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ProjectionHub

Archives for December 2016

Startup Phone and Tablet Repair Company – A Financial Model Example

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The phone and tablet repair business is a hot business to get started in right now.  It came in as #4 on the list of Best New Businesses to Start according to Business News Daily.  There are also a host of chains and franchise stores popping up around the country like:

In this article I am not going to teach you how to start a phone and tablet repair business, there are plenty of great articles that already do that like this one.

Financial Projections for a Startup Phone and Tablet Repair Company

Instead I am going to focus this article on the financial model and what projections might look like for your startup based on your proposed business model.  I will be using our app ProjectionHub to create financial projections as we go, you can sign up for a free trial here.

Revenue Projections

We will start with your sales projections.  The great thing about this industry is that there are a ton of revenue opportunities.  I am going to briefly talk through the different types of revenue that are most common as well as the most common channels in which to sell.

Repairs vs. Device and Accessories Sales

There are basically 2 primary sources of income in the phone and tablet repair industry.

  1. Repairs – You can repair devices and bill customers for the parts and services.
  2. Devices and Accessories – You can sell refurbished devices and/or sell accessories like cases to keep devices from breaking in the future.

Customer Segments

There are 3 primary segments of customers.  In my experience the best companies in this space are able to sell in all 3 of these segments and each segment can actually help your succeed in another segment.

  1. Retail – You can open a retail shop where customers with broken phones and tablets can walk in for repair services
  2. Corporate – You can sell repair services to schools or corporations that often have a fleet of devices that will require repairs and servicing
  3. Online – You can acquire devices that may be broken, fix them, and resell online via Amazon or eBay

Typical Steps to get Started

I think a good model to follow to start in this industry is

  1. Start by purchasing some broken phones online, try to fix them and resell online.
  2. Once you are comfortable and have some built in revenue from repairing and selling devices, you could look to open a retail store.
  3. The retail store will provide an opportunity for walk in repair customers, but it will also allow you to buy broken devices from customers that you might want to fix yourself and sell online.
  4. Once you have a local presence with your retail location you can approach the local schools or larger companies that have fleets of devices and look to establish a repair services relationship or contract with that organization.

Revenue Example

So now I am going to use ProjectionHub to create some year 1 projections for a phone and tablet repair startup.  Here are my key assumptions:

  1. I am assuming that you only buy broken devices, fix them and sell them online for the first 6 months
  2. In month 6 I assume that you will open a new store, take out a $20,000 loan and build out a store

Here is a sales projections graph for the first 12 months of a phone and tablet repair business:

sales-projections-phone-repair-company

Projected Expenses

I added minimal expenses for the first 6 months since you can buy broken phones online, at home, and fix them and sell them again online.  It isn’t until month 6 and 7 that expenses really start to kick in when you open your first store.  Here are my projected expenses for the first year:

phone-repair-business-expenses

Projected Profitability

In the first 12 months I am projecting a profit of approximately $10,000 before any owner’s draws.  So if you want to pay yourself in year 1 you should subtract your salary from $10,000.  I project just under $60,000 in sales for the first 12 months.  phone-repair-business-ratios

I wanted to make sure that you didn’t think you would get rich in the first 12 months, but I have seen a number of these companies become highly successful over a period of several years.

If you have any questions please email me at adam@projectionhub.com

ProjectionHub 3.0 – New Features, Pricing and Industry Support

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We are excited to release ProjectionHub 3.0 which includes a number of major improvements and updates.  Here is what we have been up to:

New Features

We have added a number of new features that will make your financial projection life much easier:

  1. Formulas – You can now use formulas to quickly create projections that grow or shrink with your business or seasonality.
  2. Scenarios – You can now create multiple scenarios like best case, average, and worst case scenarios
  3. Sharing Projections – You can now easily share your financial projections with investors, lenders, or business partners
  4. Graphs – We have added a number of standard graphs to the ProjectionHub Dashboard that you can use to visualize your financial projections

New Pricing

We have introduced some new pricing that we hope will meet your needs as you grow and need more scenarios and more years of projections. See our new pricing.

New Industries

We have added a number of new financial model templates to ProjectionHub including:

We would love your feedback on ProjectionHub 3.0, try it out for free today.

Want to Start Your Own Accounting Firm? Create Financial Projections First.

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BEFORE you leave your position at a large CPA firm and decide to jump out on your own and start your own accounting firm, create some financial projections with ProjectionHub and prove to yourself that this is a good financial decision.

The Challenge

I have worked with a number of small accounting firms lately and realized just how difficult it is to operate a successful, small accounting firm.  The challenge for a small CPA or accounting firm is that they big firms can offer excellent salaries and benefits for staff accountants.  It is going to be almost impossible to match the compensation package for a staff accountant at a small firm that serves small businesses and individual tax payers.

Right now it seems like most of the small accounting firms I know are really struggling to hire staff accountants.  It is relatively easy for a CPA to put up their own shingle and start their own firm, and you might even be able to grow by adding a partner or 2 to the firm, but once you need to start hiring non-partner staff accountants the math becomes difficult.  Larger firms have larger clients that they can charge a higher billable rate to, if your firm is working with smaller businesses and non high net worth individuals you won’t be able to charge as high of a billable rate per hour and it just becomes difficult to hire good talent.

SO… in this blog post I am going to create an example set of financial projections for a startup accounting firm to demonstrate the likely financial results during the first 5 years of a startup accounting firm.

Startup Accounting Firm Example Financial Projections

I am going to use the “Accounting Firm” business model on ProjectionHub to create a set of example financial projections for a startup accounting firm.

Sales Projections for Startup Accounting Firm

The Accounting Firm business model comes with 5 default revenue line items:

  1. Bookkeeping
  2. Tax Services
  3. Audit Services
  4. Payroll Services
  5. Other Services

Typically the lowest barrier to entry is to provide Bookkeeping and Tax Services, so in the 1st year of projections I would focus on those 2 services right from the get-go, then you can break into more specialty services like audit, payroll and other niche services.

Here is an example of revenue projections for a startup accounting firm where you the accountant are the only employee for the first year.  My example shows just $33,500 in revenue in the first year as you are ramping up.

So if you are planning to leave a high paying job you should expect to take a significant pay cut in the short term.

accounting-firm-year-1-revenue

Example Expenses for a Startup Accounting Firm

I have included typical expenses for a first year, 1 person accounting firm in the Accounting Firm business model.

accounting-firm-year-1-expenses

Assets, Liabilities and Investors

The final 3 sections of your financial projections will include assets, liabilities and investors.  As a 1 person, new accounting firm, all 3 sections should be pretty light.  I have included a computer and some furniture as assets for the default accounting firm startup, and a small loan.  I doubt that you will find any investors as an accounting firm is not typically a high growth, “investable” type of business.

Financial Projections for New Accounting Firm

So based on my example projections I show a first year, 1 person accounting firm bringing in about $33,500 in revenue and just under $20,000 in net income before paying yourself.  SO… if you are making more than $20,000 as an accountant today, before you jump out on your own, just be very aware of the challenge you have in front of you and go in with eyes wide open.

If you have any questions at all please feel free to contact us at support@projectionhub.com