Starting a Cell Phone Repair Business
Interview with Matt McCormick, Founder of Jet City Devices
Matt McCormick was looking for a starter business to try out some web site optimization ideas. After stepping on his cell phone one day, everything changed!
Matt McCormick started Jet City Devices in 2008 and now has offices in Seattle and Chicago.
Tell me about your current business. What are you doing exactly?
At Jet City Devices, we repair the cracked screens on iPhones. We also fix a couple of other phones and sell a few accessories.
How did you come up with your business idea?
I was looking for a "practice" business (a place I could try out new website techniques for my customers) when I happened to step on my phone. It was a T-Mobile Dash and when I went to T-Mobile, they told me, since I was under contract, it would be $299 to replace. So I went home, found the part on eBay, ordered it, and fixed the phone myself for a fraction of the price of a new phone.
I then decided other people must have this problem so I built my "practice" website (which was horrendously ugly but SEO friendly), bought some Google Adwords, and within a week phones were showing up at my door. I gradually added a few more phones, the business kept growing, and then in late 2008, I added the iPhone to our offering. At that point, business boomed, so I dropped the web development business I had been in, setup a business partner in Seattle, and I moved to Chicago to grow the business there.
What were you doing before this, and is this your first business?
I worked at Microsoft for 5 years and then quit to start a business building websites for small businesses. During that time, I started Jet City Devices (under a different name) as a "sandbox" to practice things for my clients (like Adwords, SEO, web copywriting, etc). This side project of repairing phones kept growing until I decided to scrap the web site building business, take on a business partner, and focus on this full-time.
Did you write a business plan? Was it an effective tool for you?
No business plan, but I do constantly think about where the business is at, where I want it to go, and how to get it there. We do set monthly and quarterly sales goals for the company as well as weekly discussions with my business partner about what we can do next.
Who did you hire to help you? Bookkeeper, Accountants, Lawyers ...? Would you suggest others do the same?
I do have an accountant and wish I had a better one. In fact, I'm interviewing a new accountant within 24 hours of writing this. All the tax paperwork is a headache and, besides distracting from everyday work, you can get in big trouble if you mess it up. So at least hire a decent accountant.
What outside resources were helpful for you? Business incubators, Chamber of Commerce, SCORE, ....
Honestly, I mostly just read a ton of books on business and business people. Right now I'm reading Sam Walton's autobiography which, while a bit hokey, has some great advice and is pretty inspirational. That's mostly what I do, read books from people that have done it before.
Did you operate your business from your home? What were the challenges and benefits to this strategy?
Initially I was 100% out of my home. The only advantage was that it was cheap. The problem is that it can get lonely, sometimes it's hard to stay focused, and more often it's hard to "leave" work. As a small business owner there's a ton of stuff to do and it's pretty easy to find yourself working all the time if you have a home office.
Now I rent a small office in a shared working space on the north side of Chicago, and I love it. It gets me out of the house, I'm around a bunch of other small entrepreneurs, it looks professional when customers come in (we have a great, shared conference room), and it's only $300/mo.
Did you have a partner when you started your business? How did you select a partner?
I did not have a business partner early on but do now and I love it. It's great to have someone to bounce ideas off or to pick-up the slack if one I go on vacation or have a bad week. Another side benefit is that it keeps me honest on the books. Before I had a partner, and I know a lot of other small business people that do this, it was too easy to just pull a $20 out of the cash box when I was headed to lunch or take draws at irregular intervals and/or amounts. I do a much better job of tracking finances now that I have a partner.
Green business is all the rage right now. Has it really been practical for you as an entrepreneur to incorporate green business practices?
Our business is green in a way. Instead of people throwing their phones away and buying a new one, we fix their old one. This keeps the old phones out of a landfill and saves the resources needed to build a new one (it also has the side benefit of saving customers money).
As far as our day-to-day operations, it can be a bit tougher. We do recycle but our suppliers frequently send us stuff in non-recyclable packaging and we're still a little too small to really dictate how our suppliers operate.
With the current economy in a slump, what cost saving tips would you have for a new entrepreneur?
I have basically three major pieces of advice I give to people:
a. Figure out what you are really good at and get very focused on that. Not only does that make you even better at that one thing, but it can save you a lot of money in advertising, wasted time, inventory, or anything else that costs money that's not related to your core.
b. Focus on your local market first. If you can't win your local market, you don't stand much of a chance nationally (or globally). This again not only keeps you focused on a specific segment, but it will save you money in things like Google Adwords and opens up free tools like Yelp or Craigslist.
c. Don't overbuild your website (and every business should have one). It's an easy trap to get into that, "I need this feature and that feature and this widget..." You don't. Basically, your initial website should contain basic information about who you are, what you do, and provide an easy way for someone to contact you. Building a big, all-inclusive website is expensive and time consuming up front and will also be expensive to maintain. Figure out what's really important to share with customers and get that information out there. You can always grow the site later.
Social marketing is consistently being written about in the small business space. Has it worked generating business for you?
Yelp.com and our Facebook page has helped because both of them have real reviews from real people. While this doesn't necessarily generate new leads for us, it does give us an extra level of credibility when people are deciding whether or not to use our service.
I also use Twitter quite a bit to keep me up to date on the cell phone industry. I only follow people that ONLY write about the industry. It's a great tool for staying informed.
What have you done that has been very effective in helping to grow the business?
I already mentioned this but getting focused on local business has been a big boom for us. In January 2009 our business was mostly nationwide mail-in repairs and we did about $5K in sales. By December 2010, with over 80% of our business being in-person, local repairs, our sales had gone to almost $22K. That dollar amount comes working out of an office and having people come in by appointment only. We are now getting a small retail space - which will really focus us on local business - and we expect to see much bigger gains in 2010.
How has your experience in running the business been different from what you expected?
From an operations standpoint, it's about what I expect. From a lifestyle standpoint, it's a little bit more lonely than I had anticipated. As we add employees and grow the business, I hope that will change but it's definitely a much different feeling than going to an office building with a few hundred co-workers.
Is there anything you wish you had done differently?
I wish I had started my business 10 years ago. As far as the day-to-day business, I've made a few financial decisions I'd take back. We wasted a lot of money on some R&D projects early on by trying to fix phones that it turned out were not in big demand. If we had done a better and more organized job of market researching, we would have saved money and been better focused.
What advice would you give to somebody else who wanted to start a similar business?
Focus on local business first. My business really took off when I transitioned it from a nationwide business to focusing primarily on my local markets (Seattle & Chicago). By using geo-targeted Adwords, Craigslist, and Yelp, we were able to really start to dominate in our local geographies.
Sounds like a business that everyone could use once and a while! Keep us posted as you grow in the next couple of years. Thanks, Matt.
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