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Posted

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

Posted

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!

Posted

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.

Posted

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.

Posted

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?

Posted

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.

Posted

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.

Posted

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.

Posted

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.........

Posted

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.

Posted

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.

Posted

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

Posted

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.

Posted

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.

Posted

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.

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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. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      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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