Partner or Employee?

[ncsvoboda7]

I am an experienced businessman who has a lot of experience in starting, growing and operating a service based business. I am now wanting to start an auto repair shop but am trying to decide how to handle the fact that I dont have enough of the technical know how to do repairs myself. Should I partner with an experienced mechanic or simply hire quality professionals to work under me?

[Mario]

Hire. Partners rarely work out from what I have seen with other shops. If you have the start up money there is little benefit to a partnership.

[ncsvoboda7]

I guess my only fear with an employee over partner is then they are not nearly as invested and if I lose my first employee I'm in trouble until I found another.

[bluewater182]

Both have their pros and cons. What is your long term exit plan? Do you intend to sell within 5 years? An employee will do what is required to get paid. A partner needs to bring something equal to your capital to the table. Does the potential partner have a following of customers? If so that will help the start up. If you want employee then look for one that has obligations (familiy, mortgage etc) they tend to be more reliable than those without. Just my opinion.

[ncsvoboda7]

Good point, I plan to stay in this business until retirement at which time I plan to either hand it down to my kids or sell the business. The only reason I am considering a partner is mainly due to my lack of expertise in the actual technical side of the business.

[Pete K]

I am one year into a similar situation but instead of lack of experience it was lack of time (I decided to start up a shop while still working another full time job). I got lucky and was able to hire a very seasoned tech who was looking for something more. I currently pay him flat rate for billable hours only but his condition for coming on board was to eventually become a partner. I will soon be making him a minority partner as we are growing like crazy and he is very dedicated. It also helped the trust factor that I already knew him and his friends before bringing him on. Like I said, I got lucky - not sure this helps but thought I would share. -Pete

[davine4real]

Hire 2 techs to start. So if 1 peels you have 50% work force left. You run the front to start. No partners!

[ncsvoboda7]

I like that idea but I feel that if I'm stuck running the front office to start then I won't have the time to market the business well enough to keep them busy all day...

[ncsvoboda7]

What is the best way to keep them paid well enough to keep them even if we dont have a fully scheduled day? At least until we get off the ground.

Edited March 22, 2015 by ncsvoboda7

[kslade]

If you have the startup money think about buying a shop that is already in business. I have over 35 years in the business and that is what I did, you have cash flow and employees to start then you can fine tune it to the way you want it done and run. Good luck and keep reading here from all the professionals who can help you sort out all the kinks you will encounter.

[ncsvoboda7]

Yes that is also very good advice I think I will set that as my first option and if that doesn't work I will just start by hiring an employee. Any advice for a good way to find a business that would be willing to sell or transition ownership?

[xrac]

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[alfredauto]

Right! Partnerships rarely end well. Not to be a downer but that's the story I see played out time and again. Hire some good people and pay them well. Even if you pay a guy half your money at least you don't have to stick with him forever like a partner.

[ncsvoboda7]

Any advice for keeping the employee happy until I have enough work for him? I have found so far that many guys out there are nervous about working for a new company that is just starting out.

[alfredauto]

Pay hourly or salary with a profit sharing bonus. A new shop can't pay flat rate, no good tech would take that gamble.

 

My top tech gets treated like a partner, he is involved in decision making, gets a % of gross sales, makes a high hourly wage. He also has a key and uses the shop like its his own keeping the business's best interest in mind. Someday he will probably own the place. But he's not a partner, if I have to get rid of him because he turns into a criminal or whatever its easy see ya later here's your unemployment slip.

Edited March 23, 2015 by alfredauto

[ncsvoboda7]

Good call, what point should I shift to flat rate?

[alfredauto]

If your guy is answering the phone, scheduling work, and taking out the trash in addition to fixing cars then the answer is never. You can always offer it, say you pay a guy $15 per hour straight time you can offer $20 per hour flat rate or whatever the norm is in your city. Some techs like flat rate, some don't care for the uncertainty. I would expect an hourly employee to produce at least 80% if the works there or they are beating you. One thing for sure is if are paying flat rate you need a good front end person to sell the work and get the parts fast!

 

Hourly employees don't care as much, but its easier to slip into low production #'s because they won't complain. Hourly guys are spending your money sitting around, Flat rate techs will push the front end to move faster.

[mspecperformance]

If you do have a partnership you need to define clear expectations and responsibilities. If your partner is going to have an everyday role in the business he needs to have a job title and description. This will avoid any confusion as to what their role is and what is expected of them. Of course this does not guarantee a successful relationship as your partner may have different views on the direction of the business, have less motivation, etc...

 

In your shoes I would just hire. Possibly offer incentives such as profit sharing or some sort of growth perks.

[GeeZ]

Just wondering why did you chose a business that you know nothing about?

[xrac]

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[KMS]

I don't care for partners. I would get a good service advisor and a top tier tech. I would give the technician a weekly 40 hour guarantee to start with, and an incentive over 40 flat rate hours. A good service advisor can run the front counter while you get a feel to how this type of business flows. You will need start-up capital banked to keep your head above water until you get a customer base. Good luck.

[ATLAuto]

No partner! Period!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! We take on partners because of our own insecurity and 99% of the time live to regret the decision. Making someone a partner doesn't make them as invested as you are.

Agreed. Do not get a partner. Hire the skillset you need. Ultimately, it will be your leadership that determines how well the shop is run, not your technical ability.

[davine4real]

Start marketing and hiring BEFORE you open. I'd start by going for some commercial accounts, car lots, delivery places, even other shops. Here's what I learned way down the road: car lots usually are cheap BUT it only takes 1 that you can train to be the ideal customer ( higher priced cars on their lot), if you're good at diagnostics you can definitely get work from other shops! Have the service writer call your old customers, advertise on free classified sites, look for other advertising opportunities. There are many ideas that work for my area and may work in other areas. I just happened to learn them rather late...school of hard knocks.