How to Start a Cell Phone Store - Part 4
continued from Part III
To read How to Create Your Own Cell Phone Store Part 3, click on the link.
Getting Things in Place
At this point, you now understand how the cell phone business works in terms of its business model and processes involved. You should have considered starting on your business plan, came up with one or two Master Dealer prospects to contact, and started to think about a location where you want to conduct your cellular phone business.
Now the next step is to organize everything so that you can actually go into business. You will need to gather together all of the information in the previous steps to make that huge leap from having a business in your mind to actually setting up a business for yourself.
In this step of the guide, we are going to assume that you have found yourself a niche and created your business plan to go to the next step of setting up a location for your business.
Finding a Location
Obviously, the first thing to do to create your cell phone business is to find a location to start it up. This location can vary somewhat depending on your situation. It can mean setting up a designated space in your apartment or your garage. It can mean leasing a kiosk or a shop cart inside a mall. Or it can mean leasing to an actual retail office space or a small business office.
Where ever you chose to do business, there will be some basic steps for you to take care of business.
About Commercial Leases
Aside from using your apartment or garage for your business, you will be involved in leasing a commercial property from a landlord. Commercial leases can be a bit different from personal residential leases, so we recommend you study up a little bit to get yourself familiar with the process. There is a good book again by Nolo that discusses the details on commercial leases. We recommend you get that book from your local library to read it over to study a bit about commercial leases.
Here are two points that Nolo emphasizes about commercial leases.
- Rule 1: Understand that the terms almost always favor the landlord.
- Rule 2: Know that with a little effort you can almost always negotiate significant improvements to the terms.
Be sure to pick up a copy of their book, Negotiate the Best Lease for Your Business from Nolo, or check out their websites on great articles on commercial leases.
Some of the main differences of commercial lease compared to a residential lease that we saw were the following
- The lease term is longer. It is normal to have a 24-48 month lease contract. If possible, try to find or negotiate your lease to be a shorter period. A 12 month or a month-to-month leases are available for lease. It is just too difficult to know how your business will do in the early stages of your business. You may want to move to a bigger location or downsize. A shorter term leases are always of advantage for you.
- You can demand certain construction to be done prior to moving in. Whether this is to add or take out a wall, commercial property owners may do some construction for you to accommodate your needs. Be sure to think about a perfect layout for you, and negotiate this point with the landlord.
- Most of the commercial leases require a security deposit and a last month's rent along with your first month's rent. That's approximately three months worth of rent. Some other properties will require you to put down a security deposit 2-3 times your monthly rent plus the first and last month's rent making your move-in costs extremely high. Be sure to negotiate these points with the landlord. Leverage yourself in the negotiation by having 2-3 potential properties that you want to use, and not falling in love with one particular property.
In our searches for commercial property, we have run into all types of landlords. Some of the landlords that we dealt with been very courteous and understanding. However at the same time, we have dealt with others that were very demanding and overly aggressive. Be sure you do your due diligence and look around at enough locations to have a selection of commercial property to choose from.
How to Find your Location
Dealing with a landlord is one thing, but you will need to actually search your office location to start out any of the processes mentioned above. To find your office location you can do it yourself or go through a real estate agent. Depending on the State that you live in, it may be more common to use a real estate agent. For example, in New York, it is much more common to go through a real estate agent than to find it yourself. However, in California, it can be pretty common to drive around town on your own to look for "For Lease" signs and get a commercial property yourself.
When looking for property for yourself, be sure to take a look at a good number of locations before picking the one you like to go with. Ask around your friends and business colleagues to see if they know of a good small business office or a retail outlet in the area that you would like to start out your business. Always look for a location with your niche market in mind. You will need a location that can access your niche market.
Here are a few questions to ask yourself as you look for a location for your business.
- How many stores are you planning to have in one year? Three years? Five Years?
- Who is your niche market? And what part of town do they exist in?
- How is the potential from growth of your niche market? Do you have plans to move to a different market after being established?
- How much rent can you afford to pay each month?
- What is a lease term that would be favorable for your business?
There is also a website called, LoopNet (http://www.loopnet.com/) that both real estate agents and small business owners can use to search for a property. You can get the paid version or use it for free. Start looking for locations through this site, and after finding a few potentials, contact the agent listed on the site or go directly to the property to negotiate.
We wish you the best in finding the best location at the best possible price because in a retail business, location is everything.
Getting Your Furniture
Once you have gotten your location, and signed that lease, the next step will be to get some office furniture. A desk, file cabinet, chairs, display cases, and other tidbits to make your store look nice for a great customer experience. Furniture can be a very costly expense for a start up business at its initial phases. You want your store to look nice, but at the same time want to try to save as much as possible. We recommend searching in following areas prior to paying full retail price on furniture.
Craigslist & eBay
You would be amazed at how low office furniture can sell for on sites like Craigslist and eBay. This is due to the fact that office furniture loses much of its utility if someone is going out of business. They can't bring back the furniture to their homes, and they want to liquidate it because they have no other need for it. In addition, the fact that there are less buyers for office furniture compared to a normal consumer good also play a big role in finding a bargain as well. How many people really want to buy 15 chairs all at once for their homes?
The bargains found on both Craigslist and eBay are amazing. And while these goods may sell at a bargain, the quality of it is very decent. For example, we have purchased 20 rotating office chairs with wheels for under $200 on eBay before. That's less than $10 per chair, and these chairs were almost new! We asked why the sellers can sell it for so cheap, and they told us that they were liquidators that bought furniture from government entities and businesses that were going out of business. They were happy the furniture sold, and we were happy to have found it for so cheap.
Be diligent and be sure to check eBay and Craigslist a lot when you are starting out. You can even find things for free on Craigslist that you would be able to use for your office. In addition, aside from furniture, eBay and Craigslist also have great deals on office equipments such as printers, copy machines, and FAX for you to save more money as you start out your business.
Thank god for IKEA, it has become much easier and cost efficient to set up a very nice store front. You can set up your shop using their furniture to make your store look simple and modern. Aside from the furniture we purchased from eBay or Craigslist, everything else was purchased from IKEA at our stores. By using a little creativity, it is very easy to make your store look elegant using the furniture purchased at IKEA.
IKEA furniture are very basic and simple with great designs. So to contrast its appearance, you will likely need to make colorful signs using your imagination and your computer. Use programs like Adobe Photoshop and Illustrator to come up with great looking signs and retail tags for your store.
If you need some additional help with the layout of your store, IKEA does have an interior design department that can help you to design your storefront as well. If you think your design creativity is not up to par, you may want to consult a professional about them.
Of course at times, you may need something that go over and beyond Craigslist, eBay, or IKEA. In these cases, there are industry suppliers that provide you with carrier specific authorized furniture for you to use at your store. If you purchased the 10 Step Guide, we have listed a few suppliers in Step 10 of your guide.
The authorized suppliers have furniture and display units that you see at the carrier owned stores. They do look very authentic and are very nice. The only drawback to getting the authentic furniture is its price. The prices on these furniture and display units tend to be relatively expensive. You will need to pay a premium because they are authentic furniture.
One way to avoid paying retail again is to use eBay to search for authentic supplies. Sometimes you can get lucky, and find a cell phone store that's going under and may be able to purchase their equipment for pennies on the dollar.
Obtaining Your Collateral
Collateral is another name for marketing materials such as brochures and posters that you provide to your customers. Collateral is also referred to any display units provided by your carrier that has their logos on it. Obtaining your collateral is one more critical step to making your store look authentic for your customers.
Display Units - Brochure Holders & Cell Phone Displays
Although you may be able to get some display unit collaterals from your Master Dealer and your carrier, they usually do not like to give out a bundle to you until you have made a good number of sales for them. Until they decide to give you a bunch of collateral, you will need to purchase it for yourself.
If you have purchased our 10 Step Guide, you will find supplier information that sells small items such as brochure holders and cell phone displays. They will cost you around $1.50-$5 a piece. You will need to budget around $100-200 to get all of the small retail display units in place. Again, you will need to use your creativity a little bit to make it all work for your retail store. At times, you can find some great retail display units at your local $0.99 cent store. Just be creative and the possibilities are endless.
One large supplier that we used frequently was ULINE. They are a company that specializes in packaging materials, and they also sold display units as well. Go to their website (www.uline.com) and order a free catalog so that you can start to order from them.
Upon a few months of operation, and with a solid number of activations each month, you are than able to start bugging your master dealer and carriers about obtaining carrier specific collateral for you to use in your store. It is always good to have collateral provided by your carrier to make your store look authentic enough for your customers.
Brochures and Posters
Obtaining collaterals such as the actual brochures and posters are much easier than getting the small display units. Master dealers and carriers are glad to provide you with their latest brochures and posters. They will usually give away much more than you can give away to your customers. Simply ask for the latest brochures and posters, and they can either send it to you or will drop it off. You can also go and visit your warehouse manager for them too. If you become close enough with your warehouse manager, they can sometimes provide you with some surplus display materials that look great in your store.
Dummy phones are fake phones that you use as display for your customers. Dummy phones are non-working units of phones. They provide your customers with the look and feel of their potential new phones. Since they are non-working phones, it is much more cost efficient for you to carry at your store.
Dummy phones are usually provided by your carriers or master dealers. They will usually provide you with some dummy phones as you start out your business. However, often enough the amount of dummy phones they may give you is not as much as you'd like. In situations like this, you will need to purchase your own dummy phones to satisfy the missing dummy phones in your line of inventory.
One way to purchase the dummy phones are from your master dealer. They will sell you a dummy phone for anywhere between $15-25 a piece. The better way of obtaining a dummy phones is through eBay. You can look for them there, and you should be able to find all sorts of dummy phones from $3-15 a piece. It is a much more cost effective way to get it for your store.
We have also listed a couple dummy phone online stores that you can try using as well. These online stores sell their dummy phones for a little less than the Master Dealers, but a bit higher than eBay. They can be used when you can't find the exact dummy phone on eBay.
Carrier Specific Signs
Have you seen your local cellular phone dealership with the window sticker or a lighting unit that says "Authorized Dealer for ABC Wireless?" These are carrier specific signs that help send a message out to your prospects that you sell the carrier's service at your store. These signs are very effective in attracting customers into your store, and provide you with instant trust by your customers.
Again, carrier specified signs can be purchased or given to you by your master dealer or carrier. It all depends on your number of sales. As you are starting out, you may want to ask your master dealer about them. See if they have any surplus or something you can get for free or at a discount. If they do, that's great. If they don't, you may consider purchasing one from an authorized supplier. They do cost anywhere between $100-300 a piece, but they may be worth your money because the sign itself does provide you with a lot of customers for your business.
If you are interested in saving some money, you can also create smaller disposable signs or banners for your store. Make sure to get approval from the carrier on the artwork so that you don't have any problems later. But if you can afford to put up some money, you may want to try out temporary signs and banners that can be replaced at a later time.
Lighting is an important environmental factor to make your store look bright. Brighter stores tend to have a better image for cellular phone businesses because it gives the image of being modern and clean. Be sure to take your time to look into ceiling lighting, display lighting, and room lighting to make the customer experience in your store spectacular. Consult a professional should you need advice on lighting for your store.
The Open Sign
An "OPEN" sign if placed properly is an effective tool to bring customer into your store. The "OPEN" sign helps your prospects to come into your store as it provides a more inviting feel into your store. The alternative of placing an "OPEN" sign is to keep your doors open during business hours. By doing so, it becomes much more inviting for a prospect to walk into your store. The point here is to make your store inviting so that people would want to come in. Dark store fronts, where you are unable to see if it is open or not is always less intriguing to want to walk in.
Outdoor signs are a great way to promote your store front if you have foot traffic in front of your store, or if you are faced to a street. Outdoor signs can be purchased from a sign manufacturer for your office. Be sure you check with your landlord about putting up a sign before you fully go through with it because they may have rules and restrictions on what type of signs they would like to have on their property. They may be able to recommend you with a supplier that they often do business with.
The costs of creating an outdoor sign can vary depending on the type of signs you are thinking about, but you can expect to pay anywhere from $500-1000 and possibly more. They are a great tool to have because it provides you with exposure to the general public. Make your sign conspicuous enough to attract prospects to be interested.
Now is a time to start thinking about your store layout. In a regular cellular phone business, you would like to have at least four main sections of your store. The four sections of your store are:
- 1. Greeting area
- 2. Display area
- 3. Sales area
- 4. Back office and inventory area
The greeting area will be an area where a customer is first greeted by your or one of your staff. In this area, the customer will be met with a customer service staff or are able to pick up some of the specials or new products you are offering for sale. It is the area where you make your first impression.
This area can be as simple as one of your staff standing in front of the door to greet your customers with a brochure in their hands. Or you can designate some furniture for this area to set up brochures on it. Some stores combine this area with the sales area due to the limited amount of square footage the store has. Make sure that the customer has a good first impression when they walk into your store and into the greeting area.
This is the area where you will set up your dummy phones or possibly live phones to display the phones you have for sale. The customers will usually browse through the display area, and this is the area where you will interact and build rapport with the customer. You or your rep can show your customers around this area to show them the newest products available as well as its features and benefits. Be sure to be proactive with your customers by not just asking,
"Can I help you?" But saying things like,
"Can I show you some of the new products that we have available?" or
"Have you heard about this new ABC technology that will make your life better?"
There is really no way a customer can keep up with all of the latest technologies available from each carrier. It is at times even difficult for the owner itself to keep up. And this is why it is your job to communicate some of the newest and most convenient technologies available to your customers. They may have never known something like that existed, and may choose to start service with you.
So in the display area, keep it clean and attractive with a lot of brochures in its relevant sections so that you can pass it out to your customers as they walk in. Remember, the carriers will give you more brochures than you'd like, so be sure to use that to your advantage and hand it out like crazy.
If a customer has indicated their buying signals and want to go forward with the purchase, you will need to have set up an area for them to sign their contracts, activate their line, and explain to them some of the available features for them. The sales area usually consists of a desk and a few chairs for you and your customers to sit down to talk about the final details of their purchase. Be sure to explain to them their contract, especially the early termination charge, activation fee, and prorated charges as those are the three big reasons why a customer may come back. Be sure to explain to them how they can set up their voice mail and their online accounts as well.
The sales area should also consist of a computer to activate their line and print out their sales receipts. You will also need to have all of the forms, contracts, and brochures in that area to make it convenient for your rep and your customer for a smooth, efficient transaction.
As a word of caution, you may also want to designate a customer service area alongside the sales area for you to service your existing customers. Customers can come into your store for a problem that they have been having, and it may not be the best idea to put a complaining customer next to somebody that is making their first purchase with you. Although separating out the two areas , customer service & sales, will depend on your square footage, it is a point you may want to consider for your business.
Back Office and Inventory Area
The back office and inventory area will serve as the employee room and inventory room. You can take care of all of your paperwork and commission related work in this room. In addition, this is the room where you will keep your inventory. Inventory maintenance is a critical part of your business process because each phone will have an average wholesale cost of $150. Losing one due to theft will mean losing out on one or two activations. Be sure to create a system for safeguarding your inventory.
Ideally, the back office will also have some desks, file cabinets, printers, and other needed furniture to take care of the business' administrative tasks. You can decide to have a room for employee breaks or not depending on the square footage of your location. As the owner of the business, you may be spending most of your time in this room taking care of business, so you should take your time to plan this area well.
There are numerous software available for you to effectively manage your store's inventory and sales. We have listed few of the top software providers in Step 10 of the 10 Step Guide. Effective use of software at your cellular phone business will occur when you start to hit 30-50 activations per month. Up until that point, it is fairly easy to track all of the activity yourself. After you consistently do 50+ activations per month, you should consider getting a software to effectively run your store.
Payments & Receipts
Recording of payment, processing credit cards, and creating receipts for your customer can be done through numerous programs. You can use the some of the software listed in Step 10 of the guide as some of them are designed to take care of your entire enterprise needs. Prior to getting to that step, you can use the most popular software applications like QuickBooks or QuickBooks Online Edition. QuickBooks can be very convenient since you can integrate the credit card portion right into the system thereby making the record keeping and accounting easy.
Of course, you can get a traditional cash register and a credit card processing system from your bank and do business that way. Everything will need to be recorded manually. This may be a traditional method, but as a small business, we do recommend you try and leverage the existing technology as much as possible to gain competitive advantage over your competition.
Customer Relationship Management
Customer relationship management software is a good tool to use if you want to make customer service a number one priority at your business. Again, there are numerous programs out there to manage your customer's information. Some representative solutions are Salesforce.com or NetSuite. Both are very good systems, and they will help you to track all sorts of information about your customers. They can both be a bit costly though, so you do have cheaper alternatives by looking for "CRM" or "Customer Relationship Management" on Google. If you do use the CRMs well, they do help you to provide great service for your customers.
And fnally, here's the master dealer list to get you started with this business!