As an owner of a cell phone repair or retail store you know that there are expenses hiding around every corner. And although at the end of most months you can put some profits into your pocket you need to keep your eyes on every dollar. In the article we cover the top business expenses that cell phone owners encounter. Controlling these costs will maximize your chances that your cell shop will survive, thrive and ultimately win.
Let’s get started!
Employee Salaries ~ 16% and up
All brick and mortar businesses need employees to cover your working hours, provide the services, and ring sales through the cash register. Cell phone shops are no exception. By far the largest operating cost in most cellular shops are employees. Expect up to 16% to go to staffing.
For a shop that opens 10 hours a day, seven days a week, you’ll need to cover a minimum of 112 total staffing hours. At busy times additional staff may be required. For repair shops with a dedicated repair technician multiply that number by 2.5.
Let’s look at the numbers, depending on where you operate salaries will vary between $8 per hour and $20 per hour. A cell phone shop owner doing $150,000 yearly can expect to drop at minimum of $24,000 – that’s $2,000 monthly – on salaries.
Rent ~ 5% and up (will be higher based on location)
Most cell phone shops are brick and mortar stores so it should be expected that your next largest expense is rent. Rents will vary depending on a bunch of factors, the biggest of those factors being location. Are you located in a busy mall or a small warehouse, do you take-up 1,000 square feet or are you in a small kiosk? The answers to these question will dictate if you are on the lower or higher end of the rent scale.
A great location will deliver customers to you but will typically be more expensive.
Looking at the numbers, if you need 300 square feet and your space is $50 per square foot, then you’ll pay $15,000 per year, making for monthly rent $1,250.
Miscellaneous (administrative, payroll services, ) ~ 4.9%
Supplies, telephone and utilities, office expenses, accounting and payroll services, vehicle expenses, delivery and other charges are all typically the small expenses that go untallied until the end of the year. These small expenses add up quickly and if you want to claim these at tax time you’ll need to keep those receipts.
A store owner doing $150,000 yearly will spend approximately $7,500 yearly ($625 monthly) on miscellaneous services. One way cell store owners can reduce these expenses are with CellStore Software’s high-value suite of services that point of sale, repair tracking, customer tracking, and other store management services.
Taxes / Insurance ~ 15% to 40%
Taxes and insurance are a major expense for mosts cell phone store owners. Depending on your country of operation you’ll have fixed tax rates. Tax rates change based on your taxable income and will typically range from 11% to 40%. Use your many expenses to keep your taxes as low as legally allowed.
In addition to business tax, there may be many others including employee payroll taxes, franchise taxes and others if applicable.
Theft and vandalism are real concerns, and although receiving payouts from insurance companies may be difficult, a good stable of insurance plans will reduce some risks. Other insurance related items will include vehicle and health.
Expect about $60,000 of a business’s $150,000 income to go to taxes and general insurance.
Advertising ~ 1.5%
At the end of the day many cell phone shop owners find it difficult to find the money to invest in long-term advertising campaigns, so most opt for small one-off advertising activities. That said, most owners will spend some money on paid advertising.
Common advertising activities include upgraded classified ad promotions, Google Adwords, Yelp, and fliers and mailers. Many owners are seeing success adding advertising messages on their invoices and newsletters, and partnering with other local businesses to split advertising costs by jointly promoting their services.
That said, spending 1.5% of your income on advertising activities you would total $2,250 yearly or $187 monthly.
Yourself ~ (what every is left)
Yes you are also an expense and depending on how well you manage the expenses listed above the amount of money left over will vary. You are running a business, and like most other retail businesses you will have fixed and variable expenses.
A cell phone store owner with $150,000 in business income can expect to pay 65% to 75% of that income to regular operating expenses.
By not overpaying your staff and keeping a tight employee schedule, choosing a cost effective location that brings in good foot traffic, watching those miscellaneous expenses, by operating as tax efficiently as possible, and spending money on advertising activities that actually make you money, you will put yourself in a position to make the most of your business asset.
With CellStore Software you receive services that will help you manage your employees, help you minimize miscellaneous expense, collect your sales and tax related activities allowing you maximize your tax saving efforts while reducing your accountant’s work, and will allow you to engage in cost-effective advertising activities.
CellStore Software provides the most value of any related service and provides you with systems that reduce your daily operational stress and busy work, allowing you to spend your time where it’s most needed.
See if CellStore Software is right for you and your cell phone shop.
Visit www.cellstore.co today for your free trial.