How to Start a Computer Repair Business
If your computer gives you an error message – or worse, a black screen – do you see it as a challenge? If you find technology fascinating, are talented in troubleshooting and fixing problems, and are knowledgeable about all of the latest technology and updates, then a career as a computer repair technician might be for you. Even better, rather than working for an employer, you might want to start a computer repair business of your own. With so many people dependent on computers today, this is an exciting and rewarding industry to go into.
Computer repair businesses help customers to both fix and maintain their computers. Often, these businesses are tasked with troubleshooting and fixing computer problems, but that work can extend to setting up and maintaining networks, offering in-home visits, and selling computers and accessories. Some of the most common services include virus removal, data recovery, system upgrades, and security updates.
Some businesses focus solely on commercial services, while others focus on PC repair. Some businesses offer a combination of both options. Additionally, while most repair businesses have a storefront, some may offer in-home or in-business visits, especially when it comes to setting up or maintaining networks.
According to IBIS World, from 2014 to 2019, the electronic and computer repair services industry has declined at an annual rate of 0.7 percent. In 2019, the industry’s total revenue was predicted to fall by 1 percent to $19 billion. As the industry’s revenue has declined, the number of businesses has also declined to 53,960. Those businesses currently employ 140,298 people.
The decline in the industry’s revenue is due to a number of factors. As computers and other electronics are increasingly more affordable, fewer people are deciding to have their electronics replaced and are instead choosing to replace them when they break. Businesses have also followed this trend and often invest in high-quality equipment and get rid of old, outdated, or broken equipment.
While these statistics may seem discouraging at first glance, repair business owners who stay on top of current trends and customer needs can still run successful computer repair businesses.
The overall computer repair industry may be declining, but there is increased need for certain services. According to Repair Desk, because computers and technology evolve so quickly, computer repair technicians need to keep pace with this technology. When a customer walks in with a problem involving a new software update or new version of an operating system, a repair technician will need to be familiar with these products and able to help the customer.
Experimax notes that computer repair increasingly crosses over with cell phone repair. As smartphones become more and more like computers, computer repair technicians are beginning to offer cell phone repair services, too. From screen repairs to virus removal and general troubleshooting, there are many opportunities for a technician to expand their services beyond just computers. And, because of the increasingly high cost of cell phones, customers are more likely to repair a $1,000 phone than they are to repair a $300 computer.
A computer repair business’s specific target market will depend on the business model and services offered. A business specializing in personal computer repair will market to local computer owners who invest in more expensive machines worth repairing. A business specializing in computer maintenance and networks to businesses may only market to businesses of a certain size or those that use a particular technology.
Computer repair businesses sometimes specialize in working on certain types of computers, like PCs versus Macs. This may also affect the target market of the repair business.
Checklist for Starting a Computer Repair Business
If you’re thinking about starting your own computer repair business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures 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.
When deciding on which business entity is best for a computer repair business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3: Choose a Business Name
Finding the perfect business name for a computer repair service 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
A computer repair business may or may not need a brick-and-mortar storefront, and many businesses can be started out of the home. However, having a business location where customers can drop off their computers can save you valuable time, so it may be worth it to invest in or expand into a brick-and-mortar location.
Rent costs will vary depending on the size of the business property and its location. Properties in retail locations will cost more, but they can also generate walk-in business and help to spread awareness of a business.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
Some states require licensing for businesses that repair electronics. In addition to computer repair licenses, there are also general local, state, and federal business registrations, such as a sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
In addition to registering the business, it may be worth obtaining certification in certain technologies. Some of the more common ones include CompTIA A+ Technician Cisco Certified Network Associate (CCNA), Certified Information Systems Security Professional (CISSP), Microsoft Certified Systems Engineer (MCSE), etc. Having certifications tell customers you have the technical expertise and be the factor that gets your company hired over other computer repair shops.
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 computer repair business is another. Even though the cost to start a computer repair business is usually low, it can be difficult to get a loan as a majority of the costs are tied up in building renovations and inventory. The borrower(s) will need to have good credit and personally invest 15-25% towards the total start-up costs to get a small business loan.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Marketing is important in promoting a new computer repair business and bringing in new customers. A computer repair business can explore many different types of marketing, including creating a website, handing out flyers, brochures, and business cards, using social media marketing, and advertising in local print publications.
To gain a competitive edge over your competition, check to see which certifications your competitors have and see if a new certification will set your business apart. You may also want to look at what type of repairs the competition does and look to specialize in a different niche.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a computer repair business. A few of these include:
– General liability insurance protects the business if customers are ever injured while on the business’ property, and it can cover expenses like medical bills and lawyer fees.
– Commercial property insurance can cover expenses resulting from the business property being damaged, like by a fire. The insurance can cover expenses like the cost of the building as well as the equipment that was inside it. A home business will want to look at their insurance policy as a claim made due to the business may not being covered.
– Workers comp insurance will cover expenses like lost wages or medical bills if an employee is ever injured while on the job.
The cost to insure a computer repair business will vary based on factors like the value of the business property, the location of the business, and the value of the equipment owned by the business. To get an accurate idea of what it will cost to insure a business, request policy quotes from multiple companies. Then, compare the quotes while looking at factors like premiums, coverage limits and exclusions, and deductibles.
Step 10: Hire Employees
A business owner may be able to initially handle the entire workload of a computer repair business, but as the business grows, it may be necessary to hire one or more employees. According to Salary.com, computer repair technicians make an average income of $24 to $35 per hour. Remember to also budget for additional expenses that come with hiring an employee, like workers comp insurance, paid time off, and health insurance contributions.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your computer 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.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a computer repair business?
The cost of operating a computer repair business will vary depending on the business model. A home-based repair business can cost as little as $2,000 to $3,000 to start up. A repair business with a brick-and-mortar storefront will cost closer to $10,000, but startup costs are still quite manageable.
Some common startup costs include for a computer repair business include:
– Tools and workspace
– Laptop, monitor, USB drive
– Inventory of repair parts like hard drives, ram, power supplies, etc.
– Furniture (for brick-and-mortar businesses)
– Signage (for brick-and-mortar businesses)
– Working capital to provide a three to six month financial cushion for costs like salary, rent, utilities, internet, phone, etc.
How much can a computer repair business owner make?
The income and profits of a computer repair business will vary according to the business’ location, specializations, services offered, and years in business. According to GlassDoor.com, computer repair technicians make an average salary of $35,240 per year. The low end of reported salaries was just $22,000 per year, with the high end being as much as $62,000.
Computer repair shops price complex services such as setting up networking for a company at an hourly rate, while other services are better at a flat rate, such as setting up a new operating system.
Keep in mind that many factors will affect your success and income. You may choose to start your business on a part-time basis so that you have additional income while you build up your body of customers. Offering specialty services, like business network management and support, can increase demand for your services and lead to higher annual profits.
What skills are needed to run a computer repair business?
You don’t necessarily need a business degree to start a computer repair business, but having certain skills and experiences can increase your chances of success as a business owner.
Computer repair experience. It goes without saying, but extensive experience in computer repair is a must in this profession. Many computer repair technicians have taught themselves the technical skills they need, but structured courses are available to supplement existing knowledge on hardware and software.
Customer service skills. Customer service is a big aspect of the computer repair industry. A business owner will need to be able to provide prompt service and have computers ready on time. Great interpersonal skills are also important, especially since customers may be upset and frustrated with their computers before they even walk in the door.
Organization skills. Good organization is important both in tracking equipment in the store and parts that need to be ordered, but also in keeping parts organized when taking a computer apart or replacing a piece.
Attention to detail. A good computer repair business owner needs to have great attention to detail. This is one important quality that can make computer repair easier and can make a technician good at their job.
Problem-solving skills. The ability to quickly identify and solve problems is essential in this industry. Repair technicians use creative problem-solving daily, so this is a must-have trait for any business owner.
Are there grants to start a computer repair business?
It’s extremely rare to find a grant to start a computer repair business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a computer repair business?
The NAICS code for a computer repair business is 811212.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?