Do you want to start a cell phone retail store? If YES, here is a complete guide to starting a cell phone retail store business with NO money and no experience plus a sample cell phone retail store business plan template.
The cell phone market is one market that has not only exploded but has also grown tremendously and consistently. If you are an entrepreneur looking to go into this industry, then you might find that this is a very lucrative business. Just like any business that you would go into, it is very important that you conduct a thorough market research on the industry.
Carrying out a market research will enable you identify the niche you would prefer, how many competitors are in that niche and what strategies you have in place to stand out and compete favorably against your competitors.
In conducting a market research, you will also be able to identify the vendors you are to work with, especially as regards the inventory you will get for your business. You should know if you are going to stock cell phones that are supported by just one carrier; if this is your intention, you might need to contact the carrier and find out what franchising opportunities are available.
However, if you want to widen your target market, then you might need to contact and have a relationship with several carriers.
In addition to stocking cell phones, you might also need to stock cell phone accessories in your store. Once you have carried out all the necessary research about the business, then you can write a comprehensive business plan regarding it.
Finally, creating a marketing plan for your cell phone retail business is very important as marketing not only helps generate the needed revenue that will boost and grow your cell phone retail business, but it will also help create awareness about your business to potential clients, competitors, industry operators, vendors and suppliers as well as other stakeholders in and out of the industry.
You would need to be creative about your marketing strategies, because even though the cell phone market is a huge and growing one, there is stiff competition owing to the many operators in the industry.
Steps to Starting a Cell Phone Retail Store Business
1. Understand the Industry
Wireless companies in the united states have been able to penetrate about 50 percent of the total industry. Even though the growth in the industry has slowed down, competition has become very fierce and according to analysts in the industry, market penetration will top off by at least 60 percent in 2014.
There are more than 98,000 cell phone retailers in the United States of America that are either for sale or rent. In the last five years, revenue has been more than $88 billion. The tremendous growth experienced in the industry has seen the entrant of new cell phone service operators.
According to a report by Deloitte, even though the dramatic growth in the industry has seen a slowdown, more growth is expected in the industry by the year 2017, this is as penetration and use of cell phones is expected to continue to increase.
According to a survey report by Global Mobile Consumer Survey (GMCS), cell phone consumers in the United States of America are looking at their devices more than 9 billion times per day. The sales for smart phones are still strong and have seen a 10 percent penetration every year. This is as consumers in the 45 and above age bracket have started seeing a high growth percentage.
Reports from Statista states that as at 2015, the number of people using cell phones have surpassed 4 billion. This number is expected to inch closer to 5 billion in 2017. Cell phone subscription according to ICT is expected to reach 7 billion by 2015.
However, varying reports by Ericsson Mobility has the number pegged at 2.6 billion by 2015 with the expectation that it will surpass 6 billion by 2022. Globally according to Pew Research Center, the cell phone market saw a surge in South Korea as there was 88 percent penetration by 2015. Other countries where there was an increased penetration include Australia, Israel, USA and Spain.
According to IBISWorld, the revenue accrued by this industry annually is $74 billion even though the growth experienced by this industry between the periods of 2011 to 2016 is a negative 1.1 percent. There are more than 52,000 cell phone retail stores in the United States of America, employing more than 330,000 people.
The sluggish growth experienced by the industry is due to the downturn of the economy, which has not only slowed consumer confidence but has also affected its disposable income. Another factor that has affected the growth in the industry is intense competition from already existing operators as well as new entrants into the industry.
According to a report by Smartinsights, more than 80 percent of those who use the internet have a smart phone; and by 2018, according to eMarketer, more than 2.56 billion people globally will own smart phones or at least a regular cell phone.
A study from Google’s Mobile Search Moments states that close to 77 percent of searches occur via mobile phones and it is from people at home while about 17 percent of mobile searches are from people on the go. A report from the Independent in 2014, states that there are more mobile devices than there are people in the world and that mobile marketing will generate close to $400 billion by 2014.
The explosion caused by the cell phone retail store has helped in creating a market for cell phone accessories not only within the country but externally as well.
Globally, the cell phone accessories market is expected to reach a high CAGR of nearly 7 percent in a decade (2015 to 2025) across regions regarded as key such as North America, Latin America, Western Europe, Eastern Europe, Middle East, Asia Pacific, Japan and Africa.
The industry is one that has seen major trends such as a rise in mergers and acquisitions, new product development, product advancement as well as diversification of product portfolio.
According to a study by comScore Mobile Metrix, even though most people use PCs during the day time for major work, the smart phone has totally dominated and is being used by consumers more in the evening; this has led to a higher browsing time on these smart phones.
This has led to digital media time on mobile in the United States to be significantly higher than desktops at 51 percent to 42 percent. Regardless of this fact however, cell phones and desktop when it comes to retail sales are equal.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that use a cell phone are not restricted to young adults, adults and senior citizens, as there are very many young people who have cell phones and need it to get and stay in touch.
Even though most of the people that own a phone are usually those that are able to afford it, there are very many people that aren’t able to get these phones for themselves due to financial or other reasons, and have people getting it for them.
3. Decide Which Niche to Concentrate On
The cell phone retail store business is one that encompasses a whole lot of segments and as such, it is necessary that you understand just how large this market is before venturing into the business. This will allow you to identify which niche you will best be able to stand out from.
What clients are concerned with regarding the products in this market are size, capability of the device, carrier as well as affordability according to their budget. Therefore niches that may allow you to stand out in the industry are very necessary; if you intend to stand out in an intensely competitive environment, you will need to choose a niche that would work for you.
Therefore, cell phone retail stores may decide to major in these key areas;
- Retail of cell phones
- Sales of cell phone accessories
- Cell phone maintenance and repair services
- Creation of mobile applications
The Level of Competition in the Industry
The level of competition in the cell phone retail store business industry depends majorly on the location of the business since most clients want to physically see the cell phones they are buying. Therefore, to be able to compete effectively against other cell phone retail stores, you would need to physically establish a location.
This does not however mean that there aren’t entrepreneurs who do not have a physical store but are still able to compete with others via their e-commerce or virtual stores. While clients want to be able to physically see what they are buying, they do not mind ordering for what they have not seen via the internet as long as it meets with the specifications they are looking for in a cell phone. Therefore as long as a cell phone is within their budget and has the desired specifications, clients are willing to physically go to a store or order the phone via an online store.
The cell phone retail store segment in the United States of America is one that is stiff with competition especially due to the low entry barriers for intending operators, which has led to a lot of cell phone retail stores opening up. Therefore, if you choose to start your own cll phone retail store business in the United States of America, you should endeavor to thoroughly research the market and also study the trends in the industry so as to have a chance against your competitors.
4. Know Your Major Competitors in the Industry
The cell phone retail store industry in the United States of America and even globally is fraught with competition, thereby making it hard for brands to stand out. However, there are several cell phone retail stores that have become quite popular in the United States of America due to their marketing and promotional strategies, their length of time in the industry and their mergers and acquisition status.
Some of the well-known cell phone retail stores in the United States of America are;
- BrandsMart USA
- Best Buy Mobile Stores
- US Mobile
The cell phone market in the United States of America is undergoing tremendous change because the industry has not only become saturated but has made carriers (wireless) to look towards ending their subsidy model. This is because of the lack of innovation in an industry mainly dominated by two operating systems, which means that customers have to deal with less choice, an action which is causing a decline in the industry.
Cell phone use is increasingly gaining adoption in countries like Indonesia, China and Brazil and has been linked to an increase in internet penetration as well as increase in popularity of social networking platforms in the aforementioned countries. Also, a growth in trend in mobile shopping and e-banking has been a catalyst for the high demand of cell phones especially smart phones, and also causing an increase in demand for mobile accessories.
The growing need for cell phones has created a widening opportunity for other sub sectors in the telecommunication industry, even for carriers such as wireless and broadband network infrastructure companies, as well as device manufacturers. Carriers for instance, have kept their focus on not only providing quality and reliable voice services but also helping to provide data as well.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting your business from scratch or buying a franchise should depend on the goals and objectives of your business. If your intention is to be well grounded in your business and control major decision making in your company, then you will need to start your business from scratch.
You should however note that starting your business from scratch might be much tougher especially in the cell phone industry where you will face too much competition from those that are already in existence and have formed strong relationships with vendors and suppliers.
Buying a franchise offers your business several opportunities than starting the business from the scratch. A franchise takes the hard decision making involved in running a business off your hands and allows you to concentrate on other parts of your business like attracting clients and generating revenue for your business.
This is not to say that buying a franchise will not make your business crumble; that is why it is essential that you conduct a thorough investigation of different franchise offers and check what they are offering to see if it is in line with your corporate goals and objectives.
6. Know the Possible Threats and Challenges You Will Face
Every business faces threats and challenges at every point in time; therefore, you must ensure that you are adequately prepared for whatever might come. If you are not prepared for any threats and challenges, you might be in danger of having your business crumble. This is why it is usually advised that a thorough market survey be conducted so that you have an idea of what to expect during the course of starting or running the business.
Some of the threats and challenges you should expect during the course of starting or running your cell phone retail store business are; a downturn of the economy that might see consumer confidence fall, thereby making them spend less than they should. Other threats are, challenges from already existing competitors and new entrants into the market as well as changing technological trends and innovations in the industry.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
There are mainly 4 legal entities in the United States of America and they are; sole proprietorship, partnership, corporation and Limited Liability Company (LLC). Each of these legal entities have their pros and cons. One thing to note is that if you choose a sole proprietorship for instance, you can change to a more solid legal entity as your business expands.
In the sole proprietorship kind of legal entity, the entrepreneur who is the owner controls all aspects of the business and all actions and decisions are on him. In the sole proprietorship, all the profits and losses are accrued to the owner and should the business fail, the owner will be held liable for any debts the business might have incurred.
In the partnership form of legal entity, two or more people usually come together in agreement, orally or verbally and agree to the running a business. The advantage in a partnership kind of legal entity is that tax is paid on the personal income return of the partners.
In the corporation, the business is regarded as a separate entity from the owners who are referred to as shareholders; this therefore means that the business cannot be sued. This kind of legal entity isn’t always easy to set up as it involves a lot of formalities and procedures.
There are majorly two types of corporation considered by an entrepreneur; S corporation and C Corporation. Finally, the LLC is another form of legal entity that is regarded as a hybrid. This is because an LLC combines the taxation benefits of a partnership and the separate legal entity of a corporation.
8. Choose a Catchy Business Name
When looking to set up a business, it is important that you consider what you are going to call your business. While the Business title=”business name” data-wpil-keyword-link=”linked”>business name you choose should be one that is catchy, unique and easily memorable; it should also be indicative of the industry you are in.
Below therefore are some catchy names that will be suitable for you if you intend starting up your own cell phone retail store business;
- Phone Mart Inc
- Affordable Phones
- Buy Mart Phones
- 24/7 Phones and Accessories
- Walworth Phones
- Endgage Cell Phones
9. Discuss with an Agent to Know the Best Insurance Policies for You
Having insurance policies for your cell phone retail store is in your best interest and it is therefore advisable for entrepreneurs intending to run their business in the United States of America to purchase some. The reason why it is mandatory is that an insurance policy helps to protect a business and the owner from any sort of seen and unforeseen circumstances especially during the course of running the business.
Knowing which insurance policies to pick might not be easy, which is why you should engage the services of an insurance agent or broker to help you choose what insurance policies will be right for your business. Below are some of the basic insurance policies that you should consider purchasing if you are looking to start your cell phone retail store business in the United States of America;
- General Liability Insurance
- Workers’ Compensation Insurance
- Errors and Omission Insurance
- Business Owner’s Policy Group Insurance
- Employment Practices Liability Insurance
- Auto Insurance
- Payment Protection Insurance
- Health Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The cell phone retail store business is one that involves the sale of hardware and mobile accessories and is therefore not what might require an intellectual property protection of a huge kind. However, because most businesses make use of the internet to market their business, it is vital that you aim to intellectually protect your business name, domain name, logo, concepts and any other material you deem important to your business.
To apply for an intellectual property protection for your business, it is best you seek the services of an attorney that has the necessary experience in this area to help you apply.
11. Get the Necessary Professional Certification
Acquiring the necessary professional certification in a business is very important as not only does it help in boosting the profile of a company, it also helps the business to stand out and compete favorably especially in a very competitive environment.
However, the cell phone retail store business is not one that requires professional certification, except you intend to go into a niche that would require some sort of certification.
12. Get the Necessary Legal Documents You Need to Operate
Any business that is being set up in the United States of America is expected to have acquired the necessary basic legal documents that would allow the business not run into any sort of trouble with the law. If you are confused on what legal documentation you would need for your cell phone retail store business, you might need to engage the services of an accountant or an attorney to help you with the right documentation to start your business with.
Some of the basic legal documents that you would require to run your cell phone retail store business successfully in the United States of America include;
- Certificate of Incorporation
- Operating Agreement
- Business License, Certification and Permit
- Business Plan
- Insurance Policies
- Contract Document
- Employment Agreement
- Non-Disclosure Agreement
- Sellers Tax Permit
- Employer Identification Number (EIN)
- Federal Tax Identification Number
13. Raise the Needed Startup Capital
When it comes to the finances required to start a business, one can either use his or her personal funds or source for funds externally. The truth is that most entrepreneurs looking to start a business rarely have all the funds they need to run the business and so usually source for funds externally.
Sourcing for start-up capital from external parties to run your business isn’t an easy thing for any entrepreneur, but it is a task that must be undertaken especially if you are committed to seeing your business become a reality. To help source for funds, it is usually good to make use of a business plan as this will easily convince potential investors of your seriousness regarding the business.
Some of the areas where you can source for start-up capital for your cell phone retail store business include;
- Raising capital personally via own savings and sale of stock or personal properties
- Sourcing for soft loans from family members and friends
- Applying for loan from the bank
- Getting loan from private investors
14. Choose a Suitable Location for your Business
Choosing a suitable location for your cell phone retail store business is very important as the location would determine how your business will grow and generate the necessary revenue that would sustain the business. If you locate your business in a location that isn’t too favorable, your business will crumble in no time as there will be almost no one to patronize your cell phones.
The decision on whether to run your business from home or from a commercially leased or rented property should depend on your budget. If you are running on a tight budget and would not be able to rent or lease a property in an area that is within your target market, then running your business from home would not be a bad idea as long as you have understood the modalities behind running such business from home.
In running your business from home, customers can only know about your business if you create a website and make sure that you have deployed the right strategies that would see customers search for your website when looking to buy a cell phone. However, you have to ensure that certain factors such as shipping fees, return policy and customer service are top notch.
If you are looking to however lease or rent a facility with which to run your business, it is important that you choose a location that is within the hub of your target market. For a cell phone retail business for instance, it would be best if you locate your business in or near malls, shopping centers and game centers or even near university campuses.
If you aren’t sure of where to choose when looking to rent or lease a business, you can engage the services of a real estate agent or broker to help you choose the best location that would suit your business.
15. Hire Employees for your Technical and Manpower Needs
A cell phone business is one that requires a substantial amount of money to start up and this is due to the fact that there are a lot of cell phones in the industry and if you intend to have as many customers as possible, you will need to stock as many different kinds of phones as possible.
Choosing the right location for your cell phone retail store business is also very important as the right location will allow you generate the needed revenue that would grow and allow you to expand your business. Regardless of whether you choose a location or intend to run your business from home, you would need to ensure that you create a website that will allow customers easily locate your business.
Regarding the equipment that you would need to run your cell phone retail store business efficiently, you might need to buy some, rent some or get some as fairly used, depending on what your overall budget for the business is. Therefore, some of the equipment that you would need for your cell phone retail store business include; shelves, display racks, hooks, computer, phones, printer, scanner and software (accounting and customer database).
Except you intend to run your cell phone business on a very small scale, you will need a certain number of people to help you run your business efficiently and they include; Chief Executive Officer (CEO), admin and human resources manager, accountant, business development and marketing executive, phone repair and consultant, sales people, customer service executive, driver and security.
From the above analysis, you will require at least 11 key people to successfully run your cell phone retail store business effectively.
The Service Delivery Process of the Business
The cell phone retail store business isn’t one that requires production of any sort as all you will be required to do is offer cell phones and accessories for sale and any other services that you intend to offer. Therefore, the process involved includes reaching out to one or several vendors in order to agree to sell their brands and also contacting cell phone accessories suppliers.
You will also need to know about the software aspect of a phone such as the different operating systems, so that you will be able to offer reliable information to your customer.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing is one very important aspect of a business as with marketing, a business can generate the revenue it needs to run and grow the business, whilst also generating the necessary publicity needed to make the target market aware of the business. Having the right marketing strategies will enable your business to not only penetrate the market but to also compete favorably against competitors.
Before one can create the right marketing strategies for a business, one has to start with market research. It is this research that helps the entrepreneur to understand the business thoroughly.
If marketing your business is a little overwhelming especially with the stiff competition in the industry, you can always engage the services of a marketing consultant to help you draft marketing strategies that are in line with your corporate goals and objectives.
Below are the marketing ideas and strategies that you can use for your cell phone retail store business;
- Empower your marketing executives to market your business directly
- Ask your loyal customers to help refer your business to others
- Use social media platforms such as Facebook, Twitter, Google Plus and Linkedin to market your business
- Ensure that your business is listed in yellow pages and online directories
- Ensure that you advertise your business in local newspapers and magazines as well as on radio and television stations
- Attend seminars and phone expos in order to network and market your cell phone retail store business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Publicity is very important for every business, which is why large companies and even those that have been in existence for long, do not mind setting aside an amount each year that will be used to boost the awareness of their brand as well as create a corporate identity for their business.
Creating strategies that will help you boost the awareness of your brand as well as create a corporate identity for your business might be overwhelming and so some entrepreneurs usually use a publicity consultant who is well experienced as regards the industry and who also has some level of success in helping similar companies to achieve their intended goals and objectives.
If you are running on a tight budget, there are several inexpensive ways that you can use to boost awareness for your brand and the internet is one of them. Below therefore are some of the platforms that you can use to boost your brand awareness and also create a corporate identity for your business;
- Ensure that you advertise your business in local newspapers and magazines as well as on radio and television stations
- Ensure that your business is in yellow pages and also in online directories
- Use social media platforms such as Facebook, Twitter, Google Plus, Instagram and Linkedin to promote your business
- Distribute handbills and fliers in strategic locations in the area where you intend operating from
- Install billboards and banners in strategic locations in the area where you intend operating from
- Use your official website to promote your business