10 Common Mistakes Cell Phone Repair Business Owners Make

by Amara Zulfiqar

Imagine you are opening a new store every six months, and your average yearly cell phone repair business revenue per store is over $1 million. Sounds too good to be true? What if we told you that’s possible?

There are so many ways to achieve success in the repair business. Most repair shop owners either don’t know these ways or don’t consider them important enough.

We talked to Denis Gutsu of First Response Phone Repair, who made $1.5 million from one store in 2020. He broke down some common mistakes most repair shop owners make that keep them stuck in the vicious cycle. Listen to the podcast here!

Here are the key takeaways from our chat with Denis!

  1. The higher the profit per repair, the more the revenue will be.

Denis happened to come across a Facebook thread where repair store owners were discussing rent and repair charges. He noticed that most of them were charging exorbitant amounts of money for simple repairs such as a screen replacement.

Even business owners operating out of their garage or paying as little as $400 for rent were charging up to $200 for every iPhone X repair. This makes a profit of around $80 to $120, which is a ridiculous amount.

For most screen replacements, Denis charges a $30 profit. This profit margin is much less than the repair industry average. And yet, Denis is making much more than most cell phone repair business owners.

So, pricing your repairs right is important. It should depend on the amount of time and the level of expertise required to repair. Other repair business owners might have 4 repair customers and overall make more profit than Denis’s 40 repair customers. But Denis makes 40 customers who buy complementary items or other devices, which is an altogether different ball game.

So, the bottom line is, look at the bigger picture. Do you want 4 customers or 40 customers?

Pricing your repairs can vary from area to area and as per your strategy. We recently had a discussion with a few repair industry experts on our webinar where they discussed their pricing strategies in detail. Watch the video below to know more about it.

  1. Maximizing profit out of one customer.

A customer walks into your shop. Do you think, here’s a customer I can make $200 profit out of instead of $100? If that sounds like you, you’re on the wrong path.

You don’t want to over-charge a customer. Rather, you want to charge him the usual amount to make a regular customer out of him. Because if you over-charge a customer, it is likely they will not come back to you again.

According to Denis, greed will draw away success. Think volume, not one-off transactions.

If Walmart also concentrated on making maximum profit per customer, it wouldn’t be the giant it is today. It focuses on bringing in more customers rather than keeping big profit margins.

  1. Focusing on paying bills, rent, and other expenses.

Another common mistake that most repair shop owners make is concentrating on making money to pay the rent. They set the wrong end goal.

The right end goal would be making your customers happy, and the rent and bills will take care of themselves.

Focus on giving your customers a good experience, so they keep on coming back to you. You want to keep on generating income from a customer’s lifetime value rather than thinking short-term and earning a one-off profit.

Dump your expenses on the cell phone repair business software that you’re using and concentrate on the profits. Or maybe even hire a bookkeeper.

Sign Up for a 14-day FREE Trial!

  1. Customers are not as important as other aspects of a business.

If you have ever had a mentor, the one thing they’ll teach you in any business is the importance of sales. And selling is an art that is directly related to your customers. Happy customers are directly proportional to an increase in revenue.

By that equation, customers are the most important part of your business. So, train your salespeople well. Think of ways in which you can create value for your customers rather than filling your pockets.

A happy customer will always come back and bring in traffic via referrals, giving you more business and increasing revenue.

For instance, a few months ago, one of the receptionists at First Response Phone Repair made a mistake. In the cell repair industry, it is common knowledge that the iPhone 7 has an IC Chip issue. A customer came in for iPhone 7 screen replacement. The staff checked her phone as per their 27 point inspection protocol. Everything was working well.

As it turned out, her phone’s IC chip was faulty, and when she received her phone back, its microphone and ear speaker stopped working. She became upset and demanded to speak to the manager.

The manager talked to her and told her that iPhone 7’s are known to have this issue. He even showed her the Apple website that stated the same and told her he could not do anything. He offered to do an IC Chip replacement for $89.99.

By that time, the girl was angry and sobbing. She blamed the repair shop for messing up her phone and demanded a refund. She even threatened to leave bad reviews on Yelp.

Luckily, Denis was at the shop. He called in the manager and told him to put himself in the customer’s shoes. He asked the employee how he would feel if someone did the same to him, not informing him in advance of a potential error and later not taking ownership for it.

Denis understood that his staff should have informed the customer of the potential issue beforehand. So, he went to the customer and took responsibility for the mishap. He told her that her phone would be fixed free of cost.

It cost Denis $5 for a new IC Chip and almost nothing to retain a customer. She visited the shop just two days later to buy some accessories and then another time to buy a phone for her husband.

Not only did Denis make a new customer and retain her, but he was also able to earn much more than what he lost on that small repair.

So, always remember that happy customers are vital to your business. You want to retain your customers in addition to getting more.

  1. I’ll be driving a Lamborghini within the first year.

We all have big dreams and want to achieve them ASAP! But don’t think about instant gratification. Think long-term. Have a 3-year plan, a 5-year plan, a 10-year plan. Build your brand, increase your traffic, both walk-ins and online. Make more sales, re-invest your profits to expand.

Hold off your dream to drive a Lamborghini for a while. Instead, concentrate on business planning. Should you move to a busier area to get more walk-ins? Should you increase the size of your shop to offer more? Are you taking on too much instead of focusing on the business? Do you need to hire a new employee? Are your current employees motivated enough?

  1. We’ve already been through a pandemic; we don’t need to be prepared for downtime any time in the future.

Being ready for the worst is the best thing you can do for your business. Many repair stores went out of business or shut down in 2020 because they weren’t well-equipped or ready to take on the challenge.

However, those that were prepared and managed to evolve with the circumstances did not suffer. And people like Denis and Jeff Sandridge actually made more than $1 million in 2020.

  1. Making a business plan doesn’t matter.

A solid business plan will always add value to your business. It will give your cell phone repair business a framework to work out of. It will also give you a way to keep you motivated, look for ways to achieve your milestones, and determine your success level.

  1. The hustle will last forever.

No, the hustle will not last forever. However, for it to stop, you need to work on point 7, mentioned above. Moreover, as you grow, you begin to automate your processes, bringing down the amount of manual labor required to hold the fort.

Such automation includes getting a good point of sale and inventory management software like RepairDesk.

  1. You don’t need to hire an additional employee for tasks you can do yourself.

Quite often, business owners busy themselves with repairs and other chores that take up a lot of time. They do not hire additional staff, rather save the money and work themselves. This is one of the biggest mistakes a repair store business owner can make.

As a business owner, you should concentrate on strategies to increase revenue rather than doing it all yourself. You may think that a new hire is $1500-$3000 less in your pocket. But in the big picture, you are more likely to increase your revenue. Because an additional employee means more repairs and more time on your hands to devise ways to grow your business.

  1. Helping your competition will hinder your success.

A common misconception held by business owners is that your competition is your enemy. However, you and your competition can both benefit each other and build together. Reach out to them and introduce yourself. Tell them about your business and learn about theirs.

It is important to hone such relationships. Not only can you share valuable business advice but also grow your business with your competitor’s help. Because in the end, it is the community that will make it or break it for you.

Denis had a repair shop close by, owned by one Jose, that offered micro-soldering when his shop didn’t. Jose’s shop did not have a lot of walk-ins. They focused on eBay to generate business. Instead of pitting himself against Jose, Denis offered micro-soldering to his customers and outsourced it to him.

Now, Jose refers other people to First Response for repairs they don’t offer. This way, Denis cultivated a healthy relationship with his competitor, retain his customers and increase his business.

Use these tried and tested tips and grow your cell phone repair business to success. For more, read our 10 Commandments of Cell Phone Repair Business series.

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