Some advice needed please

steps_3314

I have recently being offered a stake in a business partnership. The business is currently an internet cafe and is run by a single friend of mine. He has suggested that we form a partnership and turn it into a computer repair center repairing, upgrading, selling pc parts/components. Will include website with shopping cart and various other services like printing. There is currently an office colour photocopier and fax machine.

Im fairly experienced fixing pc's and do it on the side as i work as a systems engineer just to earn some cash at present. Now this guy is a very good friend of mine and very trustworthy. He also knows his stuff. Cisco experienced and all that.

My question is that to invest in this will cost about 10k. In fact its 20k but i have a friend who is interested in investing also. He is also a techy.

Do you guys think the business could be worth 20k to start it again as a partnership. We have some brillant ideas and a great location also with existing equipment in place. It would be a case of simply walking in and re-setting up again.

Any opinions appreciated.

forbairt

I'd have to ask ... have ye done any market research into this ?

You're fixing pc's on the side ... if you're going to do this "professionally" do you have the figures and so on you'll require to break even .. and to actually make a profit ...

Have you gone and made up a business plan of some sorts ... ?
Money invested ... expected return and so on ?

2 People working with an expected income of 400 quid a week each (rough example) ... means shop will have to earn 800 for the two of ye on wages ... add on rent / electricity / insurance / hardware costs / depreciation and so on ...

Having a shop will mean having rent / electricity / insurance and so on ... will ye be keeping the internet cafe side of things running ?

I was asked a year ago if I wanted to be manager of an internet cafe and initially I thought cool ... I did a bit of research into the figures and so on and quite quickly understood why so many of these places start up and close down within months of opening.

steps_3314

forbairt wrote: »

I'd have to ask ... have ye done any market research into this ?

You're fixing pc's on the side ... if you're going to do this "professionally" do you have the figures and so on you'll require to break even .. and to actually make a profit ...

Have you gone and made up a business plan of some sorts ... ?
Money invested ... expected return and so on ?

2 People working with an expected income of 400 quid a week each (rough example) ... means shop will have to earn 800 for the two of ye on wages ... add on rent / electricity / insurance / hardware costs / depreciation and so on ...

Having a shop will mean having rent / electricity / insurance and so on ... will ye be keeping the internet cafe side of things running ?

I was asked a year ago if I wanted to be manager of an internet cafe and initially I thought cool ... I did a bit of research into the figures and so on and quite quickly understood why so many of these places start up and close down within months of opening.

I think internet cafes are a dying trade tbh. With broadband becoming more available and pc's/laptop found in almost every household there is a bigger demand for services like these. I understand there are lots of people around offering these services also.

We are in the early stages of planning. I have all the details on costs/bills like rent, insurance, council taxes, esb and phone and water. The property space we are renting has three big office spaces on three floors. Therefore at present one of these rooms is the cafe and one other is being rented (this person contributes to the esb also). We have the choice to rent out the third office space as an apartment or an office for another company. We are allowed to sublet.

As i said we will keep our full time jobs and hire two members of staff. A sales girl and a desktop guy for the repairs. We will also help out as much as possible. Evenings/weekends. We will offer call out services also.

To answer your question as of yet we have no business plan. We are at an early stage but this will happen.We have good contacts also for supplies where we can purchase second hand desktops and the like to sell on. Theres a few other services we will offer that other similar business dont offer as of yet.

We will offer to support Small Businesses also. Already have one offer of a contract for a small company. I do think there is a good chance this will work but you ar right in that every minor detail needs to be considered. That is why until we have all the relevant information and detail and forecasts no decision will be made.

forbairt

steps_3314 wrote: »

As i said we will keep our full time jobs and hire two members of staff. A sales girl and a desktop guy for the repairs. We will also help out as much as possible. Evenings/weekends. We will offer call out services also.

Ah I hadn't seen that ye'd be keeping your full time jobs.

I guess you've thought about a lot of things like ... is there carparking space available for PCs ...

Who will be doing the Call outs .. will your "desktop repair guy" require a car ... What are the implications of him using it for work on ye.

Hmm.. as I said ... I'd get some figures together:

Number of sales required ...

The small business contracts would seem like the way to go ... its an area I try to target in webdesign ... a small business who can't hire someone full time to take care of their site / image can hire me to do it for them .. and similarly for ye they can't pay a full time IT guy so it may definitely be a nice little money earner. I tend to always take a bleak look on these things though and say .. well .. whats the bottom line on what ye need to be pulling in .. in terms of money (profit every week) ... with wages for 2 staff you're already up there on 1k+ I'll presume ... (experienced desktop repair guy + office girl .. though ye may get away with part time on that? initially until business picks up)

steps_3314

forbairt wrote: »

Ah I hadn't seen that ye'd be keeping your full time jobs.

I guess you've thought about a lot of things like ... is there carparking space available for PCs ...

Who will be doing the Call outs .. will your "desktop repair guy" require a car ... What are the implications of him using it for work on ye.

Hmm.. as I said ... I'd get some figures together:

Number of sales required ...

The small business contracts would seem like the way to go ... its an area I try to target in webdesign ... a small business who can't hire someone full time to take care of their site / image can hire me to do it for them .. and similarly for ye they can't pay a full time IT guy so it may definitely be a nice little money earner. I tend to always take a bleak look on these things though and say .. well .. whats the bottom line on what ye need to be pulling in .. in terms of money (profit every week) ... with wages for 2 staff you're already up there on 1k+ I'll presume ... (experienced desktop repair guy + office girl .. though ye may get away with part time on that? initially until business picks up)

Car parking might be an issue as the office is in the city center. cars can park temporarily but not for a long time. for us i suppose we'd have a permit to park..not for customers. myself and the partner would help with the call out. when i say call out i really meant collection, as in take the pc back to the center and repair.

we havent really done our sums yet but i think with what with offering and the products we can sell there should be a good profit margin with some hard work.

my concern though is the business worth 20k...remeber it will be split three ways, 10k investments by me and my friend and the original owner remains a partner.obviously we could put our 20k together and probably start fresh but as i said this business is ready to walk in so this justifies the owner asking for 20k..i think

or maybe is it worth less..say 15k, shud we offer 7.5k each?

forbairt

It sounds good to me ... (I can't really say if I'd invest 10k or 20k in it even ... as I said figures required)

My major concern would be parking in this location ... people like to throw their PC into the back of their car and bring it in to you on their lunch break or drop it off in the morning. Without parking it may turn people off.

Also if you have to collect the machines you're looking at adding on 30 minutes ? there and back ... to the work on the machine. Will a customer really be willing to pay for half an hour ... when they could have dropped the machine in .. told you the fault there and then ... and been on their way ?

(just a thought)

steps_3314

forbairt wrote: »

It sounds good to me ... (I can't really say if I'd invest 10k or 20k in it even ... as I said figures required)

My major concern would be parking in this location ... people like to throw their PC into the back of their car and bring it in to you on their lunch break or drop it off in the morning. Without parking it may turn people off.

Also if you have to collect the machines you're looking at adding on 30 minutes ? there and back ... to the work on the machine. Will a customer really be willing to pay for half an hour ... when they could have dropped the machine in .. told you the fault there and then ... and been on their way ?

(just a thought)

i agree the location could be a turn off..maybe be worth considering re-locating. city center rent is usually more expensive anyway

this is all very helpful though and i appreciate it.

its a difficlut decision but very tempting..ive always wanted to do something like this and with a partnership risk is obviously then less.

if it didnt work out whats 10k or whaever we'd invest..its alot of money i know but the business would have nothing to do with our other assets.

forbairt

steps_3314 wrote: »

this is all very helpful though and i appreciate it.

No worries ... just thinking out loud so to speak ... (I've been there ... I've friends who've been there ... and you can get carried away thinking this is cool .. without actually realising the margins / costs involved)

Have you also thought about your marketing budget on all this ?

Your website ? (no I'm not drumming for business) I'll presume its an ecommerce site .. and unless you've got the expertise to do it yourself you'll be looking probably at 3k+ ....

Once you start on the web side of things you're looking at competing with komplett / dabs / whoever why should people chose you over them ... you have to make a profit and won't be able to buy in bulk on most things....

Stock costs .. if you are selling parts ... 10K isn't a lot on stock (top of the range graphics cards for example .. cost 500quid ... having 1k spent on memory would be quite easy as well ... cables leads ... hard drives ..) .. and unfortunately in the computer game parts go old VERY fast. (graphics cards / processors at any rate)

How on earth are people going to find you ?

Here an advert in the local paper (galway advertiser) will cost you 500 - 1000 quid for something quite small and thats just 1 week. To do it properly you'd be looking at having yourselves in the papers every week so people can see ye. Radio adverts ... and so on.

steps_3314

forbairt wrote: »

No worries ... just thinking out loud so to speak ... (I've been there ... I've friends who've been there ... and you can get carried away thinking this is cool .. without actually realising the margins / costs involved)

Have you also thought about your marketing budget on all this ?

Your website ? (no I'm not drumming for business) I'll presume its an ecommerce site .. and unless you've got the expertise to do it yourself you'll be looking probably at 3k+ ....

Once you start on the web side of things you're looking at competing with komplett / dabs / whoever why should people chose you over them ... you have to make a profit and won't be able to buy in bulk on most things....

Stock costs .. if you are selling parts ... 10K isn't a lot on stock (top of the range graphics cards for example .. cost 500quid ... having 1k spent on memory would be quite easy as well ... cables leads ... hard drives ..) .. and unfortunately in the computer game parts go old VERY fast. (graphics cards / processors at any rate)

How on earth are people going to find you ?

Here an advert in the local paper (galway advertiser) will cost you 500 - 1000 quid for something quite small and thats just 1 week. To do it properly you'd be looking at having yourselves in the papers every week so people can see ye. Radio adverts ... and so on.

I suppose as the business grows our marketing budget will.

for now it will be a website...i worked with a guy who left his job in IT support to do some web development and then start his own business. ive contacted him and hes glad to do it. we already have our own hosting and we could maintain the site ourselves. this guy is again very good, honest and decent (u must think all my contacts/friends are trustworthy) tbh you can usually tell quite easily especially havin worked with these guys for so long.

we also have suppliers in the US and have already shipped 40 pc's over at a very low cost. we have xp licenses and anti virus licenses sorted also. we have accounts with various suppliers also for parts although i reckon our profit margins on these items could be better but its a start. if we can get this off the ground im sure it will work. we also have the space to offer training courses and one of us is qualified to offer this service, the others could work towards the same qualifications if necessary

forbairt

steps_3314 wrote: »

I suppose as the business grows our marketing budget will.

Hmm... I would have assumed you'd need the marketing budget initially ... and not so much later on unless you were really interested in major expansion ...

(I've gone the word of mouth way so far .. but am now looking into marketing more ... I couldn't initially have afforded ads in the papers every week and to be honest I'm not sure how well they would have paid off)

What I would say to think about would be listings in the classifieds every week devote your 20 quid a week into that .. and see if it generates any hits. I know a lot of people that search those for PC's / Tech Repair guys ...

Website .. sounds good ... It should be a showcase at least for your goods ... I wouldn't envision massive sales from it initially ... more of a showcase to local people who can see .. oh you've got that ... I'll be over in 20 minutes to pick it up. (again though .. this is where parking will hurt)

steps_3314

forbairt wrote: »

Hmm... I would have assumed you'd need the marketing budget initially ... and not so much later on unless you were really interested in major expansion ...

(I've gone the word of mouth way so far .. but am now looking into marketing more ... I couldn't initially have afforded ads in the papers every week and to be honest I'm not sure how well they would have paid off)

What I would say to think about would be listings in the classifieds every week devote your 20 quid a week into that .. and see if it generates any hits. I know a lot of people that search those for PC's / Tech Repair guys ...

Website .. sounds good ... It should be a showcase at least for your goods ... I wouldn't envision massive sales from it initially ... more of a showcase to local people who can see .. oh you've got that ... I'll be over in 20 minutes to pick it up. (again though .. this is where parking will hurt)

also i have just had a thought/concern about tax and my current position, how will i be affected, does my tax for my own job stay the same,am i allowed to work and have this company...these are all the things im just finding out/querying, its a relevantly new venture..

forbairt

Hmm...

Tax will have to change ... based on your new earnings

Initially you could put all profits back into the company ... but if its not making you anything whats the point in going on with it (though in its initial months its probably

Also you might want to check into any clauses on your contract with your current company saying you're allowed to do this ?

steps_3314

forbairt wrote: »

Hmm...

Tax will have to change ... based on your new earnings

Initially you could put all profits back into the company ... but if its not making you anything whats the point in going on with it (though in its initial months its probably

Also you might want to check into any clauses on your contract with your current company saying you're allowed to do this ?

i know i should probably check this with the company, im actually starting a new job with a company that provides IT Solutions/Services to clients soon enough also. probably wont say anything until im settled.

forbairt

steps_3314 wrote: »

i know i should probably check this with the company, im actually starting a new job with a company that provides IT Solutions/Services to clients soon enough also. probably wont say anything until im settled.

I'd actually check your contract very carefully ... as there could be serious legal implications on that. You'd basically be offering the same service on the side ... not just a nixer .. a full business on the side.

steps_3314

forbairt wrote: »

I'd actually check your contract very carefully ... as there could be serious legal implications on that. You'd basically be offering the same service on the side ... not just a nixer .. a full business on the side.

the company ill be working for dont repair machines for home users, they deal only with companies, they dont sell parts either so it may be ok.

forbairt

steps_3314 wrote: »

the company ill be working for dont repair machines for home users, they deal only with companies, they dont sell parts either so it may be ok.

You've already said you've one contract with a company haven't you ?

How would you feel if your desk repair guy ... started up his own company .. offering web design / Custom software ... ?

Ye don't do custom software ... so it'd be ok .. ye don't do web design so it'd be ok ?

When he has to take calls related to his business ... you'd be ok with it ? .. when he has to disappear for a meeting / face to face with his customer ... you'd be ok with it ?

Just some food for thought

steps_3314

forbairt wrote: »

You've already said you've one contract with a company haven't you ?

How would you feel if your desk repair guy ... started up his own company .. offering web design / Custom software ... ?

Ye don't do custom software ... so it'd be ok .. ye don't do web design so it'd be ok ?

When he has to take calls related to his business ... you'd be ok with it ? .. when he has to disappear for a meeting / face to face with his customer ... you'd be ok with it ?

Just some food for thought

as long as it dont interfare with my job i dont see the problem...unless i started stealing their customers which i wouldnt dare attempt...

if my desktop guy started something up i agree it would be a talking point but i think were two different fish in two different bowls

forbairt

steps_3314 wrote: »

as long as it dont interfare with my job i dont see the problem...unless i started stealing their customers which i wouldnt dare attempt...

if my desktop guy started something up i agree it would be a talking point but i think were two different fish in two different bowls

The problem I would see ... if I was employing you would be ... how soon before you decide **** this for a game of soldiers .. pack it in .. and go with your company full time ? ...

(I don't really see the two as different fish ... I just see it as you having roles reversed in both cases)

steps_3314

forbairt wrote: »

The problem I would see ... if I was employing you would be ... how soon before you decide **** this for a game of soldiers .. pack it in .. and go with your company full time ? ...

(I don't really see the two as different fish ... I just see it as you having roles reversed in both cases)

let me also ask you..do you think is possible to run a business with three people who have full time jobs on the side. obviously we would have to employ 2 staff members.

forbairt

steps_3314 wrote: »

let me also ask you..do you think is possible to run a business with three people who have full time jobs on the side. obviously we would have to employ 2 staff members.

I think yes ... I also think no ..

Who decides how much work each of ye are putting into it ... ?

When someone isn't pulling their weight ... what happens ?

Do ye have definite plans as to who will be doing what ?

How are profits shared ? or will it all be reinvested into the business for the time being ?

Ye are all local enough I take it ?

When the business isn't making a profit in its first few months and you need more money to put into it ... where does that come from ?