(Updated March 2018)
Cell Phone Repair as a business opportunity
You want to start a business and Cell Phone Repair is on your short list. It’s a billion dollar industry that’s growing, requires minimal investment to get started, and the basic skills can be easily acquired.
This article will discuss why the cell phone repair business is still one of the top business opportunities for 2018.
The U.S. Economist Professor, Gregory Hamilton, shares that nearly 25% of all smartphone users have cracked screens. Cell phones are ultra-portable devices with glass displays, and are often used single-handed.
“Ten thousand cell phone displays are broken daily in the United States alone”
Even though cracked screens makes up a large percentage of the cell phone repair business, they are not the only issue. Battery issues. Speaker issues. Camera issues. Connectivity issues. Virus and performance issues. The list of issues driving the mobile repair business are many.
But aren’t cheaper cell phone prices leading to less repairs?
Yes. The price of low-end smartphones has dropped and this trend is expected to continue. However, the price of popular high end devices are increasing and this trend is also expected to continue.
2018 will mark the year where top-end smartphones reach $1,000USD. And for Apple’s iPhone X and Samsung’s Galaxy S9 the un-subsidized cost for both devices already exceed that price.
In most cases, the cost to repair a broken screen or replace a faulty battery still makes economic sense regardless of the price-point.
But isn’t the industry growth slowing?
The December 2017 Ibisworld Cell Phone Repair Report shares that the US industry had an annual growth rate of 5.5% between 2012 and 2015. US annual growth rates are expected to be between 2-3% through 2020.
What do these numbers mean? Firstly, yes, the industry growth rate is slowing. It means that better planning and execution is necessary to compared to earlier years. However this is true of all markets as they mature.
Despite this the following remains true
Despite the recent changes, as the cell phone repair market matures, the following remains true:
- Very low cost to entry
- No dominant nationwide/global incumbent franchises
- Lots of opportunity exist for smart business owners
Types of cell phone repair operations
There are two main types of mobile repair businesses. Storefront and Mobile Repair.
Storefront cell phone repair businesses have a physical location. These could be in a plaza, street facing, warehouse, inside a mall, anywhere. The storefront instills more trust initially among first-time customers. These locations also allows the owners to engage in traditional brand building.
Great locations include high trafficked areas and can be an important source of new leads and customers. This also means that the physical store location becomes one of the key business expenses, and the owner will need to ensure that the shop has staff to cover regular business hours.
Mobile cell phone repair businesses are operated in private locations (not accessible to the public). Mobile repair operations typically offer repairs by pick-up or mail-in services. These options offer convenience to customers, especially for those who are very busy.
The ability to start up the business without a storefront allows many repair entrepreneurs to operate from their basements and garages. This option dramatically lowers the owner’s start-up business costs.
In the case of mobile repair shops sales and marketing operations are critical to getting the first customers. Because these businesses do not have physical locations owners need to ensure that all aspects of the business are presented as professionally as possible including website, repair quotes, and repair ticketing.
Why a cell phone repair business over a cell phone retail store?
Cell phone retail shops sell new or used mobile phones and related accessories. Why should you focus on a cell phone repair instead of a cell phone retail operation?
The answer is simple. Profit margins.
The profit margins enjoyed by cell phone repair shops are typically extremely high. The main costs are the parts and labor. This can lead to margins of over 100% on many services. When compared to selling cell phones in a retail environment, the highest margins typically go to refurbished devices, with margins of 20% – 40%. New device sales are typically under 25%.
Let’s say you can average $80 per repair and you do 10 repairs each week, that’s revenues of $800 weekly. Chances are those 10 repairs could take up 5-6 hours of labor. It is very unlikely that 10 device sales will produce profits near that amount.
What you’ll need to get started?
Parts, tools, and experience are the essential requirements to run a cell phone repair business.
I’ll share where you can get experience a little further down. As for repair parts, things like screens, charging ports, glass, batteries, can all be sourced cheaply from local suppliers/wholesalers and online (including online suppliers and providers on services like Amazon and Ebay).
There are typically no minimum order quantities for parts, so many owners keep their inventory levels low and order parts just ahead of their needs. Tools required for repairs will vary from device to device, but are generally inexpensive. A universal smart phone tool kit will suffice when getting started.
Other requirements include: Isopropyl alcohol (fantastic for phones with water damage), anti static brush, suction cup, and tweezers. All of the tools listed can be purchased on Amazon for less than $100. For owners looking to do more complex repairs, a digitizer separator device (for screen repairs) can be purchased from $200 – $400 online.
Software can help you get started!!
There was a time where the most expensive part of starting any business was acquiring the software needed to run the business. That is no longer the case great options start from $30USD per month.
Many moving parts
Like other businesses there are many moving parts involved in running a mobile repairs business. The most successful owners will track their parts and product inventory, customers, open and closed repairs, sales, labor costs and other important business metrics.
Tying everything together
In days past, spreadsheets and paper were used to manage most operations. Today’s owners are adopting software to help reduce the amount of time they spend on this administrative work.
Cell phone repair shop management software like our CellStore Software (www.cellstore.co) provides repair store owners with repair ticketing, customer invoicing, POS (point of sale), inventory management, business reporting, self-service customer repair tracking, website, customer database management, and more.
These diverse tools will make your shop run efficiently and also makes you professional, credible, and trustworthy.
Marketing and Advertising
Like all other businesses, cell phone repair shop owners will need to understand and execute their own marketing and advertising to be successful. Luckily, this too does not require too much of the owner’s attention to get started.
Many successful owners use free ads on local classified ad sites like Craigslist, Kijiji, and others to drive awareness of their services. In addition to this, many owners will market directly to local large businesses, distribute flies, and some will engage in pay-per-click advertising through services like Google’s Adwords and Facebook Ads.
Regardless of how owners advertise their repair business, referrals from happy existing customers to new prospective clients will be an important driver of business. Take care of your current customers and they will take care of you!
In addition to the traditional marketing strategies mentioned above, more cellphone repair owners are employing CRM (customer relationship management) strategies to help them market and grow their businesses. A good CRM software for repair shops will track all existing and potential customer data and allow the owner to contact specific segments of those customers for promotions.
Experience and Training
There are many inexpensive to very expensive training options for owners looking to do mobile repairs themselves. These options include online training and traditional in-class training. Many owners choose to hire someone with experience manage the repairs. However, with the availability of free training resources on websites like YouTube, many owners start by learning to repair devices by dismantling and reassembling test devices.
Should you consider a cell phone repair business?
The Cell Phone Repair Business can be a lucrative opportunity and is currently being pushed forward by the worldwide adoption of smartphones. The billions of dollars spent on cell phone repairs by individuals and companies are driving more and more people to consider getting into the business.
The low-cost barrier to enter the business makes this repair business extremely attractive. Whether you are looking to jump in full-time or part-time, the smartphone repair business allows owners to get started where they feel most comfortable.
With more than 25% of all cell phone devices in need of some repair, the repair business has to be given strong consideration for individuals looking to start a business that is in high demand.
You’ve made it this far. I think these are the resources that will assist you from here:
- I would strongly consider our CellStore Software – repair shop management software, as it includes all of the tools you need get started including POS, Repair Tracking, Expenses tracker and a Website builder. Click here to start your free trial of CellStore Software.
- Wondering how you will market your wireless repair shop? We’ve put together a guide of the most effective and cost effective methods to grow your service. Click here for articles on marketing your repair shop.
Tell me what you think?
What do you think? I would love to hear your comments!!
To your wireless success,
Alvin – CellStore Software