Last Updated on April 26, 2020
Do you have a knack for fixing things, and are you always the first of your friends to find out about the latest phone updates and tech? For technology lovers with a talent for fixing phones, opening a cell phone repair business may seem like the perfect venture. Before starting a cell phone repair business, take some time to understand the earning potential, startup costs, and common challenges to help to ensure your business is a success.
Cell phone repair businesses help to save consumers money by repairing broken phones so consumers don’t have to purchase new ones. Common phone repairs include screen repair and replacement, battery replacement, button and headphone jack repair, and camera repair, though you’ll probably see plenty of other issues while in business, too. Some repair businesses have a physical storefront where customers can bring their damaged phones, while smaller startups may opt for a mobile model to save on rental or lease fees while also offering the customer the convenience of a traveling repairperson.
If you’re considering starting a cell phone repair business of your own, this guide can help you understand the potential startup costs, your potential earnings, and what to expect as you start your business.
As more people transition to smartphones which are easily broken, the cell phone repair industry is growing to keep up with the demand. According to IBIS World, from 2014 to 2018, increased smartphone and tablet usage resulted in a 4.4% growth in the cell phone repair industry. By 2018, the repair industry reached $4.4 billion in annual revenue, and from 2014 to 2018, the number of cell phone repair businesses grew by 2.6% to a total of 8,551 businesses. Overall employment in the cell phone repair industry also increased by 22,692 during this five-year period.
The increased use of smartphones means that more phone users encounter issues like water damage and cracked screens, requiring the help of a talented repairperson. Because smartphones continue to become more common, we’ll likely continue to see an increased need for cell phone repair, especially as these phones are more expensive and warrant repairing, rather than replacing. According to Statista, there were 1.56 billion smartphones sold worldwide in 2018, alone.
Smartphone manufacturers are making phones more durable, which could reduce the need for some repairs. Consumers who have a higher disposable income may decide to purchase a new phone, rather than having one replaced. However, with upper-level smartphones costing more than $1,000 new, plenty of consumers are still likely to repair their phones when possible, rather than just replacing them.
Who is the target market for a cell phone repair business?
Because smartphones have a higher price point and are more expensive to replace than more basic phones, the majority of cell phone repair clients are smartphone owners. Pew Research Center states that younger people, people with higher education levels, and people who have higher incomes are more likely to be smartphone users. However, smartphone ownership in Americans age 50 and older has risen substantially from 2015 to 2018.
Simply put, the target market for a cell phone repair business is owners of damaged devices that are new and expensive enough to justify repairing, rather than replacing.
Skills, experience, and education useful in running a cell phone repair business
Planning, opening, and running a cell phone repair business requires certain skills. While you don’t need a degree in business, the following skills and education will be helpful.
Cell phone repair experience. Possibly the most important skill in getting this business off the ground is experience repairing cell phones. The ability to troubleshoot problems, replace broken parts, and repair a variety of cell phone models and brands is essential, since customers will expect a repairperson to be knowledgeable and talented in repair. Some people acquire these skills through experimentation and by teaching themselves about repairs, but there are also a variety of courses (both online and in-person) that offer more formal education in cell phone repair.
Customer service skills. Good customer service is also key to successfully running your business. Customers will come to you frustrated and possibly worried about being able to retrieve data from their phones. In some instances, you may have to break the news to them that their data is lost, or their phone needs an expensive repair. Being able to handle customer emotions and provide good customer service can help to build and sustain a repair business.
Business skills. Some business skills will also be necessary when it comes to starting and managing a cell phone repair business. It’s important to be able to set appropriate prices, manage supply inventory, market the business, and more.
Interest in the technology industry. Cell phone technology rapidly evolves, and a successful cell phone repairperson will need to be able to keep pace with the new technology so that they can repair new phone models as needed. The more technical knowledge that a repairperson has, the better quality service and advice they can give to their customers.
One of the advantages of starting a cell phone repair business is that its startup costs are relatively minimal when compared to other brick-and-mortar businesses. You’ll still need a budget to get started, but the below costs can give you a sense of just how much you’ll need to save up.
Costs to start a cell phone repair business
- Chairs ($40 – $80 each)
- Workstation desk ($200 – $400)
- Articulating light ($100 – $250)
- Tools ($50-$100)
- Replacement phone parts and supplies (Cost varies according to brand; plan to have between $200 and $800 of supplies in stock)
Phone accessories, screen protectors, and cases to upsell ($150 – $400)
Any cell phone repair company needs working capital to keep it running. Phone repair businesses rely on working capital to purchase supplies, replacement parts, and inventory. Maintaining enough working capital can be a challenge if that money gets tied up in supplies or inventory that aren’t promptly used or sold.
How much can you potentially make owning a cell phone repair business?
The profit of a cell phone repair business will vary according to the business’s size, the types of repairs offered, the number of employees, and even the age of the business. According to CellStore Software, cell phone repair businesses typically enjoy extremely high profit margins. Most of the costs are in parts and labor, and the option to offer a mobile service instead of a brick-and-mortar store can further cut startup costs. In some cases, you may see profit margins between 80% and 100% on particular repairs depending on the brand of phone.
For instance, if a store charges $70 for an average repair and does 10 repairs each week (a conservative estimate for an established business), the weekly revenue will average $700. Assuming an 80% profit margin, the weekly profits will come to $560, and monthly average profits would be $2,240.
Up-selling products like screen protectors, phone cases, and other accessories can also increase profits.
Steps to Starting a Cell Phone Repair Business
Step 1. Write your Business plan
After coming up with a business idea, the next step in starting any business should be to write business plan. Not only will a bank require you to have one in order to get funding, but multiple studies have shown that a business plan helps increase the odds of starting a successful business. A well thought out cell phone repair business plan will serve the entrepreneur as the road map for their business, helping them achieve their business goals.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
For brick-and-mortar repair businesses, a lease can be a significant but necessary expense. Storefront space in a high-traffic area can help to generate walk-in traffic and also naturally spread awareness of a business. Lease costs vary according to the size of the space and its location.
A cell phone repair business can also be run out of a home and provide a mobile repair service. This can be a good set-up not only to test the market to see if there is enough business before investing in a permanent location, but can be a good long-term business model as it is more convenient for customers.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
The types of business licenses, permits and registrations that will be required to start a business vary on the activities of the business in addition to where it is located.
No special licensing is required to open a cell phone repair shop, but some of the common local, state and federal registrations will include a sales tax permit, Employer Identification Number, and Occupancy Permit among others.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a cell phone repair shop is another. Fortunately, the cost to start a cell phone repair shop can be relatively low, with a majority of the costs going towards remodeling, workstations, tools, signage and inventory. Funding for a new start-up can be difficult as banks are typically going to want the borrower to have good credit and be able invest 15-25% of their own money.
Step 6. Get your Marketing Ready
Marketing is particularly important for cell phone repair businesses, because customers will only return when their phones are broken, so repair businesses can’t rely much on repeat business. Because of the nature of the repair business, a budget needs to include marketing expenses. These can be anything from sending out direct mail postcards to advertising online to leveraging the power of social media to drive business. As the business becomes better known for excellent service, word of mouth referrals will be a powerful source of gaining new customers. Exact costs will depend on the type of volume of marketing that’s best for each business.
Step 7. Obtain Insurance
Both mobile cell phone repair businesses and businesses with a traditional storefront will need insurance. Most repair businesses need a few different types of insurance for full coverage:
- General liability insurance will cover damages or medical expenses if a customer trips or falls or is otherwise injured while in a repair store.
- Commercial property insurance covers expenses such as inventory, the store building, and equipment in case it is damaged by a fire or other issue.
- Workers comp insurance covers the cost of an employee’s lost wages if they are injured while on the job. Businesses must purchase workers comp insurance if they have employees.
The exact cost of insurance policies will vary according to business specifications, location, and the value of the store’s inventory. To get the most accurate information on insurance costs, contact at least five insurance companies for quotes. Be sure to compare the coverage, including exclusions, payout amounts, and deductibles when deciding which plan is the best option.
Step 8. Hiring Employees
Many cell phone repair businesses are owned and operated by a single person, however it is important to consider having at least one part-time employee in case the owner is sick or needs to take time off. Larger businesses with many clients may hire employees to help keep up with the demand. According to Glassdoor, the average salary for a cell phone repair technician is $32,606. In addition to budgeting for employee salaries, be prepared to pay for taxes, workman’s comp insurance, and paid time off for employees.
Related: Hiring your first employee
Every state has specific requirements and regulations when starting a business. Select your state below to find the guide to starting a business in your state.
Things to consider before starting a cell phone repair business
While cell phone repair businesses require less startup funding than retail businesses, the learning curve is steeper when it comes to the actual services that a repair business provides. Not only must a repairperson have versatile repair skills in terms of the types of phones and the repair services that he or she offers, but this person also needs to be able to keep up with rapidly evolving cell phone technology.
Cell phone repair businesses typically follow two models: A physical storefront or a mobile business. The mobile business option may be appealing because of the costs it saves over rent, but remember that this business design will require travel time and will create wear and tear on your vehicle. It can also limit your repair capacity.
As with all businesses, the success of a cell phone repair business will depend on how many competitors are present and where they’re located, and what your business can offer differently, whether it’s lower prices, repair services that customers can’t find elsewhere, or another factor that will draw them in to your business.