In 2010, when he was a high school junior, Chad Kaleky wanted to make a little extra money. The 16-year-old, always a tinkerer, started repairing his friends’ smartphones. But the teen saw a bigger business opportunity. While still a student at American Heritage School in Plantation, he started buying used smartphones online, repairing them and reselling them.
When Chad went off to the University of Miami, he talked his dad, Dan Kaleky, into opening a 3,000-square-foot smartphone store in Fort Lauderdale. They opened in 2011, with Dan handling daily operations and Chad doing the purchasing. It aligned well with Dan’s main venture, buying and reselling high-end Sennheiser headphones.
After about a year, competition loomed and business declined. The Kaleky duo expanded to other refurbished goods: tablets, cameras and laptops, trying to see what worked. They sold retail online through third-party vendors like Amazon. Chad, still a full-time student, drove up on weekends to inspect inventory. At the end of 2013, Kalektronics Inc. moved to an 8,000-square-foot space in Sunrise.
In 2014, the Kalekys decided to try refurbishing goods themselves. The company bought as-is goods, returns and broken goods, and did repairs, testing and repackaging.
In the business, Dan, also a general contractor, was very handy. Chad, who earned a degree in mechanical engineering in 2015, was skilled at systems. “Together we made a good team,” Chad said.
Kalektronics expanded to other consumer goods: housewares, kitchen appliances, consumer electronics and tools. “We tried absolutely everything to find the best fit,” Chad said. The company got into wholesaling about six months ago.
The business has 12 employees. Chad, now 22, is chief operations officer, and Dan is chief executive officer. Dan’s brother-in-law, Steve Weiss, is director of wholesale operations.
The company had sales of $2.7 million in 2015. Kalektronics has outgrown its current space and is stockpiling inventory for projected wholesale business. They have several growth opportunities but aren’t sure which will be profitable. Current accounting procedures are not tracking enough information to be helpful, Chad said.
The Miami Herald and counselors from Broward SCORE, a nonprofit with volunteer counselors from the business community who mentor small business owners, conducted a Small Business Makeover. The SCORE tune-up team included Michael Statner, president of Focus Systems, an IT and business consulting company; Tapan Chakrabarty, managing partner of Publishaletter.com, who has had senior operating roles at several Fortune 500 companies; and Angelica Love, a certified life coach and business coach.
Here is the SCORE team’s advice:
Write a business plan: “We all need a road map to help us get to where we are going,” Statner said. “A business plan helps us more fully understand our direction and explore all the impediments standing in our way.” It also helps plan for contingencies, if things don’t go exactly as conceived, he said. Love said the process will make the principals sit down together and agree on what they are doing and how they are going to do it going forward.
Get accounting in order: Kalektronics’ accounting methods have been sufficient for tax purposes but little else. “The best way to run a profitable business is to run the company by the numbers,” Love said. “We plan monthly what we think we will sell and what we think it will cost. Then we look at the numbers at the end of the month. If they are different, we address the variances, revise next month’s budget and play the game again. It’s no different than keeping a budget in our own lives.” The financials should be generated monthly and must be accurate to properly portray the health of the company, Statner said. Accurate financials also must be kept if you need to borrow capital for growth.