How to Start a Cell Phone Business

One great way to decide what kind of business to start is to find a product that is very popular. Certainly, cell phones fit that bill, as it seems like everyone has one these days. And even though the market share in the industrialized world seems to have been saturated with portable phones, people are always looking to upgrade their phones thanks to new technologies that are constantly being developed. So, one could do a lot worse than start a cell phone business.

The first thing you must decide when starting a new cell phone business is if you want to operate solely on the web, or if you will be starting a brick-and-mortar store. A web business, or one that generates most of its sales via its website, is a very popular choice for many people who lack a lot of startup capital. Costs are minimal for this type of business, as server space is dirt cheap these days. Of course, someone must develop the site, and if you aren’t an expert in web programming, it’s relatively easy to find someone who is. Programmers will typically charge by the hour for a project like this, but will sometimes develop the site for a flat fee. Of course, you may find that bringing in the programmer as a partner will further reduce your startup costs, if you can convince the software developer that the site will be a success. Other costs can include a designer, as you want your site to have a professional look and feel, and various miscellaneous costs such as credit card merchant account fees. And then there’s the inventory cost as well, so you can have something to actually ship to the customer. Some suppliers, though, will give you the ability to drop ship the product to the customers. This means that the phones will ship directly from your supplier to the customers. Although this can further reduce your startup costs, it can be a hassle when dealing with returns, and it can reduce your overall profit margin since this type of arrangement is usually more expensive per phone than buying them wholesale.

For those that have a lot of startup capital, a brick-and-mortar store may be a good bet. Startup costs are a lot higher with this type of business, as rent, insurance, and employee recruiting and salary costs all figure into a physical storefront like this. A kiosk in the local mall is one popular choice, as a lot of business in this industry is generated through walk-up sales. This puts your presence right out in the middle of all the mall traffic, and is a great way to display your wares and entice shoppers into impulse buys. An advantage to a physical storefront over a website is that you have to deal with less competition, since you are fighting for customers with only cell phone stores in the same town or county. On the web, although the number of potential customers is a lot higher, you are competing with every single cell phone website in existence. As with a cell phone web business, you will also have the cost of your inventory as a startup cost, and you obviously can’t get around this by drop shipping them, as the customer will want the phone right then and there.

Once the type of store is decided upon, the next step is to become associated with what’s known as a master dealer. Since the large cell phone companies do not have the resources (or don’t want) to deal with every mom-and-pop cell phone store out there, the master dealer system was developed. These master dealers are companies that basically act as a go-between with the carriers and retailers, and supply the stores with inventory, activation system, marketing materials like posters and displays, and training and support. They also handle the money that is transferred between the stores and the carriers, and in return for all this, they get a cut of the overall activation sales. Some of these companies will represent only one carrier, and some will represent multiple ones, so you may find yourself having to deal with more than one master dealer. It’s important to choose the correct one(s) though, because just like any other type of business, there are good ones and bad ones. This is an extremely vital decision the new cell phone entrepreneur has to make starting out, so make sure to take your time and research all the options out there.

Finally, once you have all this in place, you are ready to open for business! This is a fast-paced industry, so be prepared to know everything you can about your products and the cell phone plans, and be able to follow the many technological changes that happen all the time. But as this is an industry that shows no signs of slowing down, opening a cell phone store is a good bet in terms of the potential to generate a lot of sales.


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