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3 Tips for Starting an Electronics Business

From mobile phones to cameras and laptops to LED televisions, electronic products are always in demand. In a world where almost everything is going digital, the electronics industry is becoming one of the most lucrative.

Although it was drastically affected by the pandemic, it continues to grow steadily, albeit slowly. Experts estimate the global market for electronic products would reach $1.29 trillion by 2025, a compound annual growth rate of 5%.

Indeed, it is never a bad idea to open your own electronics business. But while the start-up process is similar to other enterprises, it is a lot more challenging. Technology, after all, is constantly evolving, which makes the business landscape for electronics unpredictable.

Additionally, the competition is very steep. With reputable electronics establishments everywhere, penetrating the market can be extremely hard.

But don’t let hurdles faze you. The success of your electronic business all boils down to careful planning and extensive preparation combined with hard work and innovation.

There are no shortcuts to achieving sustainable growth, but there are ways to guarantee it happens. Here are three valuable tips for starting an electronics business.

1. Market Research and Plan the Business

Market research plays a crucial role in starting and growing a business.  But what is market research exactly?  In simplest terms, market research is the process of gathering information about your target audience to understand their behavior and purchasing habits.

Once you have a clear idea of their needs, interests, and motivations, you are more likely to attract them into buying your products.  The market research also allows you to identify and assess your competition and forecast whether your goods will sell.

Knowing how your rivals run their business will help you create a business strategy that focuses on your competitive edge.

Start your market research by developing a problem statement. Then decide on your budget and set your timeframe. Next, choose your participants and identify the information you want to collect. Determine the methods you are going to use to analyze the data.

Many businesses collaborate with consultants to conduct the actual research, interpret the information, and create the report.

Once you have your market research, you can start planning.  Your business plan is a roadmap that details the nature of your company, its purpose, and objectives, and the actions you will undertake to achieve your goals.

A simple business plan includes fundamental elements such as an executive summary, a business overview, market analysis, sales and marketing plan, management plan, operating plan, and financial plan.

Take notes from successful electronics businesses and use them as a model.  Study their marketing strategies, company branding, product costing, employee management, and incorporate these in your own plan.

However, also learn from the mistakes of companies that weren’t as successful.  Which areas did they fail, and how do you prevent it from happening to you?

On the other hand, you need to make your startup stand out. Yes, you emulate the best practices of successful companies, but you also need to highlight what makes you unique and sets you apart from your competition.

If you are just another electronics shop in an area crammed with electronics shops, you can’t expect people to start flooding into your store.

2. Consider How to Scale the Business

The foremost goal of businesses is to maximize profit for their owners and stockholders.  How to achieve this is tricky and requires a good strategy and keen decision-making.

There are two main routes to increase cash flow.  One is through growth, where you invest in new resources, such as people and new products, and increase revenue as a result.  Then, there’s scale.

To scale a business means you increase profit at a faster rate without increasing the cost or effort.  You can attain this by using new technology or finding loopholes in your operations and streamlining them.

Here are two scenarios:

You get a $150,000 deal, but you must hire three new employees with a $50,000 salary each to perform the new tasks.  You’re earning, but you’re also spending as much. In the end, you only break even and do not truly gain.

Let’s apply the same situation to scaling.  You get a $150,000 deal, hire only one person ($50,000) and invest instead in a $5,000 automated software to handle the rest of the new tasks.  You gain revenue without spending as much.

Utilizing email marketing is another example of scaling. Whether you send an email to one person or 100, your expenses and effort are basically the same.

So how do you scale your electronics business?  First, consider your capacity and capability.  Imagine selling smartphones like hotcakes only to realize you’re unable to meet all your customers’ demands.

Some of the most common pitfalls of startups are financial setbacks, overlooked orders, staff shortage, miscommunication, and incapacity to deliver the goods.

It is never a bad idea to start small and at a low cost. Still, scaling your business does not come free.  Sometimes you have a potentially ground-breaking product but lack the money to fund the project.  In such a case, consider working with investors.

Some firms are willing to support small but reputable startups as long as the owners can show a sound business plan.

One indispensable factor in scaling up your business is technology. Use digital marketing to expand your clientele, email automation to nurture leads, social media to learn customers’ perspectives, and chatbots to handle questions and requests.

There are also software systems that help manage your customer database, manage your operations remotely, and take over tedious manual work.

3. Outsource Quality Engineers

While it is essential to digitalize your business, there is only so much that technology can do.  At the end of the day, you still need hands to carry out work that requires strategic thinking and problem-solving.

Highly skilled employees are essential to every company, but more so if your business relies on electronics.  You need quality engineers to efficiently and effectively maintain not only your products but also your operations, making savvy electronics recruitment essential to your business plan.

Conclusion

However, hiring internal engineers would cost much and is not the most practical decision, particularly if you have just started your business.  Consider contracting out the position.

Not only will outsourcing allow you to reduce expenses on the hiring process, but it will also enable you to save time and promote staffing flexibility.

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Startup’s Guide to Write a Business Plan

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