Advice on Starting a Small Business

Hey everyone, got made redundant yesterday as the place I'm currently working for is closing down so was looking at starting my own small pc shop and maybe selling on ebay (hopefully like techfast, don't wanna be greedy just wanna afford things) , there's currently a little garage room to lease for 200$ pw (9500k a year) and it's around the corner from a school but it's down the side of another store, I'm only 20 and will be working by myself and I'm very scared moving forward,I already have some cheap pcs I can put together and sell for about 40-50$ each and a few boxes of keyboard and mice that I all got on the cheap a while back ($40 for everything+ the old pcs), I can build and repair pcs (physically & digitally) but I can't setup websites or Internet or do much programming so this is I will be paid out 10k by my employer in my last week so was just wondering if you guys could give me some advice.

First question, what do I need to open the business? I can get the building and all but how do I get a business license, register a name and pay my tax?

Second question do you guys think I can make a living just building and repairing pcs or should I try and expand and try and learn Web designing and other things?

Third question I'm really scared about not getting customers and going bankrupt so what's a good way to advertise and get work? Also the fact that I'll only have a small garage down the side of an alley with no store front. Would I be able to go advertise cheap pcs at the nearby school and get my name out with word of mouth or would I be better off finding a more expensive shop with a store front?
Really appreciate any advice and help guys as I'm really lost at the moment and worried at the moment, I do have a cert 3 in IT engineering if its needed to open up.

Edit: also would like to learn to setup businessess and provide pcs & mobile support if you guys could tell me how to go about it, thank you

Comments

  • +3 votes

    https://www.abr.gov.au/

    You can pretty much get yourself setup as a sole trader in a few minutes.

    $200pw and you will need a bond, so $1000ish, you've already eaten in to more than 10% of you startup funds.

    Why not start from home?

    Have you looked at where you can buy parts from, what the suppliers payment terms are?

    Personally I think it would be extremely hard to make a living selling cheap PCs everyone I know that has done it/does it does it more as a side job or hobby so you'd be competing with them.

  • +6 votes

    Consider:

    1. Don't Spend that $10K, if you can

    2. IF you've Never run a business before,
      that $9,500 is going to make you charge
      MORE for your products, than if you work
      from [a Closet in the] Home. (Home can
      also save you $$ on a 2nd Internet feed,
      public liability insurance, etc. etc.)

    3. Cut your Costs, in the first Years

    4. If you WANT to set up web sites, see
      if your Library has licensed, Lynda.com
      courses (some let you take courses on a
      PC at home); some courses have may tell
      you how to set up + run a business

    5. Maybe buy [carefully] from AliExpress
      Get a few samples first & Test 'em!

    6. It's great that you have the Excitement
      for running a business, but you DON'T need
      to Rent to get an ABN or to register 4 GST
      (GST is an extra Time burden; I'd say wait
      on that 'til your selling is in 5-digits;
      ask ATO when you MUST register for GST)

    7. Sell via GumTree & eBay (GumTree may
      save you eBay fees; find out if + how)

    8. I agree with the prev poster's take on
      "cheap" PCs… each one you sell adds a
      "12-month Warranty" burden on You.

    Slowly, slowly catchy Profit!

    Good Luck!

  • +22 votes

    Don't do it unless you are ready to lose all your savings which appear to be $10,000.

    Get a job. Stop thinking of a business. You need income. Once you have a job, try to sell PCs on the side. See for yourself whether it is a viable business. If it doesn't work out, you still have a job. If it works out, you have a business. But going full-time into new business like this funded by your savings is STUPID and you are not a stupid person. You'd be taking huge risk for little upside. Just don't do it.

    You have two options…

    1. Get a job and start your business on the side. Nike founder Phil Knight got a job as an accountant while trying to get his shoe company of the ground. It took 5 years before he employed himself in his company.
    2. or convince other people to give you starting capital so you don't risk your savings. This would be easier if you have a groundbreaking idea. I'm afraid PC repair shop is not a groundbreaking idea.
    •  

      Trust me: It'll be Hard to
      get folks to Give you start-capital,
      parents excepted

      Consider: You'll need to give it back
      with something like Interest for their
      loss

      Even High-Tech Start-up's have trouble
      finding "Angel Investors," and these
      start-up's have the potential for HUGE
      Profits, in future (You don't)

      (Eg, Designers of NEW Nuclear Reactors)

    • +1 vote

      This, takes money to make money.

      Get a job and try to make business on the side. If it takes off great, if it doesn't still have a job. Start in your room / garage dont waste money on rent.

      I do PC consulting on the side, PC sales is cut throat and margins razor thin, not worth it.

    •  

      Agreed that it would be safest to get a job or part time job, while running the business on the side to start.

      I expect there's a fair chance of bankruptcy in the renting scenario.

      Starting out at home would let you get a group of suppliers running smoothly. It's be easier to rent later if everything else is already organised and running smoothly.

      So from home, you just have to work out how to get customers, and which services you can offer. From a shop, you'd still need to work out how to get customers anyway.

      Generally, the first 1-2 years are the hardest, so by renting, you could burn through all of your cash before the business even gets properly going.

      • +2 votes

        Agree. Get a day job then slowly build your side business, finding it from your day job initially. That way, you learn from potential mistakes.

        Connect with other entrepreneurs. And have a long term plan. Don't give up.

        Get a mentor. Ask questions from someone who succeeded in a similar line of business. That way, you avoid costly mistakes from lack of experience.

        Lastly, don't be afraid. Ultimately, just provide quality service and value for your customers. Your reputation will be your partial investment.

        Good luck kid!

  • +5 votes

    you will have to sell a huge amount of computers to cover '9500k a year.'

    If you are really set on having your own computer store, why not try getting a job at one? Then you can learn more about how they operate before opening your own store.

    • +4 votes

      THIS. Selling PCs at $50 each, you need to sell almost 2,000 units to basically cover rent.

      • +1 vote

        I'm not meaning I'll just sell small 50$ pcs I'd like to do high end stuff as well I just thought the cheap ones would be good to start with but you guys are all making valid points and I heavily appreciate all the feedback

        • +2 votes

          There are a lot of people here telling you NOT to start a business. If you want to start a business - go for it (but have another job as others have noted). The earlier you start, the better it can be (fewer family commitments, more free time to spend on business). Don't spend a dollar unless it will lead to a customer. And think hard about these questions:

          1. Who is my customer (age, knowledge of category, spend, product desired…)

          2. What will I sell?

          3. What won't I sell?

          4. Why should someone buy from you rather than someone else?

          Good luck.

  • +3 votes

    If you can't beat prices from deals posted here, you won't survive as a small startup.

    •  

      Harvey Norman succeeds without showing up on OzBargain much. Selling cheap is not the only way to succeed.

      Actually, I expect it would be difficult for him to turn a profit by having a small shop and selling as cheaply as the bargains here. Selling for a medium-high price from a small shop is more likely to succeed. Tech-savvy people know where to go to find a bargain. Less tech savvy people are more likely to shop locally, and not worry so much about 'cheapest price'.

      •  

        Harvey Norman succeeds without showing up on OzBargain much. Selling cheap is not the only way to succeed.

        Harvey Norman is a small startup ?

  • +2 votes

    Do not start the business, look for a job now before you become 'unemployable' in the eyes of HR.

  • +1 vote

    The one big advantage you would have over bigger established stores is lower overheads, I'd say going into that rental would be a mistake for an unproven startup as that advantage would be eaten up very quickly. Also not sure where you're located but for $200 a week you could possibly find a clean office with street frontage, rather than a random garage/room down an alley.

    If you're selling anything but especially low-cost stuff just make sure you do all the numbers on margins and factor in time as well. Eg. if you're selling it for $50, take out material costs, time to build, time to market it, time for customer service, warranty follow-up and other admin stuff you might only be making $5 an hour.

    If I were you right now or had my time again, I would get a basic job to pay the bills and throw myself into some digital projects.

    Note I'm not saying a PC store is a bad idea, I'm sure there's plenty of people that would still use them, especially service-wise for repairs etc. However starting a business suddenly from a box of junk doesn't sound like the best plan.

  • +1 vote

    Offer at home tech support and save on rent

  • +3 votes

    No. You should not open a small business because you're not ready. You can't survive at not being greedy. You have to be ready to drown your competition when they're struggling to stay afloat. At the same time, you should have the flexibility to work together when it works best for you. At least that's my experience.

    Look for a job and flog all the cheap PCs you can assemble onto eBay in the meantime. A small PC shop is a vanity play at the moment and will not help you. Use the $10,000 as emergency funds so put $2,000 aside for emergencies such as accidents, car repairs, insurance etc. $3,000 for paying the bills and $4,500 for savings. The remaining $500, use for marketing.

    As a SME professional in the advertising industry,

    1. Spend $30 on decent business cards from VistaPrint.
    2. Also letter-drop your services in the neighborhood e.g. repairing PCs, builds etc. Put your services on community boards.
    3. Start cheap with social media. Get on Facebook and Next Door (local social network) if you're not on there yet and tell people what you do. You have to be seen to be known.

    When you get sales, then speak to a few marketing professionals to advise you going forward. Some will offer it for free, others might charge you. But find someone you trust and who has helped others.

    Get started there. The worst thing you can do/feel is to sign a contract but find out there is no demand for your products.
    In the meantime, if you have income coming in, it'll feel a lot better.

    •  

      Thanks so much for the advice! I might try and get something part time and see how I go on my free days with this

  •  

    Have you tried asking Techfast for a job?

  • +3 votes

    In one respect I echo what most of the posters here say: just don't do it.

    However… If I was 20 and just received $10k (you must have been working quite a time for this much redundancy), I would be on the first plane out of Sydney. Backpack around SE Asia, or South America, or anywhere. Have fun, have life experiences, have girls (or boys), maybe try for some part-time bar jobs, whatever. Just live.

    And finally, when you're broke, and have exhausted your own loot, and perhaps the funds that rellies back home can send you, only then come back to Oz, and maybe get a job.

    Geez Louise, there's rest of your life for starting a business, managing finances, being responsible, blah, blah. You're only 20 once. You'll never be fitter, never be better looking, never have this little accumulated responsibility, never have this much zest for life.

    •  

      I like this answer. Statistically you are more likely to succeed with new business when you are 40 rather than 20. The older you get, the odds of success keep going up. So unless there is this burning calling "you have to do it now and you can't picture yourself doing anything else" there is no need to rush. Entrepreneurship can wait.

  •  

    Does PC include laptops? So people other than gamers actually buy PC's anymore? I find I get but fine now with a decent tablet/keyboard combo.

    As per above comments, get a day job and offer tech support out if hours. Not much capital to spend.

    I've only ever invested in travel so wouldn't know what else do do with 10k

  •  

    If you’re interested in amazon selling, I’m in a mastermind with a guy who is teaching people how to sell on amazon and helping them get some brilliant results. He has a free webinar (it’s a sales funnel, but still worth watching to get a feel for this as an option for a side gig. He is called Zac and his business/course/program is Zon Best Sellers. I can’t personally vouch for his course as I haven’t done it myself, but he is brilliant and others are getting amazing results so it could be worth checking out.

  •  

    Get a job, enough to cover your bills, and stay afloat at least, and build up in your part time. Be prepared to sacrifice a lot of your free time.

    Stay scared - enough to be on the lookout for weaknesses, threats. Avoid committing to that rental agreement - as others have said, straight away you have $10k setback.

    Expect to start small, and slow. The VAST majority of startups fail. You need to get just about everything right, from accounting to business relationships to stock management to quality. And COSTS.

    Make your own luck. Look for opportunities.

  •  

    What you are proposing is what they call a 'side hustle'
    Goggle that - listen to podcasts - read our forums etc.
    Flyingsolo mentioned above is also excellent
    I recall past discussions about things like Airtasker etc. - here is one https://www.ozbargain.com.au/node/384632
    You will definitely make more $$ visiting people and repairing their pcs than retail
    Think virus removal, windows reinstall, set up the wifi - that sort of stuff non-techs can't do
    just thinking of this but setting up some security around wifi would be great
    e.g. "would you like to control how long your kids spend on youtube, block pron, etc…."
    Get/keep at least a part-time job now - even if it's woollies or bar work - until you get some repeat clients and testimonials
    you can register for an ABN and put up a FB site and cheap website for next to nothing
    Other than that spend nothing on the business but time - soon that time is worth money!
    Cheers

  •  

    Starting a small business is an exciting opportunity, but it is not easy. It requires good financial management practices such as sufficient capital, not using business funds for personal use, managing costs and anticipating rising costs. Statistics show that only one third of small businesses succeed through the first three years of operation – but there is support available to you to maximise your chances of success.

  •  

    Read through the comments here and everyone has a great point or two. On the part where you asked about spreading by word of mouth, if you're in a tight-knit community, that would be a really cheap but effective marketing campaign. For this, you can also do a bit of SMS marketing, which I think would work well in locality where neighbours know each other well and people mostly know each other's cellphone numbers. if you wanna read up on it, you can start on this blog: https://www.jooksms.com/blog/struggling-to-reach-customers-h... . And if you ever decide to go for it, good luck!

  •  

    Starting and running a business is only for the passionate. If you're simply looking to earn an income, get a job. A business is long hours, high risk, and a lot of work. You need to know what you're doing and have a vision for success from the start. You don't meet either of those by the sound of it.

    Trust me, the world has enough half-assed businesses thinking they can just get rich by having a store with their name of it. That's why they all close down within a matter of years or less.

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