Steps to Be Taken Before Starting an Electronics Business

By Louise Balle

An electronics business provides a variety of mechanical products and parts to consumers, including cell phones, televisions, computers, peripherals and components. If you plan to open this type of business, it's important to prepare yourself with information so that you won't suffer the same fate as large electronic stores that failed like Tweeter and Circuit City.

Examine Other Electronics Businesses

Before you start an electronics business, examine and understand the business models of existing electronics businesses. This includes the average price markup charged on goods, strategies for customer satisfaction, and managing supplier relations. You need this information to set your own store policies and prices competitively. Compare successful electronics outlets with those that have closed or failed. You can download detailed profiles on established electronics businesses (e.g., RadioShack, Best Buy) at such websites as and Business case studies are available from Harvard Business Publishing's website (see resources).

Create a Competitive Business Plan

Due to the competitiveness and high risk of opening an electronics retail store (10 major chains failed between 1986 and 2007 alone), it's imperative that you create a complete business plan that focuses on your competitive advantages. Use the research you gather from examining case studies and business profiles, as well as any of your own personal experience in electronics, to demonstrate why your electronics business will survive. For instance, if you've managed an electronics store, you'll have knowledge of the inner workings of this type of retail business and you might have an advantage over other new stores.

Raise Funds

An electronics business requires a significant capital investment, so raising funds should be a top concern in the planning stages. If you'll be opening up a brick-and-mortar storefront, you'll need to put up money for various initial needs, including inventory, the store lease, store fixtures, storage space, advertisements and employee wages. For an online business, you need to factor in website creation and maintenance. You can start the process of raising funds by contacting private investment firms and lenders. You must present your business plan to possible investors or lenders, fill out an application and prove your credit worthiness as well as your experience in the field. You should also start building up your personal coffers and talking to family and friends.

Find Out Requirements of Electronics Suppliers

Before you lease space or spend money on your business, you need to investigate the terms and conditions of various electronics suppliers and distributors on the market. You should also call well-known manufacturers of electronic products to find out the requirements for establishing a relationship. This may include a minimum order amount, a business license to prove you are a state-recognized business, and references from other business owners. A distribution representative at the company is the best source for this information. Some manufacturers limit the number of electronics stores they will contract with directly.