Setting up in business - a couple of questions

scottishblondie

Hi guys

I've been making a little bit of cash on the side repairing Xbox 360s for the last couple of months, and tonight I've finally taken the plunge and registered with the HMRC as self employed so as to be all above board. I'm hoping eventually to be able to operate a proper games console repair business, but for now it's a very small operation and that is how it will stay until I've finished my studies. There are a few things I would like to pick more experienced brains about just now tho

- I understand that costs of equipment etc can be set against income for tax purposes, but some of the stuff I've invested in I got before the date I've registered as becoming SE. I had to get this stuff in order to practice my skills before doing work for paying customers. Can I still claim these expenses?

- I want to get insurance in case of accidental damage to a customer's console, fire, theft etc. Is there a specific company anyone would recommend, or a broker? Direct Line quoted me £60, but I'm not sure if that's reasonable or not.

- This is one I'm not clear on at all - I've offered limited warranties of 90 days on my repairs. I'm confident that they'll last longer than that, but is there by law a certain length of warranty that I have to offer? I saw someone on another thread complaining that his PS3 broke 6 months after a repair and people were saying that the repair should have come with a longer warranty. I haven't been able to find anything definitive with Google.

I'm sure there's plenty of other stuff I haven't thought of yet, and all this is still quite new and scary! Any advice is much appreciated.

Thanks.

motorguy

scottishblondie wrote: »

Hi guys

I've been making a little bit of cash on the side repairing Xbox 360s for the last couple of months, and tonight I've finally taken the plunge and registered with the HMRC as self employed so as to be all above board. I'm hoping eventually to be able to operate a proper games console repair business, but for now it's a very small operation and that is how it will stay until I've finished my studies. There are a few things I would like to pick more experienced brains about just now tho

- I understand that costs of equipment etc can be set against income for tax purposes, but some of the stuff I've invested in I got before the date I've registered as becoming SE. I had to get this stuff in order to practice my skills before doing work for paying customers. Can I still claim these expenses?

- I want to get insurance in case of accidental damage to a customer's console, fire, theft etc. Is there a specific company anyone would recommend, or a broker? Direct Line quoted me £60, but I'm not sure if that's reasonable or not.

- This is one I'm not clear on at all - I've offered limited warranties of 90 days on my repairs. I'm confident that they'll last longer than that, but is there by law a certain length of warranty that I have to offer? I saw someone on another thread complaining that his PS3 broke 6 months after a repair and people were saying that the repair should have come with a longer warranty. I haven't been able to find anything definitive with Google.

I'm sure there's plenty of other stuff I haven't thought of yet, and all this is still quite new and scary! Any advice is much appreciated.

Thanks.

Firstly i wish you every success with your new venture.

I would have thought its a relatively crowded marketplace, and you are going to be competing against people who will be doing this and not being registered as a business therefore can charge less than you. Also, are console prices not on their way down? If you can buy a brand new XBox for £129 with some bits, is it that cost effective to repair them?

Well done for wanting to start small and grow from there - resist all temptation to rent / lease premises for as long as you can, even if that means down the line offering a 'free' pickup and return service. Still much much cheaper than premises.

RE: Warranting your work. Surely you are specifically warranting against the failure *only* of the repair you have made. I think you need to be very specific about that. If thats the case, then is extending your warranty much of a problem, given that it will potentially bring you more business - you repair XBox by replacing CPU, people back six months later with it not loading games, turns out its the laser, so you charge them for that.

Gertie_Walker

To answer your tax/accounts questions: you cannot claim any expenses, but if you include all the outgoings of the business in your accounts, this will reduce the tax due. Setting up costs wholly relating to the business need to be included.

scottishblondie

Thanks for the replies guys.

pgilc1 - It's surprisingly sparse on console repairers around here, altho there are a lot more that do computer repairs. There is 1 shop I can think of and about 2 or 3 other people that advertise on Gumtree like I do at the moment, but they are all further out of town. I live in a student area very close to the town centre, whereas the others are 10-30 miles further out. I've been trying to capitalise on the cash strapped students I can repair a console in around 40 minutes (getting quicker all the time tho), and charge a minimum of £20 up to £40 so I'd say it's pretty cost effective compared to a new console.

WRT the warranty, I think you're right. I need to be more specific about what the warranty applies to. As an example, I have a customer whose console has failed with a totally different fault within the time period and I can't fix it. Now I'm not sure whether or not he expects a full refund

Gertie, thanks for clarifying that. At the moment there isn't any tax due at all, as my taxable income is only about £4k a year without this money. I've been keeping records of each repair charge and of all the equipment I've bought, so I can sort it all out down the line once I understand how it works.

paulwf

scottishblondie wrote: »

I can repair a console in around 40 minutes (getting quicker all the time tho), and charge a minimum of £20 up to £40 so I'd say it's pretty cost effective compared to a new console.

I'm wondering if you could turn this into a marketing idea? People generally dislike open ended charging structures as you never know how much you are going to pay. How about something along the lines of "We guarantee to fix any xbox for a flat fee of £35 or we won't charge. Next day repair service on all consoles". Obviously tailor it to your needs but having a set cost and set turnaround would deliver a very simple and therefore strong message to your customers.

scottishblondie

That does sound like a good idea, people do tend to prefer it if they know what it's going to cost and how long it will take. I think I need to get more onto the advertising, as my Gumtree ads only generate 2 or 3 customers a week. I get more enquiries, but I'd say only 40% of enquiries lead to a repair.

I'm thinking of setting up a website with fixed price lists etc and more details, as I think this would help. I do wonder if my lack of a shop concerns people? This is unlikely to be more than a part-time business, so I'll probably never have actual premises. At the moment I offer a pick-up/drop-off for £5 extra, or they drop it off to me at uni. I can't really think of another way to do it cost-effectively, as a free service would eat into both my time and profit.

I work in a computing science department, so I think them bringing it there actually reassures some customers as to my skill set, but you would be surprised at the number of people that walk up to a total stranger and hand over their precious console without even asking for a receipt!

patman99

As you work in a computing science dept., make sure your bosses are ok with people dropping-off consoles at your place of work.
Also, never let anyone know how long it takes to fix a fault.
Could you extend your services to repairing the students computers, mobile phones etc?. If you can master the art of laptop repairs, then you could make quite a good profit. Just look what the big boys charge.

property.advert

scottishblondie wrote: »

WRT the warranty, I think you're right. I need to be more specific about what the warranty applies to. As an example, I have a customer whose console has failed with a totally different fault within the time period and I can't fix it. Now I'm not sure whether or not he expects a full refund

What you need to do is to be specific about what you have done. Say you fix the on / off switch, then you guarantee that, but if the motherboard fries, then that is a different problem and would not be covered under any warranty you give. Essentially you cover only the work you do but your quotations or receipts will have to state this very clearly.

You'll obviously take some on the chin but some you will have to be hard on.

paulwf

scottishblondie wrote: »

I'm thinking of setting up a website with fixed price lists etc and more details, as I think this would help. I do wonder if my lack of a shop concerns people? This is unlikely to be more than a part-time business, so I'll probably never have actual premises. At the moment I offer a pick-up/drop-off for £5 extra, or they drop it off to me at uni. I can't really think of another way to do it cost-effectively, as a free service would eat into both my time and profit.

Try and find shops where you can either advertise to their customers or act as a repair service for the shop. It could be quite a simple yet effective arrangement...the shop charges £40 to customers for a repair, they call you up and you collect all the consoles twice a week and you charge them £30.

One stumbling block may be the lack of independents in the games market but try and think beyond the core market. Perhaps a PC repair shop would like to outsource console repairs or cash converter type shop may need consoles checking over before selling them.

scottishblondie

Thanks paulwf, there is actually a new PC shop which has opened up just round the corner from my flat - they don't do games consoles, so I thought once I'm properly up and running I might approach them to see if they'd be interested in such an arrangement.

property.advert - I've given receipts to customers stating the fault that I've fixed, I do need to be clear tho that that is the only thing I'm guaranteeing!

patman - they're fine with it. I'm actually a student in the department and employed there part time (tho hopefully full-time once I graduate!), so if I can cater to the student's needs I think you're right, I could do quite well

property.advert

You've also got to be realistic about how much you can charge and how much you need to earn. As an example, a legal firm may charge you £100 per hour but the lawyer doing the work would get nothing like £100 per hour. When you transfer from a hobby come bit on the side to a business you need to charge enough to cover your overheads, all costs and then still give you enough profit to make it worthwhile. Charging £40 for something which takes you 5 hours and costs you £20 in parts and then £10 in fuel etc. is simply not productive and yet you cannot charge £100 because the market will not wear it. You need to be able to quickly and for near nil cost assess whether it is a viable repair or not.

Then when you have a full time job, you need to be making quite a bit more per hour (even if not paid per hour you can work it out) than you get from work or you could just do more work in your main job.

Many business ideas fail at this stage as when you add in the costs of doing business, it doesn't make financial sense. If you are not handy with Excel, get on a crash course !