Do you want to start cell phone business?

Do you want to open a cell phone store? Well, it will prove a convenient and extremely profitable choice for you, as cell phones have become a necessity of the modern society. Mobile phones are portable, wireless as well as long-range electronic devices for communication and can also be used as a tool for entertainment. Cell phones are desired in every part of the United States as people love to use the apps provided by it. They have become the most efficient means of communication throughout the world and are now accessible to every high and low.

An estimate shows that 95% population of the United States have their own cell phones. For starting a cell phone business, you will have to purchase a large number of cell phones of every range according to market demand, and the next step will be to display them in your showroom. People of the United States belong to various classes thus the cell phones of all companies such as Apple, Google, Samsung, Motorola, Xiaomi, HTC, Huawei, and LG are in great demand in the whole country.

If you are entering this venture, the first step you will have to take is to devise a comprehensive business plan, which will help you in starting your business and taking a lead upon your competitors. In case, you don’t know how to start a cell phone business, you can take help from this sample business plane for a cell phone business startup named ‘Mobile Station’.

Executive Summary

2.1 The Business

Mobile Station will be a licensed and registered mobile store in Denver owned by ‘Mark Franco’. The store will be located near the Denver Central Market. Franco has been working as a supplier of tech products for more than ten years, but now he is starting a cell phone business. Franco will purchase the original brand new cell phones from the main companies, tablets, and other accessories, and will keep them at his store.

The business will not be limited to just selling cell phones, it will also contain the facility of mobile hardware and software repair by expert technicians.

2.2 Management

Before starting work on how to start a cell phone store, you must hire the right person for the right job and organize your staff and store. Franco will manage the business himself, however, he will hire trusted and skilled mobile hardware and software repairers as well as salesmen to help him entertaining the customers’ needs.

2.3 Customers

The biggest benefit of starting a cell phone business is its wide spectrum of customers. Personal cell phones have become a necessity of every teen, young, adult and old. Moreover, cell phones are available in every range affordable by the rich as well as mediocre people, so our customers will be almost all the people of age above 12 approximately.

2.4 Target of the Company

Our company’s targets are as follows:

Cell Phone Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

The business will be owned by Mark Franco, an experienced businessman from Denver. Franco has been in the tech-related business for almost fifteen years. He worked as a supplier of televisions and LEDs from the main company stores to the retail stores throughout Denver. But now he has decided to run a business which is less straining than the prior one. Franco is an ambitious person and aims at providing the best services to the people of his town.

3.2 Why the Business is being started

Denver is the 19th most populous and 18th largest metro economy in the United States, Franco has chosen this city as his market because he knows this business will flourish the most in such marketplace where people have both the need and money to buy his services.

Franco was working as a supplier of tech-related products, but now considering the demand of cell phones in the market, Franco has decided to start a cell phone business, for providing trusted services to his fellow citizens and to generate a stupendous profit.

3.3 How the Business will be started

Franco is well prepared for all the requisites before opening a cell phone store. He has hired well-behaved and experienced salesmen and expert technicians for any required hardware or software recovery and is half-way in completing his business plan on how to start a mobile phone company. He has prepared the list of all the products he’ll keep in his store and will buy the items two days before the launch. The detailed information about the start-up is given below:

Cell Phone Business Plan - Startup Cost

Start-up Expenses 
Legal$55,300
Consultants$0
Insurance$32,750
Rent$32,500
Research and Development$32,750
Expensed Equipment$32,750
Signs$1,250
TOTAL START-UP EXPENSES$187,300
Start-up Assets$0
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
TOTAL ASSETS$121,875
Total Requirements$245,000
START-UP FUNDING$0
START-UP FUNDING$273,125
Start-up Expenses to Fund$11,875
Start-up Assets to Fund$15,000
TOTAL FUNDING REQUIRED$0
Assets$23,125
Non-cash Assets from Start-up$18,750
Cash Requirements from Start-up$0
Additional Cash Raised$18,750
Cash Balance on Starting Date$21,875
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$332,500
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$695,000
Loss at Start-up (Start-up Expenses)$313,125
TOTAL CAPITAL$251,875
TOTAL CAPITAL AND LIABILITIES$251,875
Total Funding$255,000

Services for customers

You have to come up with better services if you want your startup to be successful in so hefty competition. If you are confused about how to start my own cell phone company, or if you are having any difficulty with the services you should provide your customers, you can take help from this sample business plan on how to start a cell phone store business.

Mobile Station will provide the following services to its customers:

  • Cell phones: We’ll provide latest smartphones of the following famous companies, Apple, Nexus, Google, Samsung, Motorola, Meizu, Xiaomi, Sony, HTC, Huawei, and LG and wireless cell phones of Nokia to our customers.
  • Accessories: We’ll provide best quality accessories in reasonable prices, related to cell phones such as chargers, data cables, mobile cases, anti-lost devices, headphones, sim cards, phone charms, data storage cards, external batteries, selfie-sticks etc.
  • Hardware/Software Repairs: If your cell phone has broken, damaged or is not turning on, you don’t need t worry if you are near our Mobile Station. We will provide an excellent and quick repairing service for our customers, by ensuring them the safety of their private data.
  • Tablets: We’ll provide tablets of various companies in a wide money range so that every person can buy his/her desired and cost-effective

Marketing Analysis of cell phone business

If you want to start cell phone business, you won’t be at a loss because the cell phones and smartphones are in great demand these days. Like every startup the first step is to make a comprehensive cellphone and smartphone business plan. In your cell phone store business plan marketing analysis is the part of paramount importance. Before starting a cell phone company you should analyze the market in which you will be going to offer your services. A thorough cell phone market analysis will be required to discover whether your target market has the potential of a new startup or not. Considering the importance of accurate marketing analysis, Franco hired the professionals to formulate a cell phone business plan template which will include all his ideas of running the cell phone business.

If you are doing a research on  how to start your own cell phone business, you can have help from various cell phone business plans available online free of cost. Below we are giving the cell phone shop business plan of Mobile Station for your assistance.

5.1 Market Trends

In the near past, cell phones were considered the luxury products affordable by only a few people. But these days, a tremendous growth in cell phone business is observed as the cell phones have become an integral part of everyone’s life. Latest figures from Statista shows that the number of cell phone users will reach 4.9 billion within 2018.

An estimate shows that 21% of Americans spend more on their cell phones than groceries and 95% Americans own a cell phone of some kind, but still there is a demand for new ones. It will not be enough to say that only the businesses of buying and selling cell phones are gaining grounds because IBISWorld has reported a 5.5% growth in the businesses related to cell phone hardware and software repairs.

As demonstrated by all these statistics, you won’t be at a loss if you are entering this profitable venture!

Cell Phone Business Plan - Marketing Segmentation

5.2 Marketing Segmentation

The success of a startup confides in the fact that how well do you know your prospective customers. Knowing the type of potential customers helps a businessman in determining his business strategy. Marketing segmentation will help you in meeting the needs and requirements of your customers.

The detailed marketing segmentation of Mobile Station is as follows:

5.2.1 Teens & Adults: This group will be our biggest target customer. The teens in their attempt to show off their modernism and financial status, purchase the cell phones that are most attractive and most expensive too. The young generation usually prefers Apple phones and other cell phones of the famous brand name. They will also be the biggest consumers of the accessories we’ll provide such as handsfree, modish mobile cases, data storage devices, data cables etc.

Adults are not addicted to a brand name like teens, but they usually buy expensive phones as they are mostly professionals and in a position to invest in their desired product.

5.2.2 Senior Citizens: Our next target group will comprise of the senior citizens of Denver who usually prefer durable cell phones and tablets which they can use conveniently without the fear of much damage. We have a wide range of tablets in our store for senior citizens as they find the big screen of tablets easy to use.

5.2.3 Children: The children of age about ten to twelve usually force their parents to buy them a phone. For such customers, we also have inexpensive smaller cell phones with meager functions.

As we are located in the central market so our services will also be used by the people or tourists who have come near our store by chance. The people who happen to be near our shop will contribute to helping us generating a potential amount of profit by buying our accessories and by consuming our repairing services.

The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Senior Citizens32%11,43313,34416,55318,74520,54513.43%
Teens & Adults48%22,33432,34443,66552,54466,43210.00%
Children20%12,86714,43315,99917,56519,13115.32%
Total100%46,63460,12176,21788,854106,1089.54%

5.3 Business Target

Our topmost priority will be our clients’ satisfaction. Mobile Station will be a large store in Denver, our aims are to maximize our sales as well as gaining more and more customers. Our financial business targets are as follows:

  • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
  • To balance the initial cost of the startup with earned profits by the end of the first year

5.4 Product Pricing

The prices of cell phones are fixed, however, considering the market demands and the competitive aspects, we have priced our repairing services and products other than cell phones in almost similar ranges as of our competitors.

Strategy

If you are opening a cell phone business  the main thing you need to focus on is your sales strategy. After having the know-how of how to start cell phone business, you must devise your plans and find some attractive ideas for gaining more and more customers and for increasing sales.

6.1 Competitive Analysis

Our major competitive advantage is our location; we are located in the vicinity of popular stores which will pave the way in attracting the customers for us but are not our direct competitors. We have the best, experienced and trusted technicians to help you resolve your hardware and software problems related to cell phones. Our biggest competitive edge is our excellent customer service; our courteous salesmen will guide the customers until they are satisfied in buying their desired product.

6.2 Sales Strategy

As the market is full of such businesses so you will have to found extraordinary ways to advertise your business.

The sales strategy Mobile Station will adopt will be:

  • We will offer a discount on our repairing services for the first three months
  • We will advertise ourselves in magazines, newspapers, TV stations, and social media
  • We will advertise our best-selling cell phones on our website
  • We will give a $50 accessory for free to our customer who bought the product of price $600 and above.
  • We will hold competitions on monthly basis and award the winner with some famous cell phone

6.3 Sales Monthly

Cell Phone Business Plan - Sales Monthly

6.4 Sales Yearly

Cell Phone Business Plan - Sales Yearly

6.5 Sales Forecast

Our forecasted sales are summarized in the following column charts:

Cell Phone Business Plan - Unit Sales

The detailed information about the sales forecast is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Cell Phones1,887,0302,680,3202,588,240
Accessories802,370815,430823,540
Repairs539,3207702301,002,310
Tablets265,450322,390393,320
TOTAL UNIT SALES3,494,1704,588,3704,807,410
Unit PricesYear 1Year 2Year 3
Cell Phones$140.00$150.00$160.00
Accessories$600.00$800.00$1,000.00
Repairs$700.00$800.00$900.00
Tablets$650.00$750.00$850.00
Sales
Cell Phones$2,149,800$2,784,000$3,383,200
Accessories$120,050$194,500$268,500
Repairs$50,110$71,600$93,000
Tablets$139,350$194,600$249,850
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Cell Phones$0.70$0.80$0.90
Accessories$0.40$0.45$0.50
Repairs$0.30$0.35$0.40
Tablets$3.00$3.50$4.00
Direct Cost of Sales
Cell Phones$989,300$1,839,000$2,679,700
Accessories$66,600$119,900$173,200
Repairs$17,900$35,000$52,100
Tablets$19,400$67,600$115,800
Subtotal Direct Cost of Sales$1,294,100$1,699,400$2,104,700

Personnel plan

If you are going to start a cell phone company, the prosperity of your business will solely depend upon your customers’ satisfaction which can only be achieved if you hire the right staff.  You will need the persons who are experienced in understanding the customers’ intellect and help them by finding the cell phone which is suitable and affordable for them. You will need the technicians who will be a trustee and will ensure customers’ satisfaction while resolving their issue.

If you have any difficulty in making your personnel plan or even if you don’t know how to start mobile phone business you can take help from this sample plan.

7.1 Company Staff

Franco will act as the manager himself, yet for his assistance, he will hire the following people.

  • 6 Salesmen to assist the customers in buying their required item
  • 2 Administrators/Accountants for maintaining financial records
  • 4 Technicians for repairing/addressing problems in cell phones
  • 3 General Workers for undertaking various tasks at the store
  • 1 Assistant for operating company’s website and social media pages

7.2 Average Salary of Employees

 Personnel Plan   
Year 1Year 2Year 3
Salesmen$152,000$159,000$166,000
Accountants$152,000$159,000$166,000
Technicians$145,000$152,000$159,000
General Workers$187,000$194,000$201,000
Assistant$42,000$45,000$48,000
Total Salaries$304,000$318,000$332,000

Financial Plan

If you are going to start your own cell phone business, you are responsible for accurately devising all the policies of your business, the most important in which is the financial plan. Before starting cell phone business, you must have a clear idea that how will you balance the investments with the profit and which ways you will need to adopt in order to get more than what you spent on the business.

It is advised to seek help from the professionals to make you a financial plan especially if you are starting your business on a large scale. If your business is a smaller one, then you can take help from the sample business plans such as this business plan on how to start your own cell phone company.

8.1 Important Assumptions

The company’s financial projections are forecasted on the basis of the following assumptions. These assumptions are quite conservative and are also expected to show deviation but to a limited level such that the company’s major financial strategy will not be affected.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

 

8.2 Brake-even Analysis

Cell Phone Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Assumptions:
Average Per-Unit Revenue$260.87
Average Per-Unit Variable Cost$0.89
Estimated Monthly Fixed Cost$196,410

 

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$309,069$385,934$462,799
Direct Cost of Sales$15,100$19,153$23,206
Other$0$0$0
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Expenses
Payroll$138,036$162,898$187,760
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Depreciation$2,070$2,070$2,070
Leased Equipment$0$0$0
Utilities$4,000$4,250$4,500
Insurance$1,800$1,800$1,800
Rent$6,500$7,000$7,500
Payroll Taxes$34,510$40,726$46,942
Other$0$0$0
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
EBITDA$107,275$148,110$188,945
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Cell Phone Business Plan - Profit Monthly

8.3.2 Profit Yearly

Cell Phone Business Plan - Profit Yearly

8.3.3 Gross Margin Monthly

Cell Phone Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Cell Phone Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Cell Phone Business Plan - Projected Cash Flow

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
Cash from Receivables$7,023$8,610$9,297
SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$184,666$218,525$252,384
Accounts Receivable$12,613$14,493$16,373
Inventory$2,980$3,450$3,920
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL LONG-TERM ASSETS$980 $610 $240
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
Earnings$100,709$119,555$138,401
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420

 

8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets4.35%4.71%5.80% 9.80%
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.