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04 - The Business Plan Writing & Using a Business Plan

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  #1  
Old 07-23-2007, 12:02 PM
kdprulez kdprulez is offline
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Default Home business building and selling PCs

This is just an idea I've come up with recently, and I have really no idea how to go about starting it up and making plans for it.

I recently built my own pc by purchasing the individual parts via online retail sites, and putting it together myself. I spent about $1400 on what would be a $4000 computer if a major company were to sell it, and put no more than 5 or 10 hours of work into it. It got me to thinking that there could definitely be some profit to be made if I were to build and then sell the systems to anyone in need.

I think if this does end up doing remotely well, I may make it a more legitimate thing, and make a small business out of it, but for now it's purely speculation.

So where would I start?
What kind of budget would I need if I were to be selling pc from a few hundred dollars up to say $4K?
What would be the best way to advertise my little project?
Should I be ordering parts beforehand and keeping a small stock, giving my customers minimal build time, or would that require a much bigger budget?
What else do I need to know?

Any help is appreciated; thanks in advance!

edit: sorry if this is in the wrong section, mods could move it if necessary. ty
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  #2  
Old 07-23-2007, 12:16 PM
ntarifi dubai ntarifi dubai is offline
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The devil is in the details on this one.

You may or may not be able to make money building and selling PC's - most people I know who have tried it have failed because you need so much cash to buy parts in bulk in order to get the price down.

What you really need to consider though is tech support - people are going to want support after they buy the system. And that is a long-term cost.
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  #3  
Old 07-23-2007, 12:20 PM
hurleygurl777 hurleygurl777 is offline
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There was a similar idea once - a guy called Michael Dell did something like this. I think he's still in business, wait, he's even got his own website at www.dell.com.

So, yes the concept has been proved to work. I question the numbers you've got though. The PC market is very competitive and I know few people who are making the kinds of margins you're suggesting.

I suggest another look is in order.

From what I've read about the guys who do this the secret is having a fast supply chain so you don't have to pay for, own, insure, wharehouse etc your stock and so you don't get stuck with stuff you can't sell

What is your competitive point - price vs a place where you can just drive in and pick up a computer or speed - dell takes a while?

Cheers

Pete
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  #4  
Old 07-23-2007, 12:40 PM
SeattleCPA
 
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I think this could work... but you'd have to differentiate yourself from Dell, et. al. in a way that let you charge an extra $100 or $200 or whatever.

Example: You do what Dell does... and you charge an extra $200 or whatever (so your business works) ... but you offer true up-gradeability services where you regularly come up to the PC user's location and put a new, bigger disk in, etc. Of course you charge for this stuff...

But someone is still willing to pay an extra $200 up front to have the option to keep their technology on the bleeding edge...
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  #5  
Old 07-23-2007, 12:42 PM
kdprulez kdprulez is offline
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Quote:
Originally Posted by BillR
The devil is in the details on this one.

You may or may not be able to make money building and selling PC's - most people I know who have tried it have failed because you need so much cash to buy parts in bulk in order to get the price down.
That's just the thing. You can buy pc components online at sites like ncix.com and newegg.com for OEM pricing.

Quote:
Originally Posted by BillR
What you really need to consider though is tech support - people are going to want support after they buy the system. And that is a long-term cost.
That's something I hadn't considered...thanks for that.
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  #6  
Old 07-23-2007, 12:58 PM
kdprulez kdprulez is offline
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Quote:
Originally Posted by Peter Bowen
There was a similar idea once - a guy called Michael Dell did something like this. I think he's still in business, wait, he's even got his own website at www.dell.com.
:/

Cheeky. I realize there are bigger companies, but really they are way overpriced considering the price of components (as I'm sure you know).

Quote:
Originally Posted by Peter Bowen
So, yes the concept has been proved to work. I question the numbers you've got though. The PC market is very competitive and I know few people who are making the kinds of margins you're suggesting.
Take the pc I built for example. I researched it pretty thoroughly to see what the best value would be, and compared it to pre-built systems. Dell sold a model with actually worse specs than mine for ~4K. I payed $1400 and less than a dozen man-hours to build it and install all the software/drivers etc.

Quote:
Originally Posted by Peter Bowen
I suggest another look is in order.

From what I've read about the guys who do this the secret is having a fast supply chain so you don't have to pay for, own, insure, wharehouse etc your stock and so you don't get stuck with stuff you can't sell
The online retailers are actually very quick with shipping. Several business days, and the pricing isn't actually bad. That's what's making it so enticing for me - the fact that I could get an order, get it shipped to me within a week or two, and I could have it built within a few days, ready to go.

But ya, it sounds like keeping a stock may not be the best idea then? I wouldn't think so if the shipping is quick enough...

Quote:
Originally Posted by Peter Bowen
What is your competitive point - price vs a place where you can just drive in and pick up a computer or speed - dell takes a while?

Cheers

Pete
If I told some teenage gamer that he could get a $4000 pc for $2000, I think that would be enticing enough. Basically my competitive point would be having great pcs for like 1/2 the price of what your average corporate pc company would sell for, and I could hopefully build them quickly.

Thanks for the input, guys.
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  #7  
Old 07-23-2007, 01:24 PM
kdprulez kdprulez is offline
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Oh, and another added plus is the customization. Dell sells models, and allows you to customize them to a certain degree. I could get the customer exactly what he wants - nothing more, nothing less.
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  #8  
Old 07-23-2007, 01:32 PM
pete
 
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10 years ago there used to be a PC shop in every strip mall. Hardly any left.

I built systems for about 10 years. I did it because they were going into point-of-sale systems and I needed what I needed, not what Dell or Gateway or at the time Compaq thought I needed.

But that is the only reason. As far as just building a system for personal use for someone, I'd send them to Costco or Sams, etc.

You numbers are off. You are not including all of the fresh, brand new licensed software that you have to give them their own copy of. You're probably also missing some other little things. There just isn't that much profit in systems. No way, no how!

Not to mention support. Free support. Mike Dell can't come by the house, but you sure can.
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  #9  
Old 07-23-2007, 01:36 PM
supportmyoffice supportmyoffice is offline
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You won't make very much money on the hardware and software. It is very difficult to compete with the likes of Dell and HP on price of hardware. They make their money from bulk numbers. You mentioned a $4000 computer built with $1400 worth of parts. Well, most of Dell's sales come from the small-end computer systems that have very small profit margins.

However, big computer companies leave a big gaping hole when it comes to support. Nobody likes HP or Dell support. They don't even like Geek Squad support from Best Buy. You can make good money from support and supplemental services. Support contracts. Solution providing. Etc. A lot of businesses need someone to tell them what to buy. I don't know if you are qualified to provide a service like that, but it's worth considering.

Now, you absolutely can get the niche market of customized systems. This is a service that I was considering tacking onto my "tech support" business plan (which I may still do, I'm not sure yet). I was going to build gaming computers or video editing systems... something more niche-related. I was even going to go as far as offering custom modded case designs. You could definitely make money doing this on the side and the margins are higher than a typical computer system. It would take a while to build up a name doing this. Eventually, you would want to setup a proper wholesale account with a computer parts company (not Newegg, they don't offer wholesale for businesses).

Hope that input helps.
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  #10  
Old 07-23-2007, 02:39 PM
kdprulez kdprulez is offline
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Dell does offer software bundles, but tbh most of it is crap that people pay to get rid of. Who wants a copy of Norton Anti-virus that 1) doesn't work properly, 2) bogs down your system and 3) will expire within a few months? I think a key thing for my project would be that I give the customer exactly what they want, nothing more, nothing less. Really, what does Dell offer software-wise that's actually useful?

fwiw, I've also posted this on another forum, custom pc-specific, and they've given me pretty much the same responses. It looks like significant profits would only be made in high-end systems, or in tech support + repairs.

Looks like it's a dead-end unless I do get "niche-related", or magically build up a customer base and start offering tech support for all of them

Thanks again, guys. Very helpful stuff.
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