How to Start an Appliance Repair Business

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Quick Reference

If you find fixing machines fascinating and have a knack for getting to the root of a problem, you may want to try your hand at the appliance repair business. Starting an appliance repair business will mean that you’ll have the chance to work on many different appliances, putting your creativity, attention to detail, and problem-solving techniques to use. With your own business, you’ll be in charge of everything from marketing to scheduling, but this can also be a rewarding opportunity to build up a business and be your own boss.

Business Overview

Appliance repair businesses often offer repair services for appliances like refrigerators, stoves, freezers, washing machines, dryers, and garbage disposals. Often, these services are provided in a homeowner’s home since transporting these appliances is difficult. Repair businesses can help save homeowners money over the cost of purchasing a brand-new appliance. To offer prompt service, many repair businesses keep a stock of common repair parts for the appliances they specialize in, allowing them to travel to the customer, identify the issue, and repair the problem all in one visit.

Industry Summary

According to IBIS World, from 2014 to 2019, the appliance repair industry grew by an annualized rate of 0.2 percent and is expected to grow by 1.3 percent in 2019. The industry is a $4.9 billion market as of 2019 and has the potential to continue to grow because of the increase in disposable income. As consumers have more disposable income, they’re more likely to pay for nonessential appliance repairs, rather than putting these repairs off or attempting DIY repairs themselves. This means that appliance repair businesses may see increased demand for their services.

Industry Trends

One of the largest trends affecting the appliance repair industry is the transition from traditional appliances to smart appliances. According to the New York Times, smart appliances’ popularity is only likely to continue; 59 percent of adults surveyed in 2018 indicated that they were interested in using a smart home appliance or device. Traditional appliances are being modified to include smart features, such as refrigerators equipped with touch screens. To keep pace with these smart appliances, repair businesses will need to learn the ins and outs of this new technology.

Appliance repair businesses also face competition from major manufacturers who offer their own repair services, like Sears and Whirlpool. While appliances are under warranty, consumers are likely to take advantage of these services, which may be fully or partially covered. Independent repair businesses face the challenge of marketing themselves so that consumers are aware of their availability and choose to hire them when they need appliance repair.

Who is the target market for your appliance repair business?

The target market for a repair business partially depends on that business’ focus. Some repair businesses focus on a type of appliance, like repairing kitchen appliances, while others may specialize in repairs for a particular brand, like GE or Panasonic. Generally, a business’ target market will be consumers (most typically homeowners) who have the disposable income to afford appliance repair.

Skills, experience, and education useful in running an appliance repair business

Opening an appliance repair business doesn’t require a business degree, but certain skills and experiences can increase the business’s chances of success.

Appliance repair skills and experience. A repair business owner needs to be talented in working with and repairing the appliances they specialize in. As appliances become more complicated, a detailed understanding of how appliances work and plenty of experience in identifying problems and fixing appliances will leave a business owner well-prepared for the challenges they’ll face in fixing the appliances brought to them.

Creativity and problem-solving skills. Problems can and will arise in this industry, so a business owner who’s creative and takes an active role in problem-solving will do well. Repair technicians may need to be resourceful in finding difficult-to-get parts and overcoming other challenges.

Organization skills. From tracking invoices and part orders to keeping track of all the parts when disassembling an appliance, repair business owners need to have great organization skills.

Customer service skills. Customer service is a major component of running a repair business. Good phone etiquette, good interpersonal skills, and the ability to stay calm even if a customer is unhappy will go a long way to building a customer base and developing a good business reputation.

Scheduling talents. A repair business owner also needs to be able to create and maintain a schedule. This can be tricky when traveling from home to home for repair appointments, but being able to arrive at appointments on-time can build customer loyalty.

 

Educational Resources

Amazon has some good books for starting an appliance repair business:

 

How To Get More Appliance Repair Leads Online & Turn Them Into Paying Customers!
Troubleshooting and Repairing Major Appliances

 

Costs to Start an Appliance Repair Business

The cost to open an appliance repair business will partially depend on your business model. Most repair businesses travel from home to home, meaning that they need a truck or SUV to hold tools and supplies and potentially transport household appliances. Establishing a brick-and-mortar store is another option but will limit the business to working only on appliances small enough that customers can transport them themselves.

An appliance repair business can be opened on a bare-bones model for about $1,000, but expect to spend closer to $5,000 for a well-stocked business, and more if you need to purchase or lease a business vehicle.

Common startup costs include:

  • Diagnostic tools
  • Repair tools and equipment
  • Inventory of repair parts
  • Vehicle, including storage to organize supplies

 

Steps to Starting an Appliance Repair Business

Step 1: Write your 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
Free sample business plans

Step 2: Form a Business Entity

A business entity refers to how a business is legally organized to operate. 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 business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming an appliance repair business

Step 4: Select your Location

Some appliance repair businesses start in the owner’s garage and may even offer a pick-up service. Doing so dramatically reduces your expenses, but at a cost to having drive-by traffic seeing your sign.

Related: Choosing a business location

Step 5: Register for Business Licenses and Permits

small appliance/electronics repair license will be required from the state before opening your business in some states. There are also regulations for repairs that involve refrigerators or air conditioners. The Environmental Protection Agency requires technicians to have a Type 1 certification under the Clean Air Act.

In addition, there are some general local, state, and federal business registrations, such as a sales tax permit, Employer Identification Number, and Occupancy Permit.

Related: Common business licenses, permits, and registrations by state

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 an appliance repair business is another. Even though the costs to start an appliance repair business, financing it can be difficult. The borrower(s) will need to have good credit and personally invest 15-25% towards the total start-up costs to get a loan.

Related: Finding the money to start a business

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 Plan in Place

While repair business customers may become repeat customers, they will only return to a business when an appliance breaks. This means it’s important for repair businesses to actively market themselves to bring in new customers. Marketing options include direct mail, print advertising, social media, and more, and the costs of marketing will vary according to the method and volume used.

Your reputation will eventually become the most important marketing strategy as word-of-mouth referrals tend to drive most repair businesses.

Also, even though the profit margins can be slim, home warranty companies can provide consistent leads that make it worth it.

Related: Low-cost ideas to market a new business

Step 9: Get Business Insurance

Plan to purchase multiple insurance policies for full coverage for an appliance repair business:

  • Commercial liability insurance protects the business if a customer is ever injured due to work, and this insurance can cover resulting expenses like legal fees.
  • Commercial property insurance covers the cost of lost or damaged equipment and supplies if an event like fire ever damages the business’ equipment.
  • Worker’s compensation insurance applies only if the business hires staff and covers expenses like medical bills if an employee is hurt while working.
  • Commercial auto insurance will cover the business’ vehicle and offers protection in the case of an accident.

The costs of insurance policies can vary based on factors like the value of the business’ equipment and the business’ location. To get the most accurate idea of what insurance may cost, request quotes from multiple companies. Then, compare those quotes and pay particular attention to how their premiums, deductibles, coverage limits, and coverage exclusions vary.

Related: Types of insurance your business may need

Step 10: Hire Employees

While many independent appliance repair businesses are one-person operations, a business can grow to the point where it’s necessary to hire employees. Glassdoor reports that appliance repair technicians make an average salary of $32,606.

Labor is often the largest cost for an appliance repair business, right after the purchases of parts. Before hiring employees, a repair business needs to have the budget not only for salaries but also for additional expenses like workers comp insurance, health insurance contributions, unemployment insurance, and paid time off.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system is critical to the long-term success of your business.

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.

Related: Setting up accounting for your business

 

How much can you potentially make owning an appliance repair business?

The earning potential with an appliance repair business depends on factors like its area of specialization, the business size, location, and how many years the business has been in operation. The Bureau of Labor Statistics reports that, as of May 2018, the median annual wage for home appliance repair technicians was $39,270. The upper 75th percentile earned an average wage of $50,100, while the top 90th percentile earned $60,930. By differentiating your repair business from others, maximizing your profit margins, and marketing your business effectively, you can potentially increase your earnings.

 

Things to consider before starting an appliance repair business

Before you open a repair business, consider what competition is already present in your area and what market needs may be currently unmet. Could local homeowners use a technician who specializes in refrigerators? Are smart devices increasingly popular in the area, and are homeowners looking for a technician who can specialize in these types of repairs? The more unique you can make your business, the better you’ll stand out from the competition.

Transitioning into a full-time appliance repair business can be difficult as you build up that initial customer base, so consider starting your business on a part-time basis at first. Homeowners may particularly appreciate the availability of services on the weekends when they’re not at work, so a part-time weekend business might be a great stepping stone to taking the operation full-time.

 

Resources:
Association of Home Appliance Manufacturers
Professional Service Association
United Appliance Servicers Association