saver ads.

To find this sort of information, most Tech CRM’s have the ability to pull up this information. You might also need to look at your accounting package.

Saying Yes to Everything

You will most likely have many different types of work come through your doors like laptop repairs, mobile phone repair, data recovery and more. The initial thoughts of a new business owner is to take on all work you can get. More services = more business = more money. Right?

Wrong. Not all tasks are equally profitable.

In fact, some tasks like mobile phone repair are often unprofitable for most businesses. Charging around $100 for an iDevice repair can take 2 hours to fully complete, and then you have to account for the time spent managing part orders. It’s just not worth it.

It can be done profitably if you focus your entire business around it, but its best to outsource that kind of work if its not your primary focus.

Some tasks like data recovery can even land you in legal trouble if it’s not done properly. Generally those tasks are best left to trusted data recovery vendors and most of them have a partner program where you can still make money for every job you refer to them.

For more information about this topic: Derrick Wlodarz wrote an excellent article about trimming your service offerings and why you should do it.

That’s it for this article, what are some of the business traps that you know about or have even encountered yourself? Leave a comment below.