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Starting a Business?
Lucky Cynic
Registered User regular
Registered User regular
Short and sweet guys, I am a 17 year old (soon to be 18) High School Senior whom loves the techie gizmos and have built my own computer. My best friend, 18, is good at customizing and tweaking them, overclocking and the like. We decided maybe if we can, we should try and sell home grown computers built from scratch with an extra super special unique touch. We are going to have a website going soon, but it won't be the usual kind where you click a bunch of radio buttons and have dell ship you something off an assembly line.
What we are going for is a good demo computer for which we can brag about in person and also on the website and from there, have people call or email us with orders or possibly more information or maybe even special arrangements for parts and such. Our goal is to make super customized gaming computers at good pricing and very little else meaning no addition programs and demo software installed.
This leaves us with several issues.
A: Price of the parts, this isn't too bad for some items but some will be a pain like Operating systems and although my friend can install 'illegit' Copies of Vista Ultimate, I know this will probably get us in deep shit. So about $100-$150 for computer right there comes from Windows, is there anyway that MS might be able to give us a cut on this? I have been talking with other manufacturers and they seem willing to give me a rebate for 3 products or something but I doubt MS will care.
B: We have no real money to do this on our own. The cost of building the actual computer itself, with prices off of Newegg, About $800 but its a damn fine machine so the money, while being well spent, still has to come from somewhere. Now I have the money to buy and help us make this demo computer but I have college to pay for next year so this might be an issue. How can I go about collecting money or somehow raising money to get this thing off of the ground?
C: Where should I get my parts? I can't order them from the internet, and while we do have a Fry's about 30min away, they might not have everything there... :?
Sooo, um, thoughts? Suggestions?
What we are going for is a good demo computer for which we can brag about in person and also on the website and from there, have people call or email us with orders or possibly more information or maybe even special arrangements for parts and such. Our goal is to make super customized gaming computers at good pricing and very little else meaning no addition programs and demo software installed.
This leaves us with several issues.
A: Price of the parts, this isn't too bad for some items but some will be a pain like Operating systems and although my friend can install 'illegit' Copies of Vista Ultimate, I know this will probably get us in deep shit. So about $100-$150 for computer right there comes from Windows, is there anyway that MS might be able to give us a cut on this? I have been talking with other manufacturers and they seem willing to give me a rebate for 3 products or something but I doubt MS will care.
B: We have no real money to do this on our own. The cost of building the actual computer itself, with prices off of Newegg, About $800 but its a damn fine machine so the money, while being well spent, still has to come from somewhere. Now I have the money to buy and help us make this demo computer but I have college to pay for next year so this might be an issue. How can I go about collecting money or somehow raising money to get this thing off of the ground?
C: Where should I get my parts? I can't order them from the internet, and while we do have a Fry's about 30min away, they might not have everything there... :?
Sooo, um, thoughts? Suggestions?
Lucky Cynic on
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Also don't do anything illegal - like use pirated software.
You'd do well obtaining a business license from whatever state you live in.
Also: have you really considered the necessity of your business? What are you offering? Can you maintain the cost of running a business? (time, cost, effort, shipping, components, customer support.)
You probably have no credit history judging by your age - I doubt you have anything worth borrowing against to obtain money to start this business, let alone keep it running.
I'd say if you wanted to be successful running this money, mmm... you think $800 dollars per machine? What do you plan to sell it for?
Mark it up to $900 dollars, you're only making $100 dollars worth of profit. You'd have to sell eight of these things in order to make another one - and then if you sell that one, you're back to only having $100 dollars.
There's a reason why businesses that sell specialized computers don't do very well, unless they're a huge corporate monster. It takes a shitload of money.
Before embarking on this idea and getting a loan for $1k from a parent or relative or something, really weigh whether or not this is really a feasible business, for you and a friend.
most of all, most of all
someone said true love was dead
but i'm bound to fall
bound to fall for you
oh what can i do
How are you going to make any real money from this? If you're ordering your parts and software from regular online retail outlets, you are going to have to set your price-per-system at a point where it will be profitable enough to continue the business. This price point will likely be too high to truly compete with other vendors who order their parts wholesale (or make their own), so this could be a big problem.
How are people going to know about your business? To remain profitable, you're going to need to do regular business. How are you going to regularly and continuously bring customers to your website? Advertising is a good way to do this, but that's going to be another cost for you - money you already said you don't have.
How are you going to handle tech support? It's going to cost you one way or another - you'll either have to do it yourself (which will cost lots of time) or hire someone else to do it (which will cost you money). You aren't likely to sell many machines - especially at your age and experience level - if your customers don't have reassurance that they will have help if something goes wrong.
These are just a few of the many, many things you'll need to plan for when starting a business. You definitely need to think long and hard about starting something like this right now, especially knowing that you'll be starting college soon (which will take up most of your free time if you care at all about it). However, if you are just set on doing this, here is my advice to your specific questions. First, for parts and software, look for a way to purchase them wholesale. Places like Newegg or Best Buy have good prices sometimes, but I don't think that's going to cut it for hardware. Same for software. Try to find someone who has dealt with building computers as a business before, and find out who their suppliers were and how they handled that aspect. For money, you're just going to have to suck it up and start asking for money. Either start applying for small business loans (which will be difficult, again considering your age and experience), or start leaning on friends and relatives for startup loans.
Whatever you decide, good luck. It's a tough business, but if you're dedicated to it, I hope you can pull it off.
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What you'd need to do then, is offer some additional service that consumers can't get from Dell or Alienware. You say that your friend is pretty good at modding/customising PCs so that might be a good angle to take. That way you could easily justify a premium to build a PC from scratch and then have it customised to your clients own tastes (dragon stencils, prosthetic titties, neon innards, whatever they want). Whether or not there's a market for that service is to be determined. Usually people mod their own PCs as a personal expression, but there might be a market for people wanting a unique looking PC without having to do the dremmeling themselves. I guess that market would be pretty small though.
That aside, the issue of start-up costs can be solved one of two ways. Firstly, you could decide to charge your client up front - they pay a percentage upfront that covers the cost of the parts, then a percentage on delivery that covers your labour and profit. Alternatively, you could set up a business doing computer repairs and maintenance first - a service in much greater demand and thus more lucrative - to generate cash flow which you could then channel into a custom PC building enterprise once you have a decent amount of funds. Personally, I'd probably consider a combination of both these plans. The PC maintenance service isn't glamorous but it will provide a stable turn-over and income even if the PC building enterprise is sporadic. It's also cheap to get started. Getting punters to pay upfront for parts means that you aren't carrying debt - you aren't putting up your own cash for parts and risking that the client might disappear without paying for them. The PC maintenance business means that you can also generate business off the back of the PC building enterprise in the form of extended service deals etc.
I keep linking this blog this week, but here's an article from The Simple Dollar on his computer consulting business.
To be brutally honest, if you're thinking to yourself "I don't know if I can afford $800 for this," you need to just go get a job at McDonald's for your pocket money.
You will not make money building PCs. I won't say that it's impossible, but you've got about the same chances at starting a rock band and landing a platinum record deal. Per hour spent, you will make more money working a minimum wage job at a coffee shop and you'll probably have more fun, too.
Instead, take your computer skills and do home service. Put up flyers, put a little ad in the newspaper, spread the word among everybody you know (make sure their parents know, too, and their parents' coworkers) that you'll come to a house or business and do spyware removal, antivirus software installation, etc.
There's almost no overhead, you can usually get your customers to pre-pay for parts, and in the long run it's a lot more money for a lot less work.
BTW, you know all the little local computer shops you see in the phone book? They don't make money building PCs, either. Their meat-and-potatoes is service and repair. The only reason they build PCs at all is to make sure their customers call them for help rather than Dell or Best Buy.
the "no true scotch man" fallacy.
If you can get the OEM XP/Vista CD's for under $139 you're doing pretty good. To get any real discount, you're looking at having to buy in bulk. And I mean real bulk. Quanity 100 or so to even begin talking about taking a few bucks off. To shave that $800 cost down, you're going to have to buy alot of parts. Thanatos is right in that you're going to need alot of capital to build the volume you need to actually pay rent off of this.
Try making a survey, make minimum one hundred copies (for 100 households, and even more copies if you can) and pass those around your town. Find out how many people would be strongly interested in buying one of your computers. You have to see if this idea will float, before sending it out to sea, so to speak.
Speculative surveying is meh. When asked, lots of people would strongly desire to buy an uber-leet cock-tease PC. Few people actually will (or have).
What I'm saying is, the only useful surveys are ones that analyse people's previous behaviours. Take a medical insurance questionnaire - I could ask a candidate how many cigarettes they intend to smoke in the next six months and they might tell me 2 a day. In reality though, they've been smoking 20 a day for the past 15 years and no matter how strongly they plan to cut down, it is far more likely that they will in fact continue to smoke close to 20 a day.
A more useful survey would be one that tests the market by determining past behaviour in the market place. How often do they upgrade their system? How often do they upgrade individual components? How much did they last spend on a new system? How much did they last spend on new components? That sort of thing. This not only gives you an idea for how many people regularly spend money on new computers/upgrades, it also gives you an idea of how much they typically spend.
OP: I believe running those surveys first will be a good way to start figuring out if the business will go well. Better have a little information than running into things headfirst, putting down all that money and time for something that you don't know if it will have any chance of success.