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Posted

Hello to everyone from Houston TX.

 

I need some advice on buying a running auto repair shop..But I am not a car mechanic..

 

I have a full time computer programmer job from last 15 years.I make decent living. But from a while now I am planing to own my business.

 

I am ready to quit my job and work full time on the business.

 

Typically I see if I buy a running shop, I will get 4 weeks of training from existing owner and my plan is to hire the owner as manager from another 3 months to make sure, I get enough time to settle in.

 

My only concern, without knowledge of cars know/how. can I run business successfully? How would I know what my mechanics are working on, how much time does it take to work on a job ? How do I hire new mechanics etc?

 

Any advice is highly appreciated!

 

 

Best

Bobby

Posted

Hi, Bob.

 

Quick questions, have you run any business before? Do you have any business experience?

 

The way it seems to me, you have two main obstacles to overcome: 1. You need business experience. 2. You need some technical experience into the automotive field.

 

If you have the right attitude, you can definitely make a go of it.

Posted

I would suggest open a candy/ice cream shop, people always leave happy & if they are not so happy when they come in you just give them a free sample!

Dave

Posted

Thanks Guys for very relevant questions..and advice..

 

The reason I wanted to quit my job and do my business is.. I have been doing job for 15 years.. basically I have been working for someone else.. making money for someone else from last 15 years.. so why not work for myself..at least I know putting more hours goona make me more money.. not to anyone else.. and I will have my own schedule..

 

I have zeroed on Gas Station, Auto repair/parts franchise like NAPA, PepBoys etc, or buy running local service shop (no franchise). Franchise is the my least preference..

 

I did looked at lot of other business too.. and noticed % of profit is more in auto service. and it should be as it is a specialized skilled business. Also in car service working hours are decent, weekends are off etc. and it's not pure retail business like gas station..

 

Also I do spend some time in my neighborhood service centers and I have never seen one without any cars..I mean they are always busy..

running business before...Yes I do have some experience running a gas station.. worked during my school days..

 

No business is easy it is true and I get that, but one has to start from somewhere..

 

"Best advice I can give is before you do anything go out of town to a successful shop and spend a week either working or observing.". I liked this idea a lot.. I am not sure if a online business course will help me..but If I get to spend a week or two on a successful running shop that would be give me first hand experience..

 

but not sure if any one will let me observe or work in their shop just like that.?

Posted

I did looked at lot of other business too.. and noticed % of profit is more in auto service. and it should be as it is a specialized skilled business. Also in car service working hours are decent, weekends are off etc. and it's not pure retail business like gas station..

 

A significant portion of shops make less than 3% net profit yearly (poorly run shops).

Many of these businesses are actually losing money every year (negative profit & failing).

This means that if they have $500k of revenue each year, these shops have $15,000 profit or less at the end of the year.

 

Another large portion of shops that are better run but still have issues will make 3-20% net profit.

The best run shops can make 20+% net profit, but this takes extremely good planning, management and employees.

 

I don't know the actual numbers, but I'd be willing to bet that 20% of shops lose money, 30% make 0-3%, 40% make 3-20% and only 10% of shops make >20% profit.

 

Just make sure this is in line with what you are reading and planning about owning an auto repair shop.

 

If any shop owner is telling you they are making 50-60% profit, they are talking about gross profit, before expenses.

 

so why not work for myself..at least I know putting more hours goona make me more money.. not to anyone else.. and I will have my own schedule..

Be very careful about this, as there are many, many shop owners out there working 50-60 hour weeks and not making any money at all!

This is because they run their shops poorly, don't charge customers properly and generally don't know what it takes to run a business!

Take the time to go into a business ownership class for sure, this will earn you more money then anything else you can possibly do.

 

Also I do spend some time in my neighborhood service centers and I have never seen one without any cars..I mean they are always busy..

running business before...Yes I do have some experience running a gas station.. worked during my school days..

 

Some of the busiest shops are making no money, because they don't know how to run a business.

Once again, be careful of what you think you know. It sounds to me like you "managed" a gas station (1 man operation?), but that's not the same as owning a shop, not even close.

Setting prices, managing employees, hitting key performance indicators (KPIs) are all things that I'm guessing you don't have a lot of experience with.

 

All I'm saying is, do your research, get training, read books, websites and articles.

Write a business plan, speak to an accountant, lawyer, banker and insurance broker before doing anything.

Know everything you possibly can -before- buying/owning the business, or you most likely will be one of the failing businesses, or treading water with very little profits.

Also, be prepared for all the old mechanics to quit or be fired by you. They will most likely resist change or not fit into your vision/business plan.

 

Sorry for ranting...

  • Like 1
Posted

Hmm interesting numbers... I looked few of these stores on sale at bizbuysell.com and I have seen financial for couple of these.. for example one shop is for sale for 400,000 and SDE is 140,000. This is a good amount even after paying taxes? (these numbers are not exact but very close) I am sure I am missing something..

 

I am still 6-8 months away from getting into this business.. in mean time as you suggested I will gather/learn everything I can about this industry...and will hire professional for due diligence etc once close to make a deal.

 

Thanks for your guidance!

Posted

Hmm interesting numbers... I looked few of these stores on sale at bizbuysell.com and I have seen financial for couple of these.. for example one shop is for sale for 400,000 and SDE is 140,000. This is a good amount even after paying taxes? (these numbers are not exact but very close) I am sure I am missing something..

 

I am still 6-8 months away from getting into this business.. in mean time as you suggested I will gather/learn everything I can about this industry...and will hire professional for due diligence etc once close to make a deal.

 

Thanks for your guidance!

 

http://www.autoshopowner.com/topic/9322-meeting-with-owner-about-to-buy-his-shop/

Check out post #14. Search is your friend, 80% of the questions you'll ask have already been answered on here.

 

400k is probably reasonable if the SDE is truly $140k based on the formula:

(2 x SDE) + inventory, since inventory will likely include equipment in the calculation.

Posted

Hello ASO Moderators,

I too am interested in starting an auto repair business. I do have some repair experience. I am currently gathering information as you suggested. Can I ask what an auto repair business earning/income like yours is, approximately? thanks

Posted

My 2 cents.

If you do not know how to effectively run every aspect of the business, do not get involved. Getting into a business you do not have extensive experience in should be out of the question.

If you read through this forum you will find that perhaps 80-90% of the owners were technicians first and foremost. They could repair vehicles effectively. In the end almost all of them are struggling with the day to day aspect of RUNNING the business. They had never done much managing, marketing, payroll, accounting etc.. Most of them probably never had to even balance a check book before.

Without being an expert in at least 1/2 the business makes the chances for success very slim, and even then the learning curve is long and painful.

Employees will come and go (most at very inopportune times). You may/will be needed to fill any role in the company at any given time.(Example- I have 3 techs. In November I lost all 3 for 3 weeks due to various reasons. That left me and a service adviser. If I could not have filled the technician role, I would have had to close the doors. As it was we still had the best November ever.) With that being said, good employees are VERY hard to find, especially good techs. Good employees are hard to find, getting them to be loyal and to buy into what your trying to build or create is even harder.

Perhaps in your situation it might be better to partner with someone. Find a successful shop with a good reputation. One that has a good customer base. One that IS profitable. Someone that needs a partner for expansion purposes. Someone that would truly have a vested interest in training properly.

Just my 2 cents

A little more insight. This month is the beginning of year 5 for me. I pay myself $1200 a month. I hope to be able to cash the 20k in back pay checks I have in the drawer for myself. That's after having 30-50% growth after every year and starting out as a one man shop. I am one of the guy's with all the mechanical experience and none of the business experience.

  • Like 3

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  • Have you checked out Joe's Latest Blog?

         0 comments
      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
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      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.
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