How to Write an Appliance Repair Business Plan

Spread the love

Writing a business plan is critical to the success of your appliance repair service.  Writing a business plan can be intimidating for the first time, but we have tips to help you get started on the right path.

Why is a Business Plan Important?

While many people write their appliance repair business plan for funding purposes, the business plan can offer many more benefits such as:

  • Strategic Planning
  • Cash Management
  • Milestone Setting
  • Priority Setting
  • Change Management

You have likely already spent a lot of time thinking about your appliance repair business, but it is next to impossible to stay organized and reach all of your goals by not writing them all down. Likewise, it is difficult to have a clear vision until you put those thoughts on paper. That is where the business plan comes into play. Creating a business plan provides a road map to connect the dots and make your vision a reality.

Another point to encourage you in writing your business plan is that the Small Business Administration shows that over 21% of small businesses fail in the first year, and 50% fail in the first five years.  Some of the more common reasons for business failure include not starting with enough money, lack of planning, and overestimating revenue.  The business planning process can help identify these issues helping to reduce costly mistakes once your business is off the ground.

Another advantage of having a business plan is receiving valuable feedback from others in your industry. New entrepreneurs can be overly optimistic when starting their business and overlooking details both big and small simply because of a lack of experience.

By having another business owner, consultant in the industry, or accountant look over your plan, you can receive critical feedback, spotting potential weaknesses in the plan. Getting these insights and fixing the plan before presenting it to a lender or investor increases the likelihood of receiving funding and increasing the odds of business success.

Writing a business plan is not something many prospective appliance repair shop owners want to do because they are unfamiliar with the process, and it takes time. However, keep in mind that writing a business plan is nowhere near as hard as running a business without a roadmap.

What Goes into a Business Plan?

There is no set format for a business plan, and it is a living document, meaning that changes can (and probably will) be made over time.  However, there are specific topics that need to be covered. Below we have a business plan outline that should help you get started.  However, since this is your plan, write it the way that makes the most sense for your business and the intended reader.

Save Time with a Business Plan Template for an Appliance Repair Service

To help with creating a business plan, you can use software such as LivePlan that includes a narrative for an appliance repair business plan and guided financial projections.

Executive Summary

The executive summary is included at the beginning of a business plan but will be the last part written.  This section should be a clear, concise, and high-level overview to help the reader (often a lender or investor) quickly decide whether or not your project is one they will continue reviewing.  If they are not engaged after reading the summary, they will not likely read further, so it is essential to generate interest quickly.

Common elements of an executive summary for your appliance repair shop business plan will include:

  • Overview of your business
  • Why your type an appliance repair shop is needed in your area
  • The location
  • Experience of the owner(s)
  • Amount of funding being requested
  • Amount (if any) the owner(s) plan to invest
  • What the money will be used for

Business Overview

The business overview section of your business plan is where details will be provided regarding the purpose of your business. It’s imperative to show the enthusiasm you have for the company and knowledge of the industry.  If you are using the plan for funding, you will have the opportunity to tell the loan officer or investor all the great things you plan to do.  However, if you seek a loan, the plan will likely be going to a loan review committee who won’t get to hear your story, so be sure to get all the crucial details on paper!

The appliance repair industry provides repair and maintenance services for home appliances and garden equipment. From 2015 to 2020, there was a great competition with consumers wanting to replace appliances rather than repair them. This is the result of higher disposable income as well as a spike in DIY savvy consumers.

In the five years from 2020 to 2025, per capita, disposable income, homeownership, and existing home sales are expected to increase. These factors support increasing industry revenues.

Another point to drive home in this section is the need for an appliance repair shop is needed. Describe what will set your business apart from the competition and why people would choose you over your competitors.

In addition to exceptional service, a successful appliance repair needs to also offer:

  1. A good reputation: Having a good reputation can go a long way, especially if the geographical area you will be located in is pretty concentrated competition-wise.
  2. Access to a highly skilled workforce: Per an IBIS World report, wages account for an average of 29% of overall costs in the appliance repair industry. With the increase in the minimum wage, this percentage is likely to increase. Considering the investment you will be making in your employees and technicians, it is crucial that those individuals are top-notch in their field.
  3. Prompt delivery of your service: Delivering fast service to your customers will play a huge factor in the success of your business as service requests are expected to be fulfilled quickly. Otherwise, customers are inclined to seek service from another provider.

Industry Overview

The industry overview section should describe the overall market for appliance repair services, home improvement, and lawn and outdoor equipment industries. These types of businesses complement the appliance repair sector. If national sales trends aren’t increasing, try to find positives that support the decision to open your appliance repair business, such as the rise in the cost of new appliances.  The more supporting data you can come up with to support the industry’s strength, the better, but be sure to reference where you got this information.  A lot of industry information can be found with an online search or through industry associations, but if you haven’t already, take a look at our Guide to starting an appliance repair business.

Company Ownership

Indicate the legal entity of your business and how ownership will be structured.  If you aren’t sure about the differences between a sole proprietorship, partnership, corporation, or Limited Liability Company (LLC), be sure to check out our article comparing the different business entities.

Location

Discuss where you’re your appliance repair shop will be located and why this location is desirable. For example, you may decide to run this business out of a home office, but if you plan to have office space, consider the proximity to other similar businesses, as this affects your competitive landscape.

Permits and Licenses

Before opening an appliance repair business, you’ll need to obtain several federal, state, and local licenses and permits. Standard permits for this type of business include:

  • Business License (Check with the municipality in which you will run your business.)
  • Training and license to work of the appliance you will service

Also, do not forget to make sure that your business is adequately insured.

Learn more about licenses and permits for a new business 

Owners, Management & Employees

Owners

In this section, include a brief biography of the owners and their professional experience and education. (Resumes may even be included in the Appendix of your business plan.) This section is critical when looking for funding as a lot of weight is placed on the experience of the owner(s) and their ability to run an appliance repair business successfully. If the owner(s) don’t have direct industry experience, explain how their previous experience is relevant such as selling new appliances.

Employees

If there will be any employees, including information about staffing to detail what positions and how many people are needed to run your business.  Include the title of the position, the number of people required for each position required hours per week or month, and the wages for those positions.

Milestones

Include a timeline of milestones already achieved and those that are being worked on.  By having a timeline, you will have a list of the sequence of when critical tasks need to happen. An example of such millstones include:

  1. Write your Business Plan
  2. From a Business Entity
  3. Name Your Business
  4. Select the Location
  5. Register for Appropriate Business Licenses and Permits
  6. Secure Financing
  7. Open a Business Bank Account
  8. Establish a Marketing Plan
  9. Obtain Business Insurance
  10. Hire Employees
  11. Set up an Accounting System

Marketing

The competition for an appliance repair service can be competitive, and the number of ways to market this type of business keeps expanding.  Just being good about fixing refrigerators, washing machines, dryers, and other household appliances may not be good enough. Without a solid plan to get the message out about your potential customers, it may be hard to get customers to trust a newly established company.   Getting noticed in the market is critical, so what will you do to get the message out and make your business stand out?

The marketing section is one of the most important business plan sections but is often not given the time and attention to detail as it needs. Why is it so important?  Because your business needs customers to spend money without service calls, there will be no business.  Without knowing who your customers are and how to reach them, they may never hear about your repair service.

Some key areas of the marketing section for an appliance repair business may include:

  • Target Market
  • Buyer Persona
  • Competitive Analysis
  • Martlet Research
  • Marketing tactics specific to your industry
  • Marketing Budget
  • Metrics

Target Market

The first building block in the marketing plan is defining the target market.  A target market is a group of people most likely to benefit from a company’s offerings.  A target market shares similar characteristics such as demographics (age, gender, education, or income) or geographic areas. Don’t think of targeting a specific group as excluding people and limiting business potential.  By defining your target market, you can more effectively spend your marketing budget by explicitly going after the people who will most likely need appliance repair. For instance, you will target homeowners instead of those who rent, such as those living in apartment complexes.

After defining your target market, try and find numbers about how many of them there are.   You can find this information by visiting websites such as city-data.com or census.gov. Having actual data and statistics in your business plan lends credibility and will help form the basis for potential customers.

Promotional Strategy

After defining the target market, the promotional strategy comes next.  The promotional process looks at how to reach your target market best.   By knowing your target market, assumptions can be made to best reach them by focusing on their media preferences.

When preparing this section, make sure to have a solid plan to generate attention through the various marketing channels like print, radio, social media, we8bsite, etc. Also, be sure to get actual costs for advertising to use in the financial projections later in the plan.

Competitive Analysis

The competitive analysis section will provide an overview of the competition in your area and why you believe people will choose you over them.  You will likely focus on other repair services, but don’t forget to look at indirect competition such as home improvement stores.

It would help if you listed how many appliance repair businesses are in a nearby radius and then focus your analysis on the top 3-5 competitors.  The purpose is to research and show you understand the competition and what gives you a competitive advantage.

Some of the key areas to look at in a competitive analysis include:

  • Competitor’s name
  • Location
  • Years open
  • Pricing
  • Features
  • What they do well
  • What you will do better/differently

This is not the place to bash your competition or make references to how terrible of a person the owner is since this is subjective. Doing so also makes you look unprofessional and is not likely to get you the funding.

Financial Projections

The financial projections of any business plan are a critical component of the plan but are often the most intimidating.  Typically, lenders and investors will read the executive summary to see if it is a project they would be interested in participating in and then jump right to these projections.  If the thought of preparing financial projections is a bit daunting, software such as LivePlan helps make it easier.

Sales Projections

Sales projections can be complicated to estimate without existing revenue data.  There are several ways of estimating sales for an appliance repair service, but you will want to refer back to your target market research done earlier to support your assumptions. 8

Sales projections are where new business owners tend to be overly optimistic, and this is where having a mentor or consultant help review the plan.

See our article on creating sales projections for more information.

Seasonality

When looking at sales projections, the effects of seasonality also need to be evaluated.  Seasonality is more significant in some businesses than others. It is vital to estimate based on these fluctuations because it can show whether a company is projected to run out of mon2ey in the financial statements.

Simply dividing sales by 12 months is a common mistake picked up by lenders and investors because it shows the entrepreneur may not understand the sales trends for the industry.

The appliance repair industry goes through a unique cycle as different appliances break during different seasons.

Uses of Funds

Start with a section for the Use of Funds to show the total cost of starting your appliance repair business. Next, list any expenses you have already incurred and what still needs to be purchased.  You don’t need to itemize every small item, such as every office supply or piece of equipment, so combine the cost of all similar items and list them.

It’s important to have quotes for everything should the bank or lender request them, but only add quotes for the more expensive items such as renovations as attachments in the Appendix.

Total up the Uses of Funds to find the total cost of the project

Sources of Funds

The Sources of Funds section breaks out where the money is going to come from.  The owner’s investment is commonly listed first.  Most lenders will want to see the owner(s) put in between 15% – 25% for a new startup.

Other funding sources are listed next, such as bank loans, SBA guarantees, investor funds, etc. Learn more about finding financing for your appliance repair business.

The total amount in the Sources of Funds should match the Uses of Funds.

Financial Statements

There are three primary financial statements that a lender will look at for a startup of an appliance repair service: the cash flow statement, profit, and loss statement, and balance sheet. The information provided previously in the narrative portion of the business plan must match the financial projections.

Cash Flow Statement – The projected cash flow statement is an important tool when starting a business. Similar to a checkbook register, the projected cash flow statement shows an estimate of the money coming into the business and expenses that will need to be paid.  The benefit of this statement is to see whether there is enough cash to sustain the company based on the assumptions.  Should this number be negative, the assumptions need to be reevaluated to see if sales can be increased, expenses reduced, or more cash needed to start the business.

The cash flow statement is typically structured to look at three years later, with the first year broken out by month and years two and three broken out by quarter.

Profit & Loss Statement – This statement (sometimes called a P&L statement or income statement), while similar to the cash flow statement, shows the annual income and expenses of the business.  The projected profit and loss statement is often displayed annually and takes a pre-tax view of the financial results of the business.

Balance Sheet – The projected balance sheet statement be requested by all banks when reviewing a loan for your new appliance repair business. A projected balance sheet shows the projected assets and liabilities for a startup and then the end of each year.

Personal Financial Statement

If applying for bank financing, a personal financial statement will typically be needed for every person with a 20% or more ownership position in the business.  This statement is similar to one that is used to apply for a home or car loan.   The personal financial statement will show a borrower’s assets (checking & savings accounts, CD, IRA, 401K, valuables, home, vehicle, etc.) as well as debts (mortgages, credit card bills, installment accounts, etc.).

Related: How to fill out a personal financial statement

Conclusion

The bottom line is that the business plan is a living document that is geared to aiding both potential investors and owners alike.  It must both convincing and reasonable so you will be taken seriously by all who read it.

The post How to Write an Appliance Repair Business Plan appeared first on StartingYourBusiness.com.