Moving my business - Good idea?

[SS113]

Hello everybody!

Here's the situation. Me and a buddy run a small computer repair shop. We've been open for about 1 year and 8 months now. The problem is (I believe) our location. It's not in a shopping plaza or anything that has foot traffic. It's on a busy street but nobody really stops unless they have specific purpose (around us there's lawyers, Tax services, and Insurance.

Right now all of our clients pretty much come from Google, Yellow pages, and few other small referrals. We get pretty much 0 clients that just "saw" our location.

At the end of the year our contract is up and we have to decide what to do (re-new for 1 more year, move, or close business) I say close business because we do make money, but all that goes to pay rent, utilities, advertising and that's about it. There's really no room for "profit" that we get to keep for us.

I've had to keep 2 jobs- one main one that pays me, and my business as a secondary that doesn't. My buddy does that same so right now we both work Mon-Fri 9-5 somewhere else and I have my wife stay at the business to answer calls, and check in computers as they come in. After work I go to the biz to repair anything that came in so it can be picked up the next day.

I realize I cannot keep doing this if I want a successful business so I have decided to look for a new, better exposed, place. Well I found one that is perfect! It's about double the size of what we have now (1200sq ft vs us now 600sq ft) but the big thing is the price. Since it's on a very good, prime location they are asking $35.50/sq ft so the monthly payment will be ~$3000 compared to $600 that we pay now!

So my big question is, is it worth the risk? I mean I'm stuck between a place that doesn't really make me any profits but has cheap overhead OR a new place that has TONS of exposure and foot traffic but it's 5 times more expensive just to rent out AND I have to invest more $$$ to make it presentable - make it into a repair shop/retail store?

ANY suggestions would be great because I don't know what to do!

Thank you

[vangogh]

Welcome to the forum SS113. First let me say I'm not sure anyone can tell you what to do. There are several things to consider and quite honestly none of us are going to have enough information to say do this or that. Because of that I'm not going to vote in the poll and even suggest you'll probably get a better response by not having a poll at all.

Realistically you yourself won't know the right thing to do even with all the information. This is going to come down to make a choice about what you think best without really being able to know what will work best.

That said here are some thoughts.

You mention there's currently no room for profit. If that's the case how will paying more to be in a different location help? More customers doesn't automatically mean more profit. It just means more customers. If you and your partner are both working 40 hours a week at other things how many customers can you reasonably handle?

Will a new location really lead to more customers? The store front might be more visible, but does that mean more people will bring computers in for repair? People aren't exactly walking around carrying computers to bring in if they happen to be passing your store. I don't see your business as one that grabs foot traffic. A better location can certainly lead to more awareness, but awareness doesn't automatically lead to more customers and there are many ways to gain awareness other than the location of your store.

I would think the more typical way a customer will find you is they first have a problem with their computer and then they seek our where to get it fixed. It's possible that means bringing it to a store that happened to walk by, but I would think it more likely means visiting a search engine or opening a phone book or asking a friend.

How will double the size help your business? Your business doesn't really require a lot of space where customer interaction is concerned. Mainly you need a counter where someone can place their computer and presumably you can plug it in and turn it on so you can both look at it while the customer describes the problem. Do you need more space to do the work or do you have enough where you are now? More space can lead to a more positive perception though so even if you don't need the extra space for yourself or customers it can lead to a more favorable view of your business.

None of the above should be taking as me saying you shouldn't move. I don't know the answers to the questions I'm asking. I'm just trying to raise a few points for your consideration. I hope it helps.

[SS113]

Thank you for the quick reply..Yes you did raise a few point I never thought of before, especially the foot traffic. But what I meant was foot traffic around the location, not just to us. For example, the location is right next to a Denny's, Cash America, a Barber Shop, A Perfume place, and they are building a Panera Bread right now 2 doors down. I figured since Panera is REALLY big on customers bringing in their Laptops to work on while eating there, it'll be a good place to be near.

As far as size, you're right, we are perfectly fine with the 600sq ft we have now so I would only want a bigger place if we introduced a small store front for spare PC parts alongside the repair shop.

You mentioned the 40 hrs that each of us put up at another place. While that's true, We do average about 31 hrs at the biz after hours and on Saturday/Sunday. Since it's 2 of us, we can turn out a lot of repairs. By the way, we were employed before that for a major computer repair chain where we repaired upwards of 50 pcs a week at the same 28-32hrs a week level.

By the way I forgot to add in my original post that the new place required a 5-year contract!!!

[vangogh]

Just good timing for my quick reply.

I see some new information. I'm not sure things like the Denny's and Cash America will make much of a difference other than to help bring more people into the parking lot. It does put your business name in front of them, but so does your business card at the register inside the Denny's. The new location does make your more visible. I just want you to consider if it makes you visible to the right people at the right time.

The Panera Bread nearby is interesting. That is a place where people are likely to have computers with them and those people will be more likely to notice you and remember you. I can see where being close to them could be beneficial.

Sounds like the hours are no problem. I wasn't sure from your first post if it was an issue, but it sounds like you have more time than customers. The question is do you think the new place will bring in 5 times as many customers as you currently get now? (assuming your profit margin remains the same) Could you charge a little more in the new location to offset some of the cost? 5 times more expensive is a lot, especially with a 5 year lease. I was going to say in my post above you should minimize your risk by seeking a short term lease in either location.

How many repairs do you think you'll need to average each week in the new location to offset the costs and make enough money?

[SS113]

Yes, charging more would be the normal thing to do going to a better location. The way I was looking at it is this:

Right now our average repair is between $80 and $150 per machine (profit). Lets keep it average of $115 per PC. If every other day a computer comes in we take in $1725 for the month. Taking out the rent, power, internet, insurance, phone, advertising, water cooler brings us down to about 670 left over. Of course this is is not true since we only make about 200-300 left over for the month, it's obviously less than a PC every 2 days.

Now, if we move to the new place, we would have to get at LEAST 2 PCs every day averaging about $150 to make about $9000 profit. When you take out the rent, power, internet, insurance, phone, advertising, water cooler it brings us down to $5452

That would actually be great because if we have to quit our current jobs, we would have to get paid from the business so $5452/2 is $2726 for each of us.

This would be a good scenario and I'd do it but this is not an ideal world and every repair is NOT going to be $150 and I will not get 2 every day.. This is where the problem comes in... I know people will come since there are NO computer repair shops in that area but I dont know how I will cope with the expenses up until the moment of those 2-$150/day dreams...

[greenoak]

;i would get a bigger base before signng a 5 yr contract for 3000 a month...thats a pretty huge committment...
.. and keep on working on your google and maybe small local ads and hope the referrals grow..... hopefully some fun AD on your car like geek squad....or super geeks etc etc....
good luck...im sure your town needs you...

[seolman]

Before moving I would do a serious break-even on where you are now and use worst case numbers. Then consider how to increase the traffic where you are vs. the move. Even if you move it will take a while to build up clientele so how much will you have to invest before you get sufficient traffic? Could move money be better spent on a big attention getting banner on the front for your building "Why is your computer running slow? Free Evaluation!" or similar? Maybe an ad in the local Penny Saver? How about "free flash drive with memory upgrade!". If you give people a reason to visit they will come to you. Most small business struggle because their marketing budget is too limited.

[greenoak]

ditto with seolman....
we believed in running the same and over and over and over...... that might work for you in the pennysaver.....then when they need 'later they can find you....we did that for a long time in a local cheap penny saver.....and used more expensive ads once in a while.... for events etc....also we kept a good customer database right from the start.... thats cheap and sooooo worthwhile........................

[Spider]

From all that has been said above, I think the facts lean towards staying where you are and spending more time on marketing, visiting computer and electronic stores (that don't have a service department) and leaving a small brochure, visiting surrounding company offices to try to set up an emergency "You break it - we'll collect it and fix it and bring it back" service.

One of you needs to be doing the repairs while the other is marketing, selling and shmoozing. If that seems unfair, alternate - switch roles weekly. If you are going to grow your business, you have to stop doing the work of the business. Stop working IN the business and start working ON the business.

Once you have built up to a steady flow of being regularly busy, hire someone to do the work and both of you start marketing, selling and shmoozing. Then hire another worker. Then another.

Then you will be ready for larger premises. Even then, I would think your larger premises can be in an industrial area, not a fancy (and expensive) retail area.

Think big, my friends. Think eventually of being a major service station for computer stores, companies, and major organizations. Go where the money is!

Good luck!

[Dan Furman]

I think it depends on your business.

In general, I think computer repair shops are a dying business destined to go the way of video stores and TV repair shops.

However, if you also service corporate clients onsite (besides having a shop), you may have something.