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How To Start An Appliance Repair Business In 2023

How To Start An Appliance Repair Business In 2023

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How To Start An Appliance Repair Business In 2023

How To Start An Appliance Repair Business

If you find fixing machines fascinating and have a knack for getting to the root of a problem, you may want to try your hand at the appliance repair business. Starting an appliance repair business will mean you’ll have the chance to work on many different appliances, using your creativity, attention to detail, and problem-solving techniques. With your own business, you’ll be in charge of everything from marketing to scheduling, but this can also be a rewarding opportunity to build up a business and be your own boss.

Starting an appliance repair business involves much more than just technical skills, so in this guide, we’ll provide an overview of the business, shed light on the industry, outline how to get started, and answer some common questions.

Business Overview

Appliance repair businesses often offer repair services for broken appliances like refrigerators, stoves, freezers, washing machines, dryers, and garbage disposals. Often, these services are provided in a homeowner’s home since transporting these appliances is difficult. Repair businesses can help save homeowners money over the cost of purchasing a brand-new appliance. To offer prompt service, many repair businesses keep a stock of common repair parts for the appliances they specialize in, allowing them to travel to the customer, identify the issue, and repair the problem all in one visit.

Transitioning into a full-time appliance repair service can be difficult as you build up that initial customer base, so consider starting your business on a part-time basis. Homeowners may particularly appreciate the availability of services on the weekends when they’re not at work, so a part-time weekend business might be a great stepping stone to taking the operation full-time.

Industry Summary

The appliance repair industry is a significant segment of the overall home services market. The industry’s growth is driven by the increased reliance on household appliances along with the higher cost and availability of appliances.

The industry is quite fragmented, with numerous small businesses and independent contractors. While there are some large chains and franchises, there’s plenty of room for small, local businesses. These can often compete effectively by offering personalized service, flexible scheduling, and competitive pricing.

According to IBIS World, the appliance repair industry is a $6.2 billion market that saw a small decline in of 1.6% in 2022.

There are a few industry trends affecting the appliance repair industry to be aware of.

One of the largest trends is the transition from traditional appliances to smart appliances, and according to the New York Times, smart appliances’ popularity is only likely to continue. Traditional appliances are also being modified to include smart features, such as refrigerators equipped with touch screens. To keep pace with these smart appliances, repair business technicians will need to learn the ins and outs of this new technology.

Secondly, the sustainability trend is driving consumers to repair rather than replace appliances, thus reducing their environmental impact. As a result, businesses marketing around the eco-friendly aspect of repair over purchasing new can capitalize on this trend to attract environmentally conscious customers.

Appliance repair businesses also face increased competition from major manufacturers who offer their own repair services, like Sears and Whirlpool. While appliances are under warranty, consumers are likely to take advantage of these services, which may be fully or partially covered. Independent repair businesses face the challenge of marketing themselves so that consumers are aware of their availability and choose to hire them when they need appliance repair.

Target Market

The target market for a repair business partially depends on that business’ focus. A few key segments include:

  1. Homeowners: This is one of the largest target markets for appliance repair businesses. All homes have appliances, and when these appliances break down, homeowners typically prefer professional repair services to ensure proper and safe operation.
  2. Renters: Like homeowners, renters also rely heavily on appliances. However, they might not have the expertise or permission to handle complex repairs themselves.
  3. Landlords and property management companies: These entities manage multiple properties and are often in need of consistent and reliable appliance repair services for their tenants. Establishing a relationship with this customer segment can lead to repeat business and steady income.
  4. Appliance retailers and manufacturers: Some retailers and manufacturers offer after-sales repair services. They might outsource these services to reliable and efficient appliance repair businesses.
  5. Small businesses: Various small businesses, such as restaurants, bakeries, and laundromats use appliances daily and need them to be functioning optimally at all times. They can provide a significant source of repeat business for appliance repair companies.
  6. Eco-conscious consumers: With sustainability becoming more important, consumers who prefer repairing over replacing to reduce waste are a significant target market.
  7. Senior citizens: Older adults might not be comfortable or able to repair appliances themselves, making them a valuable target market for appliance repair businesses. Some businesses even offer special discounts or services for seniors.

By understanding and identifying these target markets, an appliance repair business can develop effective marketing strategies to reach potential customers and grow the business.

Checklist To Start An Appliance Repair Business

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If you’re thinking about starting an appliance repair business, it’s important to do your research first. Here is a checklist to help you get started.

Step 1: Research the Industry

The first step of starting an appliance repair business is getting a comprehensive understanding of the industry.

Become familiar with the current market landscape, the key players, and the common practices. Consider studying industry reports from research firms like IBISWorld or MarketResearch.com for an in-depth understanding of industry trends, challenges, opportunities, and the competitive landscape. Furthermore, capitalize on the power of networking. Attend industry-specific events, trade shows, or join relevant organizations to gain practical insights and establish potentially beneficial connections with industry peers, customers, and potential partners.

The digital world also offers a wealth of information. Leverage websites, blogs, and forums dedicated to the appliance repair industry. They can keep you abreast of the latest industry developments and provide practical tips and strategies. Don’t hesitate to consult with industry veterans, such as seasoned appliance repair business owners or manufacturers. Their firsthand experiences can offer a unique perspective, helping you anticipate and navigate potential challenges.

While there aren’t usually specific degree requirements for starting an appliance repair business, having a solid knowledge base and relevant certifications can significantly boost your credibility and professional knowledge. You can look to enroll in appliance repair training courses offered by vocational schools or community colleges, which typically cover a wide range of appliances and equip you with the necessary skills. Manufacturer-specific training programs can also be incredibly valuable, offering a deeper understanding of specific products. Additionally, seek recognized certifications, such as the Certified Appliance Professional (CAP) program by the Professional Service Association or the National Appliance Service Technician Certification (NASTeC). These certifications can provide a competitive edge, demonstrating your competence and commitment to the industry.

By taking these steps, you’ll be well-prepared and well-equipped to kickstart your journey in the appliance repair business.

Step 2: Assess Market Demand

Before you open a repair business, it’s important to consider if there will be enough demand for your service, in addition to what competition is already present in your area. Understanding your potential market helps validate your business idea, guides your marketing and growth strategies, and can be a key factor in securing funding or investment.

To research if there is enough demand for an appliance repair business, you could consider the following cost-effective strategies:

Demographic and geographic analysis: Start by researching the number of households and businesses in your intended area of operation. Factors such as the age of homes (older homes may have more appliances needing repair), the number of residential complexes, and the presence of businesses that rely heavily on appliances (like restaurants, laundromats, etc.) can all indicate potential demand.

Public data: Check public databases like U.S. Census Bureau data or local government statistics to understand the demographics and economic conditions of your proposed area. Higher income areas may have more appliances and thus potentially more demand for repair services.

Competitor analysis: Look at the number of existing appliance repair businesses in your area. If there are many, this might indicate high demand, but also high competition. Check their reviews, services, and pricing to gauge customer satisfaction and identify gaps in the market.

Networking: Speak to local appliance retailers, real estate agents, and property managers. They can provide valuable insights into the demand for appliance repair services.

Pilot project: Consider initially offering your services on a small scale or part-time basis. This allows you to test the market, gain practical insights, and establish a customer base without a large upfront investment.

Step 3: Write a Business Plan

After getting a better understanding of the market and seeing that a market exists, creating a business plan should be the next step in starting an appliance repair business

Even if you’re not seeking external funding, the business plan provides a lot of value as it not only serves as a roadmap for your business growth, but also assists in managing your business efficiently and strategically. It helps identify your business goals, strategies for achieving them, potential problems and solutions, and business structure.

A few sections that are especially important for a new appliance repair business include:

Market analysis: Lenders will want to be sure you did market research and have a solid understanding of your target customers, their needs, and the existing competition.

Operations and management: Explain how your business will function day-to-day. Highlight your proposed staffing structure, key roles, and responsibilities. Outline your sourcing plan for tools, parts, and supplies, and describe how you’ll manage inventory.

Financial projections: This is not only important if you’re seeking funding, but it provides you information on whether you can realistically make money with this business. Detail your projected income, expenses, and profitability. How much will you charge for your services, and why? What are your expected running costs? When do you anticipate breaking even? Provide best-case, worst-case, and expected scenarios to show that you’ve prepared for different eventualities.

By crafting a well-thought-out business plan, you not only prepare yourself to face the challenges of starting a new business but also position your business for sustainable success.

Related: How to write an appliance repair business plan

Step 4: Secure Funding

One of the most vital steps in starting an appliance repair business, or any business for that matter, is securing adequate funding. Because of the moderate startup costs, it’s feasible to bootstrap a business using personal savings, though in some cases, business owners will need to seek additional funds.

Some common sources of funding include:

Bank loans: Traditional bank loans are a common source of funding for small businesses. These can be term loans for a specific amount, or lines of credit that you can draw from as needed. To secure a bank loan, you’ll generally need a strong credit history, a solid business plan, and some level of personal investment. You may also need to provide collateral, such as business assets or even personal assets.

Small Business Administration (SBA) loan guarantee: The SBA provides loan guarantee programs to participating lenders that can make it easier for small businesses to secure bank loans. Just like a traditional bank loan, they do require a thorough application process, and the funds can only be used for eligible business expenses.

Friends and family: While it can be tricky to navigate, funding from friends and family can be a feasible option. If you choose this route, treat it as professionally as any other form of financing: provide a business plan, agree on terms, and consider formalizing the agreement with a legal contract.

When seeking funding, it’s important to carefully consider the amount you need, the repayment terms you can afford, and the potential impact on your business control and ownership.

Related: Finding the money to start a business

Step 5: Register the Business

After the funding is in place to get started, you can be free to register the business. Legally setting up an appliance repair business involves several steps and while the specifics can vary by state, here are the common areas:

Forming a business structure: Deciding on the legal structure of your business is the first step. The most common structures include sole proprietorship, partnership, Limited Liability Company (LLC), and corporation. For small businesses like an appliance repair business, an LLC is a popular choice. An LLC combines the flexibility and simplicity of a sole proprietorship or partnership with the liability protection of a corporation, safeguarding your personal assets from business debts and liabilities. However, it’s essential to consult with a business advisor or attorney to understand the best structure for your specific situation.

Related: Comparison of business structures

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming an appliance repair business

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Business licensing: Licensing requirements for an appliance repair business can vary by state and even by municipality. At a minimum, you’ll likely need a general business license. However, some states may require a small appliance, electronics, or contractor license before being able to service appliances.

Also, the Environmental Protection Agency requires technicians that work on refrigeration to have a Type 1 certification under the Clean Air Act.

In addition to industry-specific requirements, there are some general business registrations that will be needed. These will vary but could include a business license, sales tax permit, Employer Identification Number, and Occupancy Permit.

Be sure to check with your state and local government to understand the necessary licenses and permits.

Related: What licenses do appliance repair businesses need?

Zoning laws and regulations: Ensure your business location complies with local zoning laws. This is especially important if you plan to operate your business from home or have a physical shop.

Remember, each state, and in some cases, city, has its own rules and regulations, so it’s essential to check before starting your business.

Step 6: Set Up the Workspace and Office

Establishing the right location and creating a well-planned workspace are critical steps in launching a successful appliance repair business. Whether operating out of a storefront or running a mobile service, a well-organized setup can significantly enhance your efficiency, customer service, and overall business image.

When setting up the workspace for an appliance repair business, a few tips include:

Analyze successful businesses: There’s no need to reinvent the wheel, so consider visiting successful appliance repair businesses (preferably from ones that won’t be a competitor) to observe their layout and workflow. Note the arrangement of their workspace, customer service area, storage facilities, and safety measures. This could provide valuable insights into setting up your own space (or seeing what not to do).

Consider space requirements: Allocate adequate space for different activities. You’ll need a workspace for repairs, a secure area for storing spare parts and tools, a comfortable waiting area for customers, and possibly a reception or administrative area. Similar to a physical workspace, your vehicle should be well organized as well. Consider installing shelving or storage units that can safely secure tools and parts while on the move.

Organize your workspace: Efficiency in appliance repair requires a well-organized workspace. Tools and commonly used spare parts should be easily accessible. Consider using toolboxes, parts bins, and shelving to keep things tidy and within easy reach.

Location scouting software: Use mapping and routing software to plan your service calls efficiently. Apps like Google Maps, Waze, or even more specialized fleet management software can help optimize your routes, saving time and fuel.

Mobile payment and invoicing: Invest in mobile payment systems and invoicing software to make transactions smooth and professional for your customers. Square or Stripe offer mobile-friendly solutions that can integrate payments, invoicing, and record-keeping.

Remember, setting up your workspace or mobile service correctly from the start will not only improve your efficiency but also enhance your professionalism in the eyes of your customers. It’s an investment in your business success.

Step 7: Purchase Equipment

The first six steps involved a lot of paperwork, but now we get to something more tangible and start purchasing the tools and equipment to do the work. Purchasing the right equipment and supplies is a fundamental step in establishing your appliance repair business. The types of tools and parts you’ll need largely depend on the specific services you plan to offer, such as repairing household appliances, commercial appliances, or specialized equipment. However, there are some general steps and considerations that apply across the board.

Determine what you need: Start by making a list of all the tools and supplies you’ll need to provide your services. This might include general tools like screwdrivers, pliers, and multimeters, as well as specialty tools for specific appliances. Also consider consumable supplies like wire, tape, and connectors, and common replacement parts like belts, filters, or fuses.

Research suppliers: Look for reliable suppliers who offer high-quality tools and parts. You may be able to find everything you need from a single supplier, or you might find it more cost-effective to source different items from specialized suppliers. When comparing suppliers, consider not just price, but also factors like delivery times, return policies, and customer service.

With the business legally set up, suppliers will now be more inclined to provide you wholesale pricing.

Invest in quality: While it can be tempting to save money by purchasing cheaper tools or parts, this can cost you more in the long run. High-quality tools are more durable and can make your work more efficient, while reliable parts can prevent callbacks and improve customer satisfaction.

Manage your inventory: Keep track of your tools, parts, and supplies. Use appliance repair industry management software like like PocketSuite or Jobber to monitor stock levels, track usage, and identify when to reorder. This helps prevent running out of essential items, while also avoiding overstocking.

In addition, some larger or more expensive pieces of equipment might be more cost-effective to lease rather than buy, especially when starting out. This can include items like vehicle, diagnostic equipment, or even certain specialized tools.

Remember, the right tools and supplies are an investment in your business. They enable you to provide high-quality services, which can enhance your reputation, improve customer satisfaction, and ultimately contribute to your business success.

Step 8: Get Your Marketing Strategy in Place

Marketing your appliance repair business effectively is crucial to attracting and retaining customers. Start by identifying your target market, which will likely consist of homeowners, landlords, and property management companies in your local area. Understanding your target market will enable you to tailor your marketing messages and strategies to meet their needs and preferences.

Creating a strong brand identity is an essential first step. This involves choosing a business name and logo that accurately represent your services and convey professionalism and reliability. Your brand should be consistently presented across all marketing materials and channels.

Marketing your appliance repair business effectively is crucial to attracting and retaining customers. Start by identifying your target market, which will likely consist of homeowners, landlords, and property management companies in your local area. Understanding your target market will enable you to tailor your marketing messages and strategies to meet their needs and preferences.

Related: Tips for designing great appliance repair business cards.

A well-designed website is another key marketing tool. It not only provides information about your services, but also allows potential customers to schedule appointments.

Over the long-term, your reputation will eventually become the most important marketing strategy, as word-of-mouth referrals tend to drive most repair businesses.

Also, even though the profit margins can be slim, home warranty companies can provide consistent leads that make it worth it.

Related: Low-cost ideas to market a new business

Step 9: Hire & Train Technicians

Labor is often the largest cost for an appliance repair company, right after the purchase of parts. Before hiring employees, make sure to calculate not only the salary cost but also payroll expenses such as payroll taxes, workers comp insurance, health insurance contributions, and unemployment insurance. The type of employees typically hired by such businesses range from appliance repair technicians, who are at the forefront of the operation, to administrative staff, who handle scheduling, customer service, and other office tasks. As a business owner, it is essential to understand both the logistical and legal aspects of hiring.

Before you start the hiring process, you should first outline the roles and responsibilities for each position you’re planning to fill. Clearly defined job descriptions will not only help you attract the right candidates but will also set clear expectations for potential employees.
Once you’ve outlined the roles, the next step is to ensure that you comply with all legal requirements. This includes obtaining an Employer Identification Number (EIN) from the IRS if you don’t already have one, registering with your state’s labor department, and setting up a system for withholding taxes.

Another crucial aspect is understanding wage and labor laws, including minimum wage, overtime pay, and break requirements, as well as anti-discrimination laws. If you plan on offering benefits like health insurance or retirement plans, you’ll also need to familiarize yourself with the legal requirements for these programs.

It’s also essential to create a comprehensive employee handbook outlining your company’s policies and procedures, expectations for conduct, and any benefits you offer. This not only communicates important information to your employees but also helps protect your business from potential legal issues.

After preparing these basics, you can start the recruitment process. This includes advertising your job openings, reviewing applications, interviewing candidates, and selecting the right employees.

Once you’ve hired your employees, you’ll need to report the new hires to your state, provide them with the required tax forms, and ensure they are legally eligible to work in the US. You’ll also need to set up a system for tracking work hours and handling payroll.

Hiring employees involves a lot of responsibility, but with careful planning and preparation, it can be a manageable process. By taking these steps, you can build a competent team that helps your appliance repair business thrive.

Related: Stage guides for hiring your first employee

Step 10: Prepare to Launch

There are a few crucial final steps to consider in starting your appliance repair business. These are easy to overlook, but they are important in the day-to-day running and long-term success of your business.

Business insurance: This is important for protecting your business against potential losses and liabilities. At the very least, you should consider a general liability insurance policy, which covers injuries or damages that occur on your property. If you have employees, you will also need workers’ compensation insurance, as it is required in most states.

Related: What types of insurance does an appliance repair business need?

Setting Up bookkeeping: Effective bookkeeping is essential for tracking income and expenses, preparing tax returns, and providing a clear picture of your business’s financial health. Consider hiring a professional bookkeeper or accountant, or use bookkeeping software like Wave Accounting (FREE) or Quickbooks.

Contracts: Prepare or obtain standard contracts for your business. These might include service agreements, which outline what services you will provide and what you will charge or customer waivers or disclaimers, especially for more complex or high-risk repairs.

RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.

Opening a bank account: A dedicated business bank account is essential for keeping your business finances separate from your personal ones. This not only makes bookkeeping easier, but also helps establish your business as a separate legal entity.

Industry-Specific Management Software: Software can help streamline various aspects of your business, from scheduling appointments to managing inventory. For an appliance repair business, consider options like Housecall Pro, Jobber, or ServiceFusion. These platforms provide features tailored to service businesses, including online booking, job tracking, invoicing, and customer relationship management.

Related: Review of top appliance repair management software

Preparing for the grand opening: Plan for how you will launch your business. This might involve a promotional event, special offers, or a marketing campaign to attract your first customers. Make sure your team is ready, and all equipment and supplies are in place.

Starting an appliance repair business involves many steps, from market research and business planning to setting up operations and marketing your services. The needs of every business will vary, but these final steps are often necessary for a successful start.

This material is property of StartingYourBusiness.com

Greg’s Tip: While it might be tempting to offer a wide range of repair services, many owners will focus on a few specific appliances, especially when starting. This allows you to build in-depth expertise and can make training and inventory management easier. As your business grows, you can consider expanding your service offerings.

Greg's Business Tip

Common Questions When Starting An Appliance Repair Business

How much does it cost to start an appliance repair business?

Starting an appliance repair business requires a modest investment, typically ranging from $15,000 to $50,000, depending on a variety of factors. These costs can be broken down into several key categories:

Initial equipment and supplies ($2,000 – $10,000): This includes all of the tools and parts you’ll need to get started. The cost can vary significantly depending on the types of appliances you plan to service and whether you buy new or used equipment.

Vehicle expenses ($5,000 – $20,000): If you plan on providing mobile repair services, you’ll need a reliable vehicle that can transport you, your tools, and, sometimes, large appliances. This cost includes purchasing a vehicle (if you don’t already have one) and potentially outfitting it for your needs.

Legal and licensing fees ($500 – $2,000): This covers the cost of registering your business, obtaining necessary permits, and setting up your business structure (e.g., LLC, sole proprietorship, etc.). The exact fees can vary by state and municipality.

Initial insurance costs ($500 – $2,000): Business insurance, like general liability and workers’ compensation, is vital for protecting your business. The initial cost represents the first-year premium which usually is paid upfront.

Marketing costs ($1,000 – $5,000): This includes the initial costs of setting up a website, designing a logo, and launching your initial marketing campaigns.

Operating expenses ($6,000 – $15,000): When starting a business, it’s recommended to have three to six months of operating expenses on hand. These expenses can include rent (if you have a physical location), utilities, fuel, vehicle maintenance, and ongoing equipment costs.

Please note, these are estimated ranges, and your specific costs may be lower or higher. It’s crucial to do a detailed cost estimate as part of your business planning process to ensure that you have adequate funding to start your appliance repair business. A well-planned budget not only helps you manage your startup costs effectively but also increases your likelihood of business success.

How profitable is an appliance repair business?

The profitability of an appliance repair business can significantly vary based on multiple factors such as geographical location, number of jobs per day, and overall efficiency. Let’s break down the potential below:

According to HomeAdvisor, the average cost for an appliance repair is $177. Assuming that half of this cost is labor and the other half is the cost of parts, we can calculate that the cost of parts for each repair job is about $88.50.

The cost of goods sold (COGS), which includes the direct costs attributable to the production of these parts, is typically 30% in this industry. Therefore, the COGS for each job would be $88.50 * 0.30 = $26.55.

The gross profit for each job would therefore be the total revenue (average cost) minus the COGS: $177 – $26.55 = $150.45.

So, if you were to complete approximately five jobs per day, five days a week, your weekly gross profit would be $150.45 * 5 * 5 = $3,761.25. This equates to a monthly gross profit of approximately $15,045.

Note that these calculations do not take into account other operating expenses such as vehicle costs, insurance, marketing, or overhead like rent (if you have a physical store), and the labor portion of the revenue would likely go toward the owner’s or employee’s salary. So, it’s essential to deduct these expenses to estimate net profit accurately.

However, the gross profit calculation provides a good starting point for understanding the potential profitability of an appliance repair business. As with any business, maintaining a clear understanding of your finances and adapting as necessary will be key to achieving long-term profitability.

What skills are needed to run an appliance repair business?

Opening an appliance repair business doesn’t require a business degree, but certain skills and experiences can increase the business’s chances of success.

Appliance repair skills and experience: A repair business owner needs to be talented in working with and repairing the appliances they specialize in. As appliances become more complicated, a detailed understanding of how appliances work and plenty of experience in identifying problems and fixing appliances will leave a business owner well-prepared for the challenges they’ll face in fixing the appliances brought to them.

Creativity and problem-solving skills: Problems can and will arise in this industry, so a business owner who’s creative and takes an active role in problem-solving will do well. Repair technicians may need to be resourceful in finding difficult-to-get parts and overcoming other challenges.

Organization skills: From tracking invoices and part orders to keeping track of all the parts when disassembling an appliance, repair business owners need to have great organization skills.

Customer service skills: Customer service is a major component of running a repair business. Good phone etiquette, good interpersonal skills, and the ability to stay calm even if a customer is unhappy will go a long way to building a customer base and developing a good business reputation.

Scheduling talents: A repair business owner also needs to be able to create and maintain a schedule. This can be tricky when traveling from home to home for repair appointments, but being able to arrive at appointments on time can build customer loyalty.

What is the NAICS code for an appliance repair business?

The NAICS code for an appliance repair business is 811412.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
Association of Home Appliance Manufacturers
Professional Service Association
United Appliance Servicers Association

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

How To Start An Appliance Repair Business In 2023

How To Start An Appliance Repair Business In 2023

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