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 ensure your business succeeds.
Cell phone repair businesses help 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. At the same time, smaller startups may opt for a mobile repair business 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 a talented repair person’s help. 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 1.52 billion smartphones sold worldwide in 2019 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 replace one. However, with upper-level smartphones from iPhone and Samsung costing more than $1,400 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 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 various cell phone models and brands are essential since customers expect a repairperson to be knowledgeable, talented, and fast. Some people acquire these skills through experimentation and by teaching themselves about repairs, but there are also various 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 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 build and sustain a repair business.
Business skills. Some business skills will also be necessary for starting and managing a cell phone repair business. It’s important 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 repair person will need to keep pace with the new technology so that they can repair new phone models as needed. The more technical knowledge that a repair person 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 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 like tweezers, screwdrivers, UV light, etc. ($50-$100)
- Repair parts inventory and supplies – Need to be sure you have sufficient stock for most phones as customers don’t want to wait long ($200 and $800 minimum)
- Phone accessories, screen protectors, and cases to upsell ($150 – $400)
- Repair ticketing and invoicing system
- Working capital for payroll, rent, utilities, etc.
How much can you potentially make owning a cell phone repair business?
Aa cell phone repair businesses profits will vary according to the types of repairs offered, the number of employees, location, etc. 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 phone’s brand as iPhone repair parts are generally less expensive than Android based phones.
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 a business plan. Not only will a bank require you to have one 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 (sometimes called a legal entity or business structure) 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 Limited Liability Company (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: Name the Business
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 4: 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 or kiosk in a mall can generate walk-in traffic and 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 as a mobile phone repair service. This can be a good set-up to test the market and see if there is enough business before investing in a permanent location.
Related: Choosing a business location
Step 5: 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 there are some of the general local, state, and federal business registrations such as a state sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
Step 6: 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 personally invest 15-25% of their own money.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the business’s income and expenses.
Step 8: Get your Marketing Ready
Marketing is essential 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 handing out business cards, flyers, and brochures to advertising online to leverage digital marketing power through Facebook, Instagram, Yelp, Craigslist, and other social media platforms to drive business. As the business becomes better known for its excellent service, word of mouth referrals will be a powerful source of new customers. Exact costs will depend on the type of volume of marketing that’s best for each business.
Step 9: 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 if a fire or other event damages it.
- 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.
- Vehicle insurance will cover damages incurred if you have a mobile business. Personal policies will likely not cover you in the case of an accident while on business.
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 10: Hire 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 if 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
Step 11: Set up an Accounting System
Setting up an accounting system for your cell phone repair business is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
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.
The right tools make a difference in efficiency and doing the job right. It may be tempting to save some money by purchasing less expensive tools, but consider you will be using these for multiple hours each day. Also, while buying certified replacement parts will cost a little more, the quality of those parts is a lot better than 3rd party vendors that you might find on eBay or Amazon. This will ultimately result in a better experience for your customers.
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 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 into your business.