Your Business 1

We have a philosophy. It goes like this: If you aren't sure if you need it, don't buy it. This goes for systems, equipment, supplies and sometimes ink. There is a problem in our industry in that much of the product that is for sale is ineffective, effective only within context and most importantly, not going to make you profitable. If it saves you time, thats good. If it improves your quality, that is very good. If it reduces your cost, this too is good.

But think of adding a buck to each cartridge you produce. Let's say you refill a given cartridge for $12. You have $.50 worth of ink in it. You may have a top cap ($.20), a sticker ($.05) and you certainly have a clip ($.25) in it. This adds up to a dollar. Add in 6 minutes of technician time which is one tenth of an hour. At $10 and hour, that's another buck. Now start adding up the soft costs, the ones like electricity, insurance, rent, solutions, tapes and other elements that are not easily or directly accountable to the cost of refilling a cartridge. Let's call it $2. Now you have the equipment like testers, centrifuges, microscopes, filling machines, sprayers and what other stuff you have collected to ease and speed your delivery of service. Go another Buck. Here's how it looks:

Ink $ .50
Other Supplies $1.00
Labor $1.00
Overhead $2.00
Gear $1.00

Total $5.50

To pay $1,000 in rent and cover the rest of your overhead you will have to fill 500 cartridges with this distribution of expenses. In a retail operation that is open 26 days per month (you are working Saturadays) this averages out to 19.2 cartridges per day. this will give you a gross profit of $3250 dollars per month or $39,000 per year. The government will want their piece of your flesh, give up 1/3 to net after tax $26,000. This isn't going to work if you have lofty goals. A ten year old will tell you to add more business, and cut costs.

Supplies can be minimized but there is little savings here. Forget about that aspect, just don't let anyone spill a gallon of that good German ink.

Labor cost are figured above at 6 minutes per cartridge. A new technician can only do about 3 or 4 per hour but after training and a month on the job they should be able to kick out 10 per hour and a great tech can approach 20 in a production environment. This says volume is important. Volume puts more money in the drawer and reduces your per cartridge cost as your people become more efficient.

Overhead can be affected to a large degree, mostly in rent. Now is the time to consider what business you are in. You are in the discount business. You may think you are in the "green", environmentally kind business of recycling. You are not. You are in the discount business. Your customers are looking for a deal, a way to save money. They don't give a rip if they are saving the planet or keeping plastic junk out of the land fill. The hassle of refilling cartridges, taking them to your shop, having you work on them, the potential for the cartridges failing or as they have been taught, ruining thier printers are all driven by one thing; cheap ink and toner. Having said this, deal seekers will seek you out. The lady buying brand name groceries, like Dole and Campbells will not. She may go to the grocery store right next to you but she is going to buy brand name ink from Staples. It's as simple as that.

So, the great spot next to a big grocery store is going to set you back $2,000 to $4,000 per month unless you can catch a landlord on the ropes. Forget it. Find a spot that is easy to get into and out of from a major road, find a spot that is visible from the street and put up your sign. By the way, if your shop is Quality Cartridges, forget about that too. The sign should say INK - TONER. You won't win any business with an "I can't read it sign" or an "I can't understand it" name. At first glance it has to ring the bell so to speak.

So now we are talking about a smaller strip shopping center with cheap rent, look for one that has food. A breakfast place is good, fast food is OK, a butcher is good, a dry cleaner is good, dollar stores are good. What are we looking for? A neighbor buisness that causes people to cycle through in regular intervals. The insurance brokers, jewelry stores, game stores.. forget them they won't help you.