What do you think? Need advice from Guru's

[GenX Auto Works]

Ok folks I need some help. I have been reading a lot here lately but just registered today. You folks are a wealth of information and I would be extremely grateful for any help. Warning, this is a bit long-winded!

Let me give you a quick background on me, then what I am trying to do, and where I am at with the process.

I am 37 years old and have had a dream of opening a hot rod shop for about 30 years. I have wrenched on cars for most of my life off and on, building several cars over the years including a 70 mach1, 67 cougar, 85 camaro, and others. Working on cars has always been just a passion, nothing I really made money with, nor do I consider myself a true mechanic. I did ten years in the Army as infantrymen and two tours to Iraq. Since being home and out of the Army I have worked as an Army contractor where I teach soldiers how to use the computer systems they will use in combat. My education includes an understanding of accounting, business law and ton of information technology. Leadership wise I was a team leader, squad leader, platoon sergeant, and battle NCO in the Army so I think I have the leadership stuff covered. As for financing I have gathered 10 investors that are very interested in the idea. My wife and I also have loans available to us as disabled combat veterans. Long story short, it is time to reach for my dreams and make my shop happen.

As of now I am in the planning, and data collecting phase. I have a rough draft of my business plan done and I have an appointment with the local small business administration next week.

Let me tell you about the proposed business. The business will consist of three buildings in a U shape configuration on around 6 acres of land. The middle building will be for admin and inventory, the two side buildings will consist of four bays each. One side for general repairs, the other building will be a performance and detail shop. These services (performance and detail) are not currently available in the town I live in (population 40,000 and growing rapidly, not including surrounding areas). I feel the market would be huge as there are many gear-heads in the area that have to go two towns away for these services. In the front lot I will offer 3-5 cars for sale that I will market to parents who want a safe dependable first car for their teen while not spending a lot of money. I will purchase fleet cars at auction, conduct the maintenance and repairs and then resale. I plan to keep around 2 “special” cars for sale on the lots as well. These cars will be sort of a middle class hot rod. The only place to buy any hot rod is 40 miles away and for over $20k. They only carry things like 69 fastbacks and 67 camaros, you get the idea. These cars are not in very good shape and VERY expensive for what you get. I will find and repair cool cars that can be bought and repaired cheap, and then sold as a cool hot rod to those who cannot spend 20K plus on a car that sits in their garage 9 months a year but still want something fun to drive that doesn’t leave a puddle of fluids where they park. Where I am, you can find 70 novas, impalas, monte carlos, and all kinds of neat cars to fix up and sale without breaking the bank. I will need to lease a flat bed for hauling from auction, so I suppose if things get slow I can use the truck for towing as well.

Once up and running I would like to experiment with electric hot rods and gas to electric conversions.

So now for my questions….

1. Assuming business is decent, how many employees would it take to run this monster?

2. What positions should I hire?

3. Given my experience what should my role be?

4. What are a must for tools? Hand tools, power tools, lifts, and so on. How many and what? Best way to purchase in bulk?

5. I have no desire to start small, what are the pitfalls of starting this large.

6. Anyone else sale used cars AND fix them? Any advice?

These are just a few questions I have, but I don’t want to bombard you too much 

Thanks so much for your time and knowledge!

Guy,

GenX auto works

[GenX Auto Works]

I will continue to come back and check for replies. Thanks folks!

[GenX Auto Works]

I guess I will check back tomorrow. You guys aren't getting rid of me that easy

[xrac]

.........So now for my questions….

1. Assuming business is decent, how many employees would it take to run this monster? 8-10

 

2. What positions should I hire? Whatever you need and cannot do yourself. You alone can define this.

 

3. Given my experience what should my role be? You alone can define this.

 

4. What are a must for tools? Hand tools, power tools, lifts, and so on. How many and what? Best way to purchase in bulk? Most shops purchase and own all the major tools. Technicians will furnish their own small tools. I would begin with the bare minimum and add tools as I saw the need and could afford the same. I started a shop with an initial $700,000 investment twelve years ago. If I had know what I was doing I probably could have reduced that cost by $75,000-$100,000. If I were opening a shop my goal would be to keep overhead as low as possible without penalizing what I was trying to accomplish.

 

5. I have no desire to start small, what are the pitfalls of starting this large. The risk is financial. The larger you start the more you lose if you do not succeed. The higher your startup cost the higher your breakeven point and the greater the pressure. Also by taking on other partners you may find yourself with ten different bosses.

 

6. Anyone else sale used cars AND fix them? Any advice? I would not sell cars on the same property as the shop. You are opening yourself up to complaints if you sell one to one of your customers and have problems with the car. We have bought and fixed up a few cars and sold them. It it much easier to do if the price is less than $5,000. Above that it is hard unless you can help with financing. I do not know what state your are in but here in Indiana there are specific requirements as far as the property, building, hours, etc., etc. that you must satisfy to get a dealers license. You need to check out the requirements in your state and city.

 

These are just a few questions I have, but I don’t want to bombard you too much 

Thanks so much for your time and knowledge!

Guy,

GenX auto works

[xrac]

I guess I will check back tomorrow. You guys aren't getting rid of me that easy

 

It is hard to get replies during the day since we are all working. I work about 50-60 hours most weeks.

[GenX Auto Works]

It is hard to get replies during the day since we are all working. I work about 50-60 hours most weeks.

 

 

Yeah I know I'm just being impatient, sorry

[GenX Auto Works]

Thanks so much for the answers! On the tool front I suppose like you said, I will get the big stuff and if a need arises I will purchase from there. On the partners, you are right. One of the big things I would like to get away from are bosses. I may narrow it to one or two, just so financing is a little easier with out having to answer to too many people. The wife and I both qualify for loans so we should be able to do this without them. On the positions to hire and my role I was asking from the standpoint of having 8 bays and an admin building. I would like to start with one detailer, two tech in the performance shop, and to in the repair shop. Maybe do time with a desk person fielding call and what not. Not sure what to do about bathrooms and property maintenance type stuff. So much to think about I don't know how you guys did it!

[gravysuckinpig]

umm - we started small - this cant be stressed enough - with what i know now - i would start with 4 or 5 bays- 3 for general repairs and 1 or 2 for the detailing- let your general techs handle any performance work in the beginning untill you really see a need for more expertise in that area - the reason for this is simple - most gearheads are gearheads because they like to do their own work- thats where they get their enjoyment - not to mention, by the time they buy all those shiny chrome parts they have no $$ left to pay you to put them on. not trying to crush your dream but just speaking from experience - as for the sales part - find yourself someone with a sales license and see what you need to do to be able to sell cars- xrac was right there are alot of stipulations to running a sales lot- some of them are dumb - in ohio you need a 750sq ft lot an office and a file cabinet- a freind of mine who is a dealer told me he got fined for having some small 2 inch weeds growing through the cracks in his asphalt- this is a very competitive business - which is a good reason to start as small as possible- i would buy all the land i needed for the whole operation and do 1 building at a time as needed.

[GenX Auto Works]

umm - we started small - this cant be stressed enough - with what i know now - i would start with 4 or 5 bays- 3 for general repairs and 1 or 2 for the detailing- let your general techs handle any performance work in the beginning untill you really see a need for more expertise in that area - the reason for this is simple - most gearheads are gearheads because they like to do their own work- thats where they get their enjoyment - not to mention, by the time they buy all those shiny chrome parts they have no $$ left to pay you to put them on. not trying to crush your dream but just speaking from experience - as for the sales part - find yourself someone with a sales license and see what you need to do to be able to sell cars- xrac was right there are alot of stipulations to running a sales lot- some of them are dumb - in ohio you need a 750sq ft lot an office and a file cabinet- a freind of mine who is a dealer told me he got fined for having some small 2 inch weeds growing through the cracks in his asphalt- this is a very competitive business - which is a good reason to start as small as possible- i would buy all the land i needed for the whole operation and do 1 building at a time as needed.

 

 

Thank you very much for your answer. Very good advice. I am in the process of working out the kinks for the sales lot. I will likely get my dealers licence and do that piece myself. If I have to start smaller, I will. I'm hoping to find a way to make the whole thing work, but you know what they say... "hope in one hand and #^$^& in the other and see which fills up first" or something like that You guys are the experts and that is why I am so grateful to have found this site. You guys have been a world of help already. I'm waiting for the day when I can share my experience with others.

Oh by the way I'm in WA state. I thought it showed on my profile, sorry about that.

[xrac]

Thanks so much for the answers! On the tool front I suppose like you said, I will get the big stuff and if a need arises I will purchase from there. On the partners, you are right. One of the big things I would like to get away from are bosses. I may narrow it to one or two, just so financing is a little easier with out having to answer to too many people. The wife and I both qualify for loans so we should be able to do this without them. On the positions to hire and my role I was asking from the standpoint of having 8 bays and an admin building. I would like to start with one detailer, two tech in the performance shop, and to in the repair shop. Maybe do time with a desk person fielding call and what not. Not sure what to do about bathrooms and property maintenance type stuff. So much to think about I don't know how you guys did it!

 

I will just say this about partners in my experience. One partner is one too many. As far as market size for a franchise (typically 6-8 bays) Car-x likes to have a market of at least 80,000.

[GenX Auto Works]

I will just say this about partners in my experience. One partner is one too many. As far as market size for a franchise typically 6-8 bays) Car-x likes to have a market of at least 80,000.

 

 

Yeah, I think you are right about the partner thing. If I can do it on my own I will. Our market is at just over 40,000 but the surrounding area is much larger. The town I live in is growing rapidly, and the services I will provide are currently hard to find. I may reduce to 4-6 bays then and leave room for expansion. Thanks again you guys!

 

A few more questions ...

 

1. If there was one employee/ duty position you could not live without, what would it be?

 

2. What do you do about building and grounds maintenance?

 

3. Besides lifts, compressors and all the normal stuff, are there any "must have" tools that someone might not think of when starting out?

[DewayneP]

I can't help you too much but I'll try. I would think you would want to start out small first, build clientel and then go big. Since you are starting a business where this is none you may find out why there's no competition, because no-one needs or wants those services. I think you should try to find a place you can lease on a temporary basis, buils up some repair/maintenance clientel. Those clientel will be the ones that will get you through the tough times. You also say you are totally new to this, never been in the "business" before. You need to find a "partner" (but he/she doesn't have to truly be a partner in the business) that can help you with the mundane tasks at hand like what equipment to purchase, how to set up the bays, what inventory to stock and what to purchase as needed. You may want to talk to a local parts store or parts wharehouse rep and see what they have to offer as far as what inventory moves in your area and what doesn't. I'm thinking a rep from Mighty, NAPA, CarQuest, ServiceChamp, etc... You can talk with them without comitting to purchase anything. They can get you going on the repair side of things.

As far as equipment goes: A good Rim Clamp tire machine is a must these days as well as a spin balancer that will handle the same size tires/rims that the tire machine will handle. No sense buying a tire machine that'll do 48" tall tires and a spin balancer that won't balance them. I'm not saying go out and buy the biggest and best, buy smart. Think of who your clientel will be and go from there. A workbench and great vise (notice I didn't say good vise, mechanics are hard on vises) is a necessity. A shop press: H frame 20 tons at least. A strut spring compressor (like a brannick or similar, OTC makes a good one).

One other piece of equipment you might not think about is a good computer infrastructure. Make sure if you are building that you have cat 5e cable run everywhere, even out in the bays. Also a good wireless network is a good idea. A lot of the newest scan tools offer a technician repair database that is accessed via the internet via a WIFI connection. No wifi, no fast fixes, longer repair times. A good PC that has no moving parts would be ideal for a POS computer. No moving parts means no hard drive to fail.

The biggest thing I can think of is this: You don't have to buy the biggest and best of anything. Spend your money wisely. There are $15,000 tire machines that can mount a tire without anyone touching anything and there are $4000 tire machines that will do almost the same job but they are manual. I have been at this only 3 years myself. I wouldn't change much if I had to do it over again. I'm not big, just a one man shop, but I've learned the hard way to not stock too many parts and not to buy equipment at an auction without trying it out first no matter how good of a buy you think it is.

[xrac]

DewayneP, has given good advice. A few additional pieces of equipment are a brake lathe, alignment machine, roll around torch, maybe a mig welder, battery/charging system tester, used oil tank, some shelving but not too much, bench grinder, ac machine, coolant flushing machine, transmission flushing machine, brake rotor and drum micrometers, good floor jack, jack stands, engine stand, engine hoist, and battery charger. When we opened we bought a used forklift which we used for 9 years until it laid down on us. It was very useful but not a necessity so I did not replace it.

[GenX Auto Works]

Great answers you guys, thanks.

[xrac]

Great answers you guys, thanks.

 

You will also need a good shop POP software package to operate the shop with, a subscription to Identix, and either Alldata or Mitchell.

[Joe Marconi]

Sorry, I’m a little late to the discussion. First, thank you for your service to this country.

 

I am the cofounder and also a shop owner for 30 years, and I really don’t know where to start. I admire anyone who has a dream like yours and wants to make the dream a reality. Let’s start with leadership which you mentioned in your post. You will most certainly need leadership to build your dream shop. To build what you are proposing will take an enormous amount of cooperation from the right people all pulling in the right direction. You will find that getting people aligned in the public sector may be a bit harder than in the military.

 

You will undoubtedly need to learn business skills and become more proficient in the numbers of business, marketing, advertising, etc. That’s not to say you have to do it all yourself, you just need to know how to get the right people working as a team to achieve your goal.

 

I am a little concerned about the 10 investors, not quite sure what that means in terms of return on investment for these people. When I expanded my business a few years ago and built another shop, I create a comprehensive business plan which was submitted to my bank. The bank, in essence, was my venture capitalist. Have you spoke to a business lawyer about this?

 

I think you idea of used cars is great. We started selling used cars last year and we have done fairly well. We plan to increase our use car department this year. It’s a great way to acquire new customers and keep existing ones, looking for a car.

 

I think you need to determine what will be your best income stream. It will be important to establish a steady form of income. You may find it will be traditional automotive service and repair. For this reason, you need to tool up for this type of service work: tires, alignments, brakes, preventive maintenance, etc.

 

As far as employees, that’s a tough one. In a perfect world, you need to be looking for service writer(s), technicians, support staff (clean up), lube techs and some sort of bookkeeper or administrator. One thing I can say with certainty, if you plan on making this happen, it cannot be done on your back. Please take this advice from someone who has been there: You need to work on the business, establish goals, create the vision and oversee the operation. Don’t try to wear too many hats, it will wear you out and tear you apart. Trust me on this one. If your goal was a 2-bay shop, doing oil changes and brake jobs, that’s different.

 

You say you don’t want to start small, I like your attitude. To achieve anything in life you must have goals and a well-thought out plan. And you achieve you goals by establishing many smaller goals. I make the parallel to when President Kenney said in 1960 that the USA will go to the moon by the end of the decade. The goal was the moon, but how we got there was a series of smaller goals: we sent rockets into space, then we sent rockets with animals, then we sent a manned rocket up into orbit, eventually 2 men. We practiced docking in space and other tasks. After a many missions, we sent unmanned rockets to the moon, and then manned missions which orbited the moon, and then finally we landed on the moon. You must do the same, build your plan, and establish you short term and long term goals. Don’t try to do too much at once.

 

Sorry for going on and on. Let me leave you with this. Most important don’t be afraid of failure and making mistakes, because you will….we all have.

Good luck and stay in touch!

[GenX Auto Works]

Joe,

thanks so much for the reply and the great advice. I go to the local business administration on Wednesday for them to review my phase 1 plan. Once I know the tweaks I need to make I will take it to the proper people for help (business lawyer, accountant, consultant, so on) for phase 2. I am encouraged that you are having luck with used car sales and I wish you great success. The laws in my area are tough for selling cars, but if it was easy everyone would do it. The market I'm trying to fill, currently is not being addressed. I would like to use this as a way to give myself just one more avenue to success while filling a need in the community. I will do my best to get the right staff in place so I don't have to be everything to everyone and I can focus on the business side. Thanks again, I will keep everyone updated as I proceed.

[GenX Auto Works]

OK, so a little update.

I went to pitch my plan yesterday at the local small business administration. The guy threw my plan to the side without looking at it. He then told me a 30 minute story about how he worked the oil fields in the 50's, and how he is not "familiar" with the internet. Bottom line is, it was a complete waste of time. I understand most of the "counselors" there are likely volunteers, but holy cow they could not have been any less helpful. I went in with all my questions written down and a professional looking business plan that I worked on for ages and I received no feed back at all. It was a bit discouraging, being I had made the appointment weeks ago, and had been looking forward to moving one step closer. Oh well, I will get back to work at it and see what I can do from here.

[CARMandP]

Forget the Small Business Administration. Try SCORE. http://www.score.org/index.html They were more helpful and their classes were very well worth the price if you want help getting information in your area.

[Joe Marconi]

OK, so a little update.

I went to pitch my plan yesterday at the local small business administration. The guy threw my plan to the side without looking at it. He then told me a 30 minute story about how he worked the oil fields in the 50's, and how he is not "familiar" with the internet. Bottom line is, it was a complete waste of time. I understand most of the "counselors" there are likely volunteers, but holy cow they could not have been any less helpful. I went in with all my questions written down and a professional looking business plan that I worked on for ages and I received no feed back at all. It was a bit discouraging, being I had made the appointment weeks ago, and had been looking forward to moving one step closer. Oh well, I will get back to work at it and see what I can do from here.

 

That's terrible. The SBA should be ashamed of themselves! You are doing the right thing by creating a business plan, don't give up. What about your bank? My bank had financial people that helped analyze my plan. Is there a local Chamber of Commerce? Maybe they can recommend a business consultant.

[xrac]

Forget the Small Business Administration. Try SCORE. http://www.score.org/index.html They were more helpful and their classes were very well worth the price if you want help getting information in your area.

 

You took the words out of my mouth. SCORE is a good resource.

[gravysuckinpig]

heres what you do.... when you get the business started, be sure to stop back in there and hand out free oil change coupons..... when that guy shows up with his coupon....write him up and after he signs the work order throw it aside and tell him a story about how you spent all this time making a business plan and took it to the sba.........

[xrac]

heres what you do.... when you get the business started, be sure to stop back in there and hand out free oil change coupons..... when that guy shows up with his coupon....write him up and after he signs the work order throw it aside and tell him a story about how you spent all this time making a business plan and took it to the sba.........

 

Sounds to me like that guy doesn't care and may not be the sharpest knife in the drawer.

[DewayneP]

Hmm, yeah the SBA isn't great, but my experience with SCORE wasn't much better. They did look at my business plan and made some comments about it but basically told me good luck. Not in a bad way, just good luck. They did give me 2 bits of good advise: Never give away your services, barter is OK but don't do anything for free!!! (diagnostics comes to mind). Also, be sure to pay yourself first. Never buy something for the business without taking your pay out first. You can't survive if you don't get paid.

[GeeZ]

Pretty ambitious plan for a 1st business. Especially for no management experience. The SBA does not lend money, they only guarantee the loan

thru a bank. So you should have started with a bank who does SBA loan. At time, they are difficult to get as the banks are not even lending to

on going businesses. Be careful with borrowing friends/family because it it a good way to loose friends and make for angry relatives.

 

I started a shop (hi-perf). I spent $350,000 the first year with 2 techs. I am not a mechanic, but have 40 years managing several businesses (concurrently.) My wife and I do not draw a salary. 2 years later, we are barely breaking even. Shop has 2-4 post bays, 2-2 post, chassis dyno, air compressor, 2 band saws, TIG welder, drill, sanders, and misc. shop hand tools. We now have 4 techs. My investment doesn't compare with what you are planning. I have learned a lot about this business in the process.

 

You are starting with a lot of overhead and you need to draw a salary. Go slow is best advice I can give you.

[GenX Auto Works]

Thanks everyone for the replies. I will keep at it and use all my resources. I will let everyone know how I will proceed. After I thought about it, I just put it in the "one to grow on" category and will use it to help others when I have found my way. Thanks again

[Southeast Tire Co.]

Pretty ambitious plan for a 1st business. Especially for no management experience. The SBA does not lend money, they only guarantee the loan

thru a bank. So you should have started with a bank who does SBA loan. At time, they are difficult to get as the banks are not even lending to

on going businesses. Be careful with borrowing friends/family because it it a good way to loose friends and make for angry relatives.

 

I started a shop (hi-perf). I spent $350,000 the first year with 2 techs. I am not a mechanic, but have 40 years managing several businesses (concurrently.) My wife and I do not draw a salary. 2 years later, we are barely breaking even. Shop has 2-4 post bays, 2-2 post, chassis dyno, air compressor, 2 band saws, TIG welder, drill, sanders, and misc. shop hand tools. We now have 4 techs. My investment doesn't compare with what you are planning. I have learned a lot about this business in the process.

 

You are starting with a lot of overhead and you need to draw a salary. Go slow is best advice I can give you.

 

 

I would have to concur with this assessment. The current commercial lending situation is tight at best. I think it is awesome to have a grand dream but I think you should consider smaller steps in achieving it. You are talking about a multi-million dollar investment before a profit is realized. Dream with your heart but reason with your head.

[xrac]

I would have to concur with this assessment. The current commercial lending situation is tight at best. I think it is awesome to have a grand dream but I think you should consider smaller steps in achieving it. You are talking about a multi-million dollar investment before a profit is realized. Dream with your heart but reason with your head.

 

Here is interesting information on the state of small business lending:

 

[CARMandP]

I can vouch for this information. All I was trying to loan was 20k in the last six months with near perfect credit but it was pulling teeth to get it and I still wasn't able to get the full amount.

[xrac]

My banker tells me that the Feds are only letting them loan money on owner occupied property.

[CARMandP]

Which you can't purchase the building because they aren't loaning the money to buy with in the first place. All because a few people ruined the system for the rest of us.