Streamlining Your Computer Business

Article by Tony Scarpelli of CFI Computer Repair:

I worked with the Small Business Administration as a consultant and have helped many businesses start and grow. So I will share some techniques that I have found to be helpful to me and others.

If you are truly a one man show with no wife or girlfriend to handle calls, receive mail and send invoices, then it’s a greatly different operation than if you have a receptionist, office manager or girl in on a Friday. It is even more critical you’re setup to be efficient and effective from the get go. You must streamline every process since sooner or later you will be successful and have to work more hours than there are in the day.

Time Management

Getting a good $10 book on time management is highly recommended but the basics are to write down all your information in one organizer, put a to do list in there, calendar items, objectives, goals and all your contacts. Smart phones are great but always have a written copy in case you lose the phone or it breaks. Besides, paper needs no battery.

Then prioritize your activities based on how they affect your long term importance; Write everything down and track your performance which helps you learn where the “time black holes” are and avoid them. Learn to say no to time wasters and how to delegate.

Administration

Easily one third to half of your time could be spent with administrative duties. This cuts your time to make earnings in half right off the bat so we need to find an efficient way to perform every support task that does not directly make income. We call these duties Administration and include accounting, customer tracking, business process such as work orders, invoicing, payment receipt and cash flow management.

Accounting

Learn and use a simple program like QuickBooks which costs about $149 for single user. In my opinion, Quickbooks has the edge in easy to use computer invoicing and basic customer resource management. The second way is to outsource this to someone familiar with accounting, if you can this is a good investment. The third way is to use OneWrite plus a checking system which records your receipts and deposits, expenses and checks as you write the check.

As you write the deposit or check and tear the check, a carbon copy is made on the business journal or ledger. Later, you can also locate this amount to the correct column under the proper headings: Marketing, rent, payroll and purchases. Later those columns are totaled for the month and become your basic profit and loss statement for that month. Nothing beats the simplicity and elegance of this system. As good as Quickbooks is when I am really bogged down, nothing beats OneWrite for speed.

Customer Management

Again Quickbooks does a good basic job of recording who your customers are and what you did for them by keeping an electronic version of the invoice or work order. Other more enhanced ways to do this are using a CRM like ShopManager or CommitCRM. It takes time to learn and to enter each invoice, record receipt of each payment, deposit each payment, write each check and balance the checking account. If you do not have time to do these activities in a timely and accurate way then perhaps you might decide to use New England Business forms. For about 37 cents per invoice, the NEBS Contractor invoice is just the ticket for our industry.

I write down the details at once and keep the manila last page as hard copy for my permanent records which may later be put into a computer CRM or Quickbooks. They have a tear off equipment receipt to give the client at check-in and another copy to attach to the computer. The customer can sign the ticket which has a legal contract on the back of it which protects me if I ever have to go to court with this guy. I’ve never needed it but it has some useful verbiage such as the defendant paying court costs and other expenses above the invoice in the case of winning in court.

I use the 2nd ‘yellow’ copy as work order which I attach to the computer, so I may better keep track of what I am supposed to do with each item, like backup or no backup, and all contact information if I need to call them from the work bench. I write notes as I work through the repair which I later add to the invoice and for my records. This is particularly useful when time passes between check-in, repair and pickup. All documented. It is dead simple to use.

Purchasing

I use Pricewatch.com to find new vendors. Once I find vendors I like I try to use them as much as possible. It is helpful to process warranties if you know that each item came from only one of two or three vendors. This brings up administration of inventory. When your shipment comes in, print out labels for each invoice from a vendor and then put one label on each item purchased. It has the Invoice number, vendor code and date. This helps me find the invoice when making an RMA six months later and I am too busy to search for this nitpicky stuff. I have found if I do not do RMA’s immediately they sit around getting dusty until it’s too late to collect my credit for the defective part. So make it easy to process immediately and get a good part back.

Communications

You’ll need a cell phone or smart phone with the work number forwarded to you at all times when you are out of the office. You don’t have a secretary so you answer all your calls. Marketing calls and family you can call back when you can. Handle new business inquires as quickly as possible and promise a follow up call when you get out of your current clients office. After all, your current clients doesn’t want to pay you $120 per hour to talk to other clients.

Making Money

No matter what business you are in, it’s not your money until you actually perform the work and get paid for it. For this reason I hate to book appointments for later. I prefer to do the job as soon as possible. Just in time. I cannot tell you how many appointments I’ve seen canceled never to be re-setup. Then I wish I had taken them immediately.

The customer is hottest when they make the call. Better if you can say I will be there in 45 minutes, or tonight after 4pm. Even if you go there just to take a look and tell them you need to take it to your shop to work on it where your tools are and makes the job faster and cheaper for them. I would rather work until 10pm any night than set an appointment for two or three days from now and risk this fish getting off the hook.

Follow up

Thank you post cards printed from online printer are easily ordered and cheap. About $100 for 1000 cards color. No job is done until you follow up with each client to ensure that they are happy with the work they received. It’s nice if you can call every client. You can and probably should hire a part time college girl to do this but until you do, sending a nice thank you card is the minimal follow-up that you can get away with in my opinion. This is also a time saver over calling each client. I send thank you cards a few days after they pickup their computer or after I perform the work on-site.

Since I am sending a thank you card what else can I accomplish with this? My thank you cards tell the client that they are appreciated and that they will receive a $25 gift certificate when this card with their name and address is brought in by a new customer. This helps my word of mouth referrals. Some of my clients get me 2-3 referrals between their services. Of course, I take extra good care of them as they are my promotion champions.

Automate backup

I would love to have an automated backup system for all my client backups and I am about half way there but until that is perfected using either gigabit networking to set and xcopy the backups to my backup server, or when that is not possible, I’d use a 500GB USB drive which is also a good fast alternative.

Automate installation

Using Acronis Image Copy is a fantastic way to do a reinstallation in 15 minutes rather than 2 hrs. You still have to load drivers when you finish the image. Setup the image with all your branding, freeware, antivirus, malwarebytes, freeware office, and such, when you are happy you can make a source image.

You must do this for each OS that you will use. For example, XP Pro, XP Home, Vista Home, Vista Business, Vista premium, Media center, Win7 Pro, Win7 Home. Since you are busy, you don’t make them until you are already setting up a client’s machine. Once each client’s machine is perfected you use his system to create your master source image and copy it to your server. Since the Universal restore doesn’t care about hardware it doesn’t matter which system you use to create these images. Eventually you will have one of each OS in your library so future restores are all a few minutes each as if they had a F11 restore key.

Do not give away service

One of the most important and difficult things to get a new entrepreneur to learn is “Do not give away service.” It does not do what you think it does. It does not cement relationships, it creates mooches. It does not create loyalty, it does the opposite. To make matters worse if you are already very busy, you must make something for each and every productive hour you have. Get paid for your time and send them a $5 coffee mug if you feel you must cement relationships with gifts.

Being Busy and Growing

If you are always busy to the point of not keeping up, going home tired every night, then it’s a good time to hire an assistant. If you cannot find the right assistant you can at least consider a slight rise in your base prices. The raise does two things for you. It increases your cash flow and profits. Since all your bills are presumably already covered, the raise goes straight to your bottom line and your personal checking account. A side benefit is that it should help reduce your busy work a bit.

If after a price increase, you notice your schedule starting to slack a bit, that is good as that gives you more time to prepare for your customers and regain some needed perspective and regrouping. Once you are busy, never be afraid to lose clients especially the less profitable ones. You cannot be all things to all clients so as you grow you might well outgrow some clients, particularly the clients who demand the most and pay the least. We all have them. They get in the way of getting new clients that represent your current state of operation.

You need slack time for training and learning new things. You need slack time for improving your processes. You need slack time for performing warranty work. You need slack time to think about your business and come up with better ideas. You need slack time to be available to pickup new clients. You need slack time to pickup more profitable clients. You need slack time to rest and recuperate from all your hard work.

Once you are busy, money should not be a problem unless you are completely undervaluing yourself or giving out credit. Both of these are critical errors for a small business owner to make. If so, please reassess this situation and increase your prices immediately. You can afford to lose some dead beat customers or some marginal ones too. Look at it like this, you need to let go of the unprofitable clients so that you have time to take on some more profitable ones. Unfortunately we sometimes have an emotional connection to our first, small clients who are now holding us back.

Parts

Here is a massive profit opportunity and a tremendous time saver for you at the same time. Imagine every time you need a hard drive, floppy, cable, power supply, video card, network card, cable, case, keyboard, mouse, UPS surge protector or any other adaptor, you can snap your fingers and wow it’s there. Wouldn’t that be great? Onsite you would recommend larger hard drive, upgraded memory, wireless mouse, UPS or surge protector when you see the client doesn’t have one. Or a wireless mouse and keyboard when you see the mess it is getting to their computers under a tight desk. Or a 50 foot cat 5 cable when you want to move the wireless router to a more suitable location.

It could be that easy. Now think of all the time you take during jobs to run back to the shop or to a store like Wal-Mart or Best Buy to pick those items up? Most of us start out buying inventory “Just in Time”, or as the Japanese call it “JIT Inventory”. That is a killer waste of time. So if you have a few bucks, it is a very good time to order enough inventory to keep you a month or two. Yes I know there are batteries that you cannot inventory, there are laptop parts you cannot inventory as there are hundreds of options none of which you should carry in inventory. But when it comes to workstations and servers there are only 12 to 15 parts that are mostly standard and which you need every day or week.

How do you decide which parts to carry? I’d start by carrying every part needed to build a computer. Then I have every part which might break on a client’s computer. Also, it would be nice if I got a chance to sell a custom computer that I had the parts in my van and could build it on the spot if need be. What does it take to build a PC? Case, Power supply, Motherboard, CPU with fan, RAM, DVD/CD, Floppy, Hard Drive, Keyboard, Mouse, Memory card reader, OS Home and OS Pro.

OK, its more complicated than that. You need an AMD system and an Intel system. You probably also want to have a PS2 keyboard and mouse as well as a USB keyboard and mouse. So now you may have $400 worth of parts at wholesale prices sitting in a plastic storage pail in your truck. If you don’t like the sound of things sloshing around, pack shipping foam between the boxes. You will see your onsite sales double just from the recommended upsales you make while on site.

OK, so now you have a store location. You have to have parts to fix most workstation contingencies. Buying from Evertek or Pricewatch with shipping is cheaper than any local supplier, particularly if you can buy 3-10 at a time of each item. But this time you have probably already had and delivered a custom order of 6 workstations. So take up to a few thousand dollars and order the entire inventory which you can reasonably expect to use over the next two to four weeks. Look back at your sales for the last 30 days and that is what you should order.

You spend so much time stopping to order one power supply, one set of RAM, one Hard drive, so order all the things you need to build a few new computers and carry that inventory in a tool box in your trunk. You should fit enough inventory to build one if not two complete computers in your cars tool box, minus the computer cases. A case can sit in the back seat of your car. I made a rack for my van to hold 3 upright towers to move client’s computers without denting them and I keep a new case in it for sell.

Avoid trips locally to buy parts as you pay too much for local sourcing and more importantly it takes too much of your very valuable time. Learn to value your time as an asset. You can always make more money but you can never make more time. So value yourself and your time.

Get Help

By this time (if you have not already) you should find a small business ad agency or locate a graphic artist to help you. Sit down and figure out your brand, image, logos, looks and who you are. Put that same image into all your customer contacts: website, Yellow Pages, thank you cards, around your store if you have one, flyers, PDF’s that you email out or newsletters.

If you are a professional making $60-80 on the bench and $100-120+ per hour on-site, and you are busy then you certainly can afford to pay an ad agency, graphic designer, accountant and the occasional temp girl on Fridays to help do the things that need to be done but do not directly make money. This will allow you to focus on making more money. So long as you do all the work yourself you just have a job. It might be a well-paying job but it’s a job. Even at $100 per hour you can still only bill 1200 hours a year. However if you push yourself to learn to work through others, now you can make 10 times that. The first step in learning to work with employees is to learn and experience working with companies or contractors to do things for you.

I can fix computers and networks faster than my accountant can. He can do my accounting faster than I can. So I prefer to do computers and take a bit of that money to pay him to do my accounting. I can also design a lousy website. I charge an appropriate amount for my time so I can afford to hire website guys, same with accountants, lawyers, bill collectors, word processors, a Friday temp girl and sign makers.

Employees

It is true that I have to take some time away from making money to hire, train and supervise my employees but it is also true that I can make more money eventually with employees helping me. Don’t dive into hiring if you are not used to it.

I say start delegating to businesses to perform your marketing, advertisements, design, accounting, phone service and such for a reason. Delegating to other business owners is much easier than supervising a new employee. This is mainly due to the fact that they are already motivated, trained, experienced and responsible to make theirselves a profit. So they are self supervising to a point. So get used to depending on your business network. They still require supervision, just not as much as an employee. Later you will develop those supervisory skills into supervising employees as you grow.

Billing

One last thing. I referred to bill collectors. Bad, Bad, Bad. Fool me once shame on you, fool me twice and shame on me. Get away from any billing. Get used to getting paid at the time work is performed. It is the new way of doing business. I have 5000 clients and only about 5 or 6 of them are allowed to carry a balance with me from month to month. That is only because most of them are people I barter services with. The only way I will get stuck with an unpaid bill with them is if one of them dies.

There are some points to making ‘paid as you go’ easier to do. When selling and installing a computer or small network, mention at the time of ordering that computer that it will be cash on delivery. It’s ok to say “I have a lot of money out on equipment right now so I had to go to cash as we go”. Then fax or email the invoice to the client or to his secretary before you deliver the computers and call and ask that a check be made out before your get there. You can make this sound easy by saying “I wanted you to have the exact amount so you can prepare the check; I have to get it into the bank by 3pm tonight to cover an order I have to make tomorrow”.

The main thing you need to change is your attitude about doing work without pay. The rest follows.

Never be ashamed of telling your client you need the money when service is performed. End of story.

Any customer who doesn’t understand that should be willing to pay $20 or more per hour billed for that privilege. Back when my rate was $100 per hour for three or so years, any clients that asked to be invoiced were automatically invoiced at $120 per hour. There were a few of them and I gently let them know that their charge was to cover my additional costs of managing the accounts receivable, possibility for loss, opportunity cost of not having the money I earned; they get the message. Some will offer to pay you cash, like green backs, $100 bills. Never turn cash or prepayments down.

Sometimes we get the feeling we have bad customers but the truth is we train our customers. It starts with our own belief system and then we relay it to them. We turn our customers into freeloaders. So work on yourself and your attitude, the customers will follow.

All hardware should always be COD or prepaid for special orders. You cannot afford to invoice, bill, wait or chase your customers for payments. Get paid up front or get new customers. You can train customers to be lazy, lax, late payers or even mooches. Turn that around or you are just in a go no-where job, stuck never making any real money. There will always be that one client that takes you. Next year it’s another one, and the year after that another. Wean yourself and your clients off billing. CASH is KING. You can always choose to give a refund later if something goes wrong.

Ask yourselves, especially if you are busy, how do I want to spend my time next week? Finding new customers? Making more money? And getting paid daily? Or calling and chasing clients who owe me money? That is the worst thing in business. You work for your money twice, once to earn it and twice to collect it. That model makes no economic sense. Try getting out of Sam’s club or Wal-Mart with an IOU. “Bill me, I’ll pay you as soon as the invoice comes in, you can trust me.”

These are the critical success factors in the Computer Business as I see them. Managing cash is the most critical. Of course I didn’t touch on keeping skills current and being proactive. First you have to do the above list. This is all 100% a reactionary list. Next you work on the proactive list. The proactive list gets you from where you are to where you want to go either by growing or becoming more free personal time wise.

Article by Tony Scarpelli of CFI Computer Repair