Peanuts to Profits With Thor Schrock
Peanuts to Profits With Thor Schrock

Thankfully we moved a lot of our excess inventory yesterday, as well as our new servers, rack, bench displays, and some of the lesser used data recovery equipment. We also had all of our phone and data cabling installed as well as our ambient sound system. Today we finish moving everything and tomorrow the phones and data change over.

While we will be live in the new space tomorrow, our grand opening will not be for another week or two. There is still a lot of work to get done, and we are all tired and sore but man is it worth it!

Grant Mellor is one of Schrock Innovations‘ newest technicians. Typically a technician must work at Schrock for 90 days before we official assign them to one of the Service Centers.

In Grant’s case we did not have to wait that long to understand that we had a talented technician and a great guy on our hands.

After just a few weeks on the job, Grant has accumulated more customer compliments, thank you notes, and mentions on Compute This than I could possibly list here.

Because of his great technical efforts, his positive attitude, and his committment to providing excellent service, Schrock has assigned Grant to our new Omaha Service Center to help train and coordinate the next generation of Schrock Innovations staff.

Congratulations Grant and thank you for your excellent work!

It took a while for us to find just the right location, but after a lot of searching and negotiating Schrock Innovations will be locating its new Omaha Service Center at 168th and Burke in the Village Pointe South Development.

Village Point South is just across the street form the large Village Point Mall at 168th and Dodge. Some of our technology neighbors include Best Buy and the Apple Store.

Schrock will be occupying 2 bays in the development for a total of 2,400 square feet.

No More Moving!

Our Omaha customers might remember that we launched our first Omaha Service Center in 2003. Following the same model that has brought success in the Lincoln, NE market, we chose to advertise with a weekly radio show on Magic 590 AM.

Our first year was a success and we started hiring more employees and expanding the array of services we offered in Omaha. In the midst of our expansion, we received notice that Magic 590 was going to flip formats to become a sports talk station, and our show was canceled as a result.

We worked on a few other advertising mediums, but nothing produced like our radio show did. Eventually we were forced to lay off most of our Omaha staff and eventually, we closed our physical Omaha location and serviced our customers on-site exclusively in Omaha.

This new location is a 5-year lease and was selected specifically for its location and proximity to other technology companies who we already know we can outperform with our award-winning customer service.

New Radio Show

I make lots of mistakes, but I always learn from them. I knew there was only one AM station in Omaha that was going to bring the success that we needed to support a new Omaha Service Center, and that station was 1110 KFAB.

But getting on KFAB is not as easy as calling a sales rep and asking how much. When we lost our Magic 590 show we sent demo CDs into KFAB only to be turned down.

You have to understand that stations like KFAB are approached every day by people who want radio shows. Some are serious, and some are not, but most do not have any radio experience whatsoever. KFAB is a market leader and they need to have quality talent on their airwaves at all times.

After we were rejected in 2003 by KFAB I went to work honing my radio abilities on our Lincoln affiliate, KFOR 1240 AM. Things started going so well that in late 2009 KFOR and I developed a new 3-hour weekend show called the Living Digital Show.

With a LOT more experience under my belt and a home-based studio to boot, we approached KFAB again and they agreed to grant us a 1-year contract for Compute This on KFAB.

The new show starts August 1, 2010 and airs every Sunday morning between 7-8 AM.

Construction Begins

Our new bay is a bare shell. It has never had any other business in it before, so that means we get to design the space to meet our unique needs. I may be good with computers, but I am definately not a measure twice cut once kind of guy. We needed a General contractor to keep our build out on track.

We plan on signing a letter of intent with a contractor tomorrow and we should be open for business by September.

Since our radio show starts in August and the shop won’t be ready until September, we have hired employees to do free pickups, drop-offs and on-site appointments in the meantime.

Nothing Like Schrock in Omaha

The thing that makes me excited the most is that there are no other companies like Schrock Innovations in Omaha. There are lots of places to get your computer fixed, but there are no service-leaders.

I am confident that our blend of ultra-talented technicians, radio fun (and a little marketing), and the Schrock dedication to customer service that we will do well in Omaha. Stay tuned for the grand opening party coming in September 🙂

The KZKX morning show is one of the most highly-rated morning shows in Lincoln, so you can understand how THRILLED we were when Schrock Computer Company was featured during their show today!

Carol and Mick said some kind words about us as they introduced us to their listeners and kindly mentioned that we give a free hour of labor to all new customers so they can experience what real service feels like.

Have a listen to what they had to say about us!

Tim and the Animal took a couple minutes during the Morning Show today to throw a few kind words toward Schrock Innovations Computer Company.

We have done a LOT of work for Animal’s computers over the past few months and no matter what he sounds like on the air, he is one of the most good-hearted, caring person that I know. Tim is a true tech lover and he and I would talk for hours about the latest cameras and audio technology if the boss wasn’t around to break it up.

Have a listen to what they said about Schrock on the air. Thanks guys!

Omaha, NE is a very different beast from Lincoln, NE. Everything is more expensive, less available, and more regulated.

Despite the challenges, Schrock Innovations is planning a massive expansion into Omaha in 2010. Replicating what we have done in Lincoln for $850,000 we are planning to spend nearly $1.9 million to establish a presence in Omaha.

Didn’t Schrock Already Have an Omaha Location?

Schrock Innovations entered Omaha in 2004 with a small 1,500 sq foot expansion office on 84th and Maple Street. We had a radio show on the lightly listened to KOMJ Magic 590 AM, and we managed to generate a profitable first year of operation with a light staff and a lot of small-ticket repair work.

In 2006, Magic 590 was flipped to an all-sports format and re-branded as Big Sports 590. We lost our radio show, and with it the only means of marketing that we had cultivated in Omaha.

We tried to move to KKAR 1290, but after 6 months of radio we only had 2 new customers to show for it. KFAB did not have any available air slots, so we cut our losses and killed the Omaha radio show.

From a financial perspective we should have rolled up the Omaha physical location right then and there. From a moral perspective the right thing to do was to keep the store open to service the hundreds of warranties we had sold on new Modular PCs.

We tried to hedge our losses by locating our web development staff in Omaha and moving the location to a lower rent area on 93rd and Maple.

Our lease on that location expired in October of 2009, and our landlord had the opportunity to lease to a longer term tenant. I was not willing to sign a long-term lease in that space, so we rolled up the location in November 2009 and went to 100% mobile service in Omaha.

What is Going to Be Different This Time?

In a word, everything. The most basic barometer is money and the #1 reason our first entry into Omaha didn’t become a permanent fixture was capitalization.

On our original expedition into Omaha we spent just under $200,000 and managed to cross break even on all start-up costs by mid 2007. When we lost the radio show we did not have the time to develop and cultivate a new advertising medium while maintaining basic services.

This time we are entering the market with a few more factors on our side. First, we are capitalized. We are not borrowing one single penny to make this happen in Omaha.

Second, we have a primary and a secondary advertising medium developed and ready to launch. One model should be enough to gain penetration rapidly, but if it fails or falls short, we have a backup plan that we have been testing successfully in Lincoln for months.

Third, we have a staffing plan that will allow us to add new people to our Lincoln Service Center and train them there and then move some of our existing employees into the new Omaha Service Center to assist and train our new Omaha staff. This “culture graft” will help us maintain our normal service-focused edge as we bring in new people who may have been trained as technicians instead of service providers in the past.

When and Where Will it Be Opening?

We have narrowed our possible locations down to two possibilities – Village Point Mall at 168th and West Dodge Road, and The Shoppes at Legacy at 184th and West Center.

We are targeting September, 2010 as the opening date for the Service Center.

I will have more updates as we lock things in, but all in all this has been a VERY busy month and should be an interesting 4th quarter as well 🙂

If you follow my Tweets you might know about a project I am working on called topITship.com.

Schrock Innovations does a great job breaking technology down for our customers and clients into understandable and practical servings. One of the reasons Schrock has been so successful is that its somewhat rare to find a tech company that can do that.

What is topITshop.com?

The idea behind topITshop is to serve the other sode of the equation – other IT shops.

The website will feature video reviews that you can’t find anywhere else (not even cNet), informative articles about how to conduct business more efficiently, as well as marketing advice and proven-effective techniques for building a sustainable business.

Every year thousands of IT professionals ditch their employers to venture out on their own, and unfortunately most of them will fail. They typically fail because the owner is a technician, not a businessman.

When the new venture is created, the entrepreneur fails to realize that the skill set required to be a good technician is completely different than the skill set needed to build an effective revenue model and execute it.

topITshop.com is designed to help tech entrepreneurs and their employees bend the learning curve, survive the initial volitile start-up years, and prosper in an ethical way.

When Will it Launch?

We have the website designed, and have released it to our coders this week. I am anticipating a November / December launch, but there are a lot of loose ends that need to be wrapped up before that can happen.

Some of the content for the website includes:

• A Weekly Podcast Called “Computer Repair Business Weekly”
• Video Reviews of Components you will actually order (not cool stuff you can’t sell)
• Marketing Advice Articles
• Guest Contributors
• ID10T Stories (shop owners you know that we all have these)
• Tips on Refining Your Business Practices

Want to Be a Part?

If you are involved in the IT industry and believe you have content that would be valuable to others in the industry, we might be interested in talking with you.

If you are interested in becoming a contributor, email me your information, a description of what you believe you have to contribute, and what you want in return for your contribution.

This website is based on predictable, accurate, high-quality content, so make sure you bring your A-game!

Most computer repair companies are started by technicians or IT professionals. They are usually confident in their technology skills, have experience serving customers for others, and believe they can earn a significant income if they were only working for themselves instead.

When an IT professional takes the entrepreneurial leap, the immediate focus usually lands on how to acquire clients, customers, or jobs.

As the newly-born entrepreneur sets out to build a business, he or she finds that for some reason they are having a tough time making ends meet even though they are working twice as hard as they did in their previous job.

That single misstep is why many IT professionals will fail to find success within the first year of their entrepreneurial venture and will be pressured back into servitude as an independent contractor or employee.

What good does it do to ferociously hunt new clients and customers if you are not able to have profitable interactions with them when you do find them?

Before you leave your job, before you invest the first dollar in your future, and before you even attempt to get your first client, you need a revenue model.

What is a Revenue Model?

Simply put, a revenue model is how you plan on making money by satisfying your clients’ needs.

Take a moment to think about the businesses you have interacted with today. Why did you buy what you bought?

Gas stations will offer inexpensive fountain drinks, hoping you will grab a bag of chips or a candy bar to go with it. McDonald’s asks you to try their latest sandwich for free with the purchase of fries and a drink in the hope your come back for more. Even my plumber was using a revenue model when he tried sold me a “hydro-scrub” of my sewer line for $50.

The point of a revenue model is to have a basket of products and services available that your customers might need, and then moving them through those products and services in a way that maximizes the profitability of each interaction with those customers.

Components of a Sales Model

Revenue models have 9 basic components. No matter what mix of products and services you keep in your basket, you need to know exactly what they are and how they interact with each other in your revenue model.
Your revenue model needs to:

1. Have a client (A Customer Who Presents A Problem)
2. Have a solution that resolves your client’s problem
3. Bridge that Solution to Another Item in Your Basket of Products and Services
4. Provide an Opportunity to Investigate for Further Up-Sell Opportunities
5. Close the Sale With the Customer in a Compelling Way
6. Back-sell With Customer to Reaffirm Their Decision
7. Deliver the Products and Services that Were Promised
8. Back-sell Again in Person to Prevent any Buyer’s Remorse Feelings
9. Stand Behind Your Warranty With a SMILE if it is Called in

How to Build Your Revenue Model

Building a revenue model is not a daunting task. In recent years there has even been a counter-push against revenue models in light of hyper-successful companies like Google that did not have a revenue model when they started.

The truth is that for every Google there are hundreds of thousands of business failures that a good revenue model might have prevented.

It is easiest to think about your revenue model as the thread that links your products and services together. Just because you offer a Maintenance Checkup, or Anti-Virus software, or memory upgrades doesn’t mean that people will come to you looking for them.

You need to have a planned way to let your clients know what you have that they can use and give them compelling reasons why they should let you solve their problems.
Steps to creating your revenue model:

1. List all of the products and services you offer. It might be easier to list each one on a note card so you can literally line them up in the order they might happen.
2. Determine which of your products or services will satisfy the largest number of clients. I creat5ed the Maintenance Checkup because it has a little of everything. Every computer problem touches the Maintenance Checkup in some way. It was a great way for me to get my leads into my revenue model. This is called your gateway offering.
3. Starting from your gateway offering, develop lines of reason – based on specific problems – that would lead you to recommend each of your other products or services under certain circumstances. For example, if you offer data recovery services, a customer complaining of a blue screen of death may be suffering from a failing hard drive. When this happens what options will your customer have?
4. Take the model one step further into your product and service basket. Continuing from the example above, does that data recovery customer need a new hard drive? Did the hard drive die because it was being over-used for virtual memory because the computer does not have enough physical memory? Find one more thing that the customer needs (assuming they truly need anything additional) and figure out how you would offer it.
5. Rehearse your pitch. Nothing sounds worse than a person who sounds like they don’t believe what they are saying or know what they are talking about. Find someone who won’t think you are crazy and role play. Ask your partner to challenge you. This is best done with a non-technician because that is who your customer will be.
6. Make real-life adjustments. When you are implementing your revenue model there will be times when you have to make adjustments based on input from your client. For example, if your customer does not have $390, you are better off getting the $100 than having the customer just take the unit back home again. Use your model, and then back pedal if necessary. Never start with a rate lower than your model. People don’t buy what they can’t afford.

Up-Selling is Not Evil Unless You are Evil

Some technicians find the revenue model – or selling in general – to be distasteful. I even consulted with one business owner whose entire reason for going into business was because other repair shops i town were “always trying to sell something.”

A good revenue model does more than generate profits for the company that employs it. Businesses that are successful in the long-term rely on repeat customers and word of mouth.

A good revenue model is designed to extract as much profit from a customer interaction as possible while at the same time providing superior services that are deserving of a premium price.

Life Without a Sales Model

Consider for a moment how awful your experience as a consumer would be if the companies you visited today did not employ a good sales model.

If the gas station didn’t have the inexpensive fountain drinks, you may have never found what has become your favorite snack. If McDonald’s didn’t get you to try that new sandwich you might have eaten the same old thing every day. If my plumber didn’t sell me that hydro-scrub, the scent of old poop might be wafting up my drains right now.

Superior revenue models deliver good products and services at a price the customer is willing – and in most cases eager – to pay.

Failing to recognize the need for a systematized sales model is the single greatest factor in the failure of small businesses in general. Having a good revenue model will put you 10 steps ahead of most of the IT shops and consultants in your market. Ignore the need for a revenue model at your own peril.

My morning (and possibly most of my afternoon) today has been tied up in depositions in a case brought against Schrock Innovations by one of our local Lincoln competitors.

One of our local competitors is claiming that I have said things on this blog that have damaged their business. They are demanding $7,500 in unspecified damages.

We have offered a settlement, which was quickly declined. We have tried to move this case to trial, but have been thwarted by procedural tactics for almost 4 years by the plaintiff.

On one hand I am annoyed that I have to spend a half day on this, but on the other hand I am happy to finally start moving this thing to a conclusion.

Despite everything that has happened over the past four years between Schrock and this competitor, I hope that one day we can all sit down together peaceably and laugh about all of this.

Follow me on Twitter for up to the minute updates…

From time to time I do some consulting for computer repair companies outside Schrock’s local trade areas.

Typically these take the form of phone calls about trends or marketing ideas, but York Computer Repair is a whole different story.

Yesterday I received an unexpected thank you letter (yes the postal mail kind) from York Computer Repair’s Owner, Walter Oakhem. Here is what he wrote:

Thank you for all of the help you have given me with starting York Computer Repair.

I especially appreciate the information and advice you have provided, and the contacts you have shared with me. Your assistance has been invaluable to me during this process. I just wanted to say an extra thank you for your mentoring and kindness.

Again, thank you so much. I greatly appreciate your generosity.

What Did I Do to Deserve Such Kind Words?

I have never really talked about Walt, his company, or what I have done to help him get things rolling in York, PA. Even my employees don’t know the details of what we discussed. In one of our calls Walt suggested I document our conversations because he felt other computer repair company owners might benefit from them.

I am going to preface this by stating that no consultant, no home study course, and no business model can bring you success unless you are willing to implement it.

From day one, Walt has had a flame of passion that I have seen in few others over the past few years. While this post will name off some of the suggestions I gave to Walt, by no means am I trying to take any portion of the credit for his work. Anyone can talk, but only an entrepreneur can transform talk into results like Walt has in Pennsylvania.

The Meat & Potatoes of Three Phone Calls

Over the course of our three phone calls we covered topics raging from starting up to scaling to a retail location and everything in between. Walt and I discussed:

* The absolute NEED for a sales model (and how easy it is to make one)
* How to target a small niche in your marketplace and expand outward from there
* Yellow Pages advertising techniques that are proven to bring in hundreds of new customers each month
* How to build an inventory of repair components for next to nothing
* How to hire employees as inexpensively as possible in the first few months
* How to value your time and get your customers to pay a reasonable price for it
* Every reason you should NEVER try to be a low-cost leader
* The need for a work flow management system and where you can get one specifically designed for computer repair shops
* How you can create brands for your physical products and service products and why it is a VITAL step than is often skipped causing others to fail
* Who the key low-cost hardware providers are and how to do business with them (if you think NewEgg is your best value, think again)
* The need to continually remind your customers how wise they are to choose to do business with you