Viability of a brick & mortar store

[Rise]

Hey guys, I've been thinking about how much of a nerd I am lately, and I know that one of my passions in life is computers. I was wondering what people thought about the viability of a brick and mortar storefront + webstore that did a few things: retailer of both hardware & cooling components/computer builder/LAN setting for games (~12 PCs?). Do you think such a store could exist? I'm going to do some research on it myself but I wanted to see what the web community thought. Could it exist in a small city (Worcester) or is it just a pipe dream? I post this in the LC section because I would want to provide water cooling services.

[just a noob]

depends on the size of the city if you ask me, and the number of people with more money than brains you can get, also helps if you have a best buy near you, so you can provide more personal service, less screwups, and better prices

[CmB]

Pipe dream mate. Unless you have very, very deep pockets now really isn't the time to start a business. Credit is tight people aren't spending what they might've. Even so I vote maybe but for your sake research your tax laws and credit card association rules (if you take plastic). I know a guy who started a shop and now owes 120K due to chargebacks from scammers. Lost the products and had to refund the purchase price. No one protects small businesses. Owning a business can be very, very rewarding but just know what you're getting into before you lay your financial future on the line. you should look up the statisdtic from the Dept. of Commerce on business viabiltiy and fail rates. YOU MUST HAVE A SOUND BUSINESS PLAN AND SUFFICIENT CAPITAL FOR 3 YEARS WITHOUT PROFIT. I apologize for shouting, but I felt it was necessary. according to the last research I read 3 years was about the mean brek even point for businesses, though this will vary by industry. Again you should fact check.

My advice is go for managed services like lanparty hosting, managed servers. networking and PC repair. I suggest you go to your local dept. of commerce and check data for you town as most of your business early will most likely be local, trust me you want cash over plastic. Once you have a good base with positive cash flow you can then look at national with a website. Newegg is a great company and a ridiculously tough opponent then toss in all the others. Know your competion.

Ask anyone they're trying to head out of retail and into managed servers a la IBM. By the way, SMB owners do roughly three times the work of a regular employee. Weekends are just another workday and stress is large. Now if you're the next Bill Gates none of this applies, lol.

All that aside, I vote maybe.

--Chris

Edit:

It's tax season do you want to ask how much fun it is doing taxes for 3 companies? Waiting 90min. to speak with an IRS rep is a joy.

[safan80]

not with the way the economy currently is.

[fart_plume]

Actually now is is the best time to start a business according to some of the experts. Mainly because you can build your good reputation and trust with your customer base, whereas the compitition that is already in business has probably alienated a number of people, i.e. Best Buy, CompUSA, and the like.

[RCG_Bex]

www.microplaygaming.com

That's where I work - I'm the techy there - we do custom builds to spec & budgets. Just had a 40 man halo 3 xbox lan there. Do all nighters etc. More people come in off the street to play xbox's than PC's though.... except on a Saturday

~Bex

[NaeKuh]

first off the market of a DYO computer is VERY small.

If you account for prebuilts, like HP, and Dell, the DYO computer you assemble is RARE.

Now people who overclock a DYO computer are even more rare.

Then factor in the people who migrate from air -> water.

Your niche is very small my friend.

[faster3200]

I live in a decently sized city that I would like to think is relatively techy (Redmond) and there was one store that sold WCing parts and was pretty devoted to it. They went out of business. I have talked with a lot of store owners in my area, since I used to run an online store, and they said prebuilt comps (like shuttles where you just add ram and what not) were pretty popular. I also noticed that the shops that sold some of the more obscure/harder to find stuff were consistently busy while the places that sold newer stuff were never busy. I think there is more of a market for older tech than there is newer since no one wants to pay much and odd stuff is hard to find at the major e-tailers.

[Movieman]

Pipe dream mate. Unless you have very, very deep pockets now really isn't the time to start a business. Credit is tight people aren't spending what they might've. Even so I vote maybe but for your sake research your tax laws and credit card association rules (if you take plastic). I know a guy who started a shop and now owes 120K due to chargebacks from scammers. Lost the products and had to refund the purchase price. No one protects small businesses. Owning a business can be very, very rewarding but just know what you're getting into before you lay your financial future on the line. you should look up the statisdtic from the Dept. of Commerce on business viabiltiy and fail rates. YOU MUST HAVE A SOUND BUSINESS PLAN AND SUFFICIENT CAPITAL FOR 3 YEARS WITHOUT PROFIT. I apologize for shouting, but I felt it was necessary. according to the last research I read 3 years was about the mean brek even point for businesses, though this will vary by industry. Again you should fact check.

My advice is go for managed services like lanparty hosting, managed servers. networking and PC repair. I suggest you go to your local dept. of commerce and check data for you town as most of your business early will most likely be local, trust me you want cash over plastic. Once you have a good base with positive cash flow you can then look at national with a website. Newegg is a great company and a ridiculously tough opponent then toss in all the others. Know your competion.

Ask anyone they're trying to head out of retail and into managed servers a la IBM. By the way, SMB owners do roughly three times the work of a regular employee. Weekends are just another workday and stress is large. Now if you're the next Bill Gates none of this applies, lol.

All that aside, I vote maybe.

--Chris

Edit:

It's tax season do you want to ask how much fun it is doing taxes for 3 companies? Waiting 90min. to speak with an IRS rep is a joy.

Smart advice here..

[zanzabar]

i wanted to do this for years but its alot of money, pc repair has low overhead and so dose case modding (more overhead though and smaller market) but built pcs are hard to sell until u have an established base and the people who would know what they are buying would normal build it themselves. any ways when i looked at the expenses and numbers it takes $20-30k to be a retailer $10-15k to be a consignment retailer to start and u would need to sell about 10 pcs a week. i still want to do one but u would need a good investor.

u also need a microsoft masters certificate to become authorized by HP or dell for server repair or something simmilar

[hotdun]

I wonder how MicroCenter does with it's watercooling section.....

[Eddie3dfx]

I wonder how MicroCenter does with it's watercooling section.....

They don't really have much of a selection. Sometimes you can get some nice things on clearance, but majority of the time I'd rather get it on the net knowing it will be in stock.

I've had so many canceled orders from microcenter, than it's almost ridiculous that I continue to place orders with them anymore.

[Rise]

good responses so far

[mattkosem]

They don't really have much of a selection. Sometimes you can get some nice things on clearance, but majority of the time I'd rather get it on the net knowing it will be in stock.

I've had so many canceled orders from microcenter, than it's almost ridiculous that I continue to place orders with them anymore.

I agree on that. They only really consistently carry swiftech products and a select few fesser rads, the rest is low end prebuilt stuff or old DD parts. Their customer service has been pretty poor lately too IMO. They seem to be a bit too budget constrained these days to provide the level of service that they used to provide. Customer service and selection like Petra's Tech Shop, Jab Tech, and FrozenCPU provide is hard to beat with the overhead of a brick and mortar establishment.

--Matt

[Utnorris]

I think it is viable depending on how you approach it. Most small businesses can be started out of their home and if you are building custom PC's than that can be manageable. If you are selling WC parts or PC parts it can also be done out of your home. The point is, if you can keep your overhead low and do not mind eating Ramen noodles for awhile then you could probably do it and right now is a good time since the economy will get rid of a lot of the fat so to speak.

They don't really have much of a selection. Sometimes you can get some nice things on clearance, but majority of the time I'd rather get it on the net knowing it will be in stock.

I've had so many canceled orders from microcenter, than it's almost ridiculous that I continue to place orders with them anymore.

Dallas here, sometimes they have a decent selection in the store, sometimes they don't. I use them for those "I gotta have it right now" moments like tubing or fittings. They have gotten better, but it can be hard to cater to that crowd if you are not familiar with it, which I bet their buyer has never used water cooling, nor has he/she been to a site like this to read up on it. If they had you wouldn't see Thermaltake in their selection.

[headala]

Personally, I would go the housecall/repair/custom rig route; take orders and then order them from Newegg. Computer parts are one of the most dangerous products for losing your shirt on stock you can't sell. So, minimize the need to keep a huge amount of stock. Do a killer gaming rig with a killer paintjob (with your business name) and donate it to the local high school; the kids will be begging their parents for one for Christmas, and noone ever knows what to get high school kids anyway. Make calendar magnets for peoples' refrigerators. Talk to EVERYONE you know. Do whatever it takes (especially in the beginning) to make sure every single customer is 100% satisfied, and has a stack of your business cards. Make sure you know what to charge, and be up front about your charges with your clients.

Microcenter is an interesting model since they can shift products from one location to another according to what's selling. I checked out their WC'ing stuff, and it was decent but not terribly high-end. Mostly swiftech, all of their kits with a few 'add-ons' and 'upgrades'.

[Brother Esau]

outfitting a technology store with inventory my boy will run you tens of thousands of dollars and re-selling is hardly worth the effort for what you make and actually its not worth it!

Also then factor in another $15,000.00 for Website design and S.E.O Optimization and another $20,000.00 for money to exist on while business takes off and also for unexpected /unforeseen cost........So if you have that Kind of loot my first important question for you is....Whats your Address

I Voted Maybe reason being is that if you have enough Capital Backing anything is possible depends on how bad you want it.

[ballzD33P]

I think your best chance for success would be to produce a stunning business plan, and then go find yourself an angel (good luck) interested in the tech area.

Not only could they provide initial startup $, their previous business expertise would be invaluable.


lol, do not pm me, i am not one.

[CmB]

outfitting a technology store with inventory my boy will run you tens of thousands of dollars and re-selling is hardly worth the effort for what you make and actually its not worth it!

Also then factor in another $15,000.00 for Website design and S.E.O Optimization and another $20,000.00 for money to exist on while business takes off and also for unexpected /unforeseen cost........So if you have that Kind of loot my first important question for you is....Whats your Address

I Voted Maybe reason being is that if you have enough Capital Backing anything is possible depends on how bad you want it.

Hundreds of thousands on inventory alone.That is, if you want to compete with Newegg, Microcenter etc. And Newegg MC will still undersell you potentially .Now want to talk about inventory depreciation. In the tech industry, PCs depriciate about 2% PER DAY! Disregard this if you're selling services.

Now let's talk about renting or buying a store with decent space. Loads of capital there. Utilities loads of capital. Security costs. Why not work out of your home? You can, but need tons of space or you need to rent or own warehousing. That is if you want to compete. Now if you want to be that store with 500% higher pricing be my guest.

Web costs vary, but it isn't cheap. Angels just suck, I bought mine out. I am now poor, lol but my conscience is clear. Dirty bastage, wanted to nickel and dime everyone. They can and will bleed you dry once you get off the ground. Same goes for venture capital firms, banks etc. You can earn minimum wage and decent salaries elsewhere, why be a peon working that much harder for peanuts?

Before you even start you need an exit plan. How are you going to end your business? Are you gonna pass it on to a family member? Sell it? Go public with an IPO? Really, unless you're Wild Willy Gates (who once had a partnership with IBM iirc) you're not going to take much in terms of salary. Figure on 40K after taxes in a good year. Make sure you register an pay said taxes, failure to pay taxes for any reason is a criminal offence. I have a former business partner who's sitting in prison for 5 years for gross tax evasion (I actually paid as normal, i'm a free but poorer man, lol)

Again do your planning, know your market have sober and accurate projections regarding your business plan/break even point and count on all Hell breaking loose. In business, it can and will happen. Just know what you're getting into.

A failed business/bankrupty may affect you for the rest of your life. Don't underestimate the power of a credit report. That said even with all the problems and headaches I still love my business. I jst don't want you to fail by being unprepared.

--Chris

[Brother Esau]

Well I was not eluding on a New Egg set up that would cost hundreds of thousands and I was referring to Internet based Business not a local owned joint thats for sure instant failure and way more over head

[CmB]

Well I was not eluding on a New Egg set up that would cost hundreds of thousands and I was referring to Internet based Business not a local owned joint thats for sure instant failure and way more over head

My friend, (may I consider you a friend?), I was not calling you out specifically as being wrong, rather using your post as an illustration. In my post, there was a qualifier "if you want to compete with newegg etc.". I just want him to have an idea what it takes depending on the level he's aiming for.

My goal here is to provide Rise with as much first hand data as possible. The reseller business is all but dead (pr at a minimum completely) saturated. Unless you can scale highly, you're going to end up making like $2 per hour. or worse, just take losses.

I would love to see Americans, (as we're discussing American business, that is Worcester Mass. right?) come up with new and innovative business plans because the current models do not seem to be doing well. Circuit City was a huge company. Love them or hate they are gone. So is PC Club and Club IT. CompUSA was bought otu by TD and have scaled way back. Just beating the dead horse won't cut it. It is only my honest opinion.

Now if in Worcester, everyone consistenly buys sixty WC kits etc. per quarter you might be ok depending on overhead and margins. That scenario is a pipe dream. Again know your market, I can't repeat this enough. FIND A NEED AND FILL IT!

--Chris

[iandh]

My guess is that with a small population you would have a very hard time unless you were the only bet in town, and even then it would still be pretty hard. For this type of business you need a huge demographic to survive, hence the reason we usually only see stores like this in the big city.

My advice, if you must have a brick and mortar store, would be to outfit it as a LAN center with all different custom built rigs. You could offer custom building services and use your store rigs as your showcase. Then when people order just require a deposit for the cost of parts. Do not forget to have a decent para-legal or attorney write up a customer agreement for you, unless you want to be giving away free PC's in court...

As far as parts go, I would purchase main components from somewhere like newegg where DOA RMA's are nice and easy, and in many cases warranty replacements are covered under neweggs 1yr policy. That way you could warranty customer's builds for 1yr with little chance of you having to go out of pocket for replacements.

Another thing you could do is to make friends with a good online W/C parts reseller, such as Petra's or sidewinder. If you told them what you are up to, you likely could work out some sort of semi-wholesale type discount as long as you promised to purchase your parts for customer builds solely from them.

[Rise]

thanks for all the responses everyone, it was good to get so many different perspectives. If I were to do anything, it would likely be just making pcs from my house in my spare time. I doubted the feasibility before I even posted this and I figured I'd get a lot of the responses I did - but some of the others containing solid advice did surprise me, so thanks for that

it's fun to dream about, but I don't see it happening any time soon, if ever for all of the reasons above. In my mind, it comes down to risk and there is just too much of it in a business like this. I'm sure it can be done but I'm not willing to accept that amount of risk for what would likely be a lower salary than I currently earn. Thanks again guys!

[CmB]

thanks for all the responses everyone, it was good to get so many different perspectives. If I were to do anything, it would likely be just making pcs from my house in my spare time. I doubted the feasibility before I even posted this and I figured I'd get a lot of the responses I did - but some of the others containing solid advice did surprise me, so thanks for that

it's fun to dream about, but I don't see it happening any time soon, if ever for all of the reasons above. In my mind, it comes down to risk and there is just too much of it in a business like this. I'm sure it can be done but I'm not willing to accept that amount of risk for what would likely be a lower salary than I currently earn. Thanks again guys!

You're welcome

Building PCs in your spare time and supplementing your income with PC repair is very feasible as long as you don't get dragged into court every other build lol. I suggest you go the supplementing route get your feet wet and wait for the economic rebound then who knows, you might be Wild Willy Gates in disguise and you just don't know it yet.

--Chris

[DarthBeavis]

I know I could pull it off in a heartbeat . . . .and it has been proposed for me to do so . . . .but came to the realization you should also come to;
You would end up dealing with Joe Sixpack END USER . . . .uuuggggg.
http://www.youtube.com/watch?v=pxyOA...eature=related