How do I check a phone repair shop’s stock of screens and batteries?
Count the screens and batteries yourself, matched against the shop’s list, and test a sample for quality. Ask how fast each model sells, which models are slow, and what the supplier takes back. Stock for phones that people no longer bring in is a weak asset.
Do the count with the seller present, model by model, and compare it to the shop’s inventory sheet. Note the grade of each part, because shops often carry a mix of qualities. Test a sample: fit a screen to a spare phone, check touch response and brightness, and look at battery condition and date codes. Aged batteries lose their value even when unopened.
Next, connect stock to demand. Ask for sales by model, and look for parts for older phones that have not moved. Slow stock should be priced separately, not folded in with the fast sellers. Your accountant can help you decide how inventory counts in the purchase, and can compare the shop’s own value for it to what you saw.
Finally, ask about replenishment. Who supplies these parts, how long they take to arrive, and what happens when a model is suddenly in demand? A shop that depends on one source is exposed if that source changes terms. Look at ways to diversify supply and ask whether the owner already has a backup. Ask also how returns of unused parts work and whether any stock was bought in bulk at a discount. Bulk buys can look attractive on paper but tie up cash in parts that take a long time to use.
Key takeaways
- Count and test stock yourself with the seller present.
- Separate fast sellers from parts for models nobody brings in.
- Ask how long replenishment takes and who the backup supplier is.
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat is inventory
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