Thread: ? for shop owners

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I am 33 years old and want to start my own business. I am looking for property in the northern lower michigan area and would like some advice.

How much money does it take to start up? I am talking tools, supplies, inventory, liquidable cash, etc. I am looking at doing this in a rural area north of Saginaw, where there is little to no competition and a lot of gearheads I want to specialize in every aspect of building a car from paint and body work to engines and fabrication work. I would have a staff of 3-6 people at first until things get rolling. I would need just about everything as I don't have anything to start with at this point.

Any insight into what i'm getting myself into would be appreciated

I'm probably too conservative, but I would go slow. Do you have a history of building cars? (A good reputation in the area as a car builder)? I would start the business as a side job. Build it slow buying equipment and inventory as I could afford it. Then once you have a reputation and client list built to the point that the business can support you,... then move into full time.

I built my sign business that way. I put a second mortgage on the house on more than 1 occasion. Worked looong hours and bent over backwards to give the customer what they wanted. And over time I got so busy that I couldn't afford to stay at my regular job. (Looking back I should have gone full time sooner, but like I said earlier, I'm conservative)

BTW: In my business as a sign shop, I make signs for a lot of start up businesses. After a while you get a feel for the ones that have a good chance and the ones that are just going into business blind. I've seen some guys that i just got to shake my head and say, "What are they thinkin"?
My advise would be to have a plan. Don't assume if you open they will come.
Make sure your area will support your business (A good argument for starting out as a sideline).
Be prepared to work harder and many more hours than you would working for someone else
.............. well I could just keep adding to this list because there are a LOT of things to watch for (another good argument for starting out as a sideline).

And cost will vary GREATLY .......... too many variables. I 've been in business for around 20 years and I can tell you equipment costs are in the annual budget . There's always something needing repair or there's always newer bigger, better, faster machines out there. I don't have employees. I buy machines that allow me to work by myself. I had employees at one time ...... Don't even get me started on that can of worms. Sorry....... just bad experiences I guess.

Don't mean to sound negative, Just make sure you go into it with your eyes wide open. Be prepared to work and work hard.

Oh, and one other thing. I would sure hate it if I had to go back to working for someone else after working for myself.

What both the guys have said is basically accurate, except from my personal experience having done something very similar 12 years ago I'd take Bill's numbers (both dollars and time) and double them if you think you're going to hit the ground running. Similar in concept to Pro's outline, we sold my running street rod, our house and took the equity to get started................we were committed! Got the basic equipment and one to two employees, and built from there. Took about a year to clear the first NET profit dollar, and three to build up to most of the equipment I really needed to do it right. And nearly everyone in the business was amazed I could do it that quickly.

Here's the part you probably don't want to believe, being technically capable is the least of your needs. Not saying that's not important to the business, it is. But what's twice as important is HOW you run the business. All that stuff the guys talked about above that's not related to physically working on the cars, and more. Especially if you have to administer employees. And while all that book doin' stuff is critical to keeping your business going THE three most important tools in getting your business off the ground, and keeping it alive are MARKETING, MARKETING, and MARKETING. I don't care how many people you THINK are out there that want what you'll do, it's how many there really are that counts. And then, what is your ability to convince them you're the right guy, at the right time, at the right price, and with the right finished product to satisfy their needs. I've known a lot of technically competent shop owners who could do "anything", but they didn't know how to run a business, and they sure as heck didn't know how to market and sell. At best, they often end up working for less than if they'd stayed a technician for someone else..........plus the headaches. A few figure it out as they go along, but they usually have that reputation thing Pro was talking about to give them a leg up. Many more go broke, because they mistakenly thought the hardware and technical skill was the most important aspect.

Just something to think about. If there are so many potential customers in that area why hasn't someone else already figured that out and moved in there? This hot rod thing has been growing like crazy for close to 30 years. If there's some unmet demand it's way on the fringes. In order to keep your doors open and put food on your own table, as well as your employees, you're going to have to charge what some people (typical do it yourselfer's) think are rip off rates. Yeah, they may be wrong when you consider what it costs to maintain the business, but their belief is what they operate by. In the total "potential" market of hot rod lovers, there's only a VERY small percentage who can, and will, afford to pay a shop for a whole car being done. There's a somewhat larger, yet still small in the bigger scheme of things, number who will have part of the car done by a pro shop. And these folks are the more affluent among us. If that "untapped" rural area is populated by "gearheads" who only make a modest income, they can't afford you as a pro.

All that being said, it's VERY satisfying to build your own business and watch it grow into a successful endeavor. Something like a proud parent nurturing their child. The hours are long, the frustrations sometimes monumental, agrevations abound..........but if you are successful..............the pay off (not just financially) is tremendous. I just hate to see folks going in blind, or looking only through rose colored glasses, and ruining their dream by being under-prepared.

Everyone has allready given you some good advice, but I would add a few things. You mentioned paint and body work, so make sure the arean you are looking at allows it and check all the local, state, and federal codes for a paint booth and materials storage.

If you really want to do your own engine work, plan on having a dyno and a flow bench along with all the regular automotive machine shop equipment. If you could buy all this used, the investment would still be in excess of $100,000.

Many years ago when I first started my own "shop" it was in a 2 car garage and all I did was chassis fabrication.

I don't mean to throw cold water on your ideas, but to do everything you want to do, plus have money in the bank to cover at least 6 months of overhead, even Bill's estimates are a bit on the conservative side.

Maybe you should start out small, establish a solid reputation, and build up as business warrants the expansion.

Just a few thoughts, good luck on your endeavor.

Thanks for the advice everyone. I don;t want to go into this blind-sided and I'm doing my homework now to make sure everything is on the up and up.

I'd like to start small, but what area of specialty should I start off in? I prefer mechanical/electrical over bodywork but I have the personal ability to do it all.

The building i'm looking at is in town ( a small town of roughly 1400 people) and was formerly a collision shop. There are cities in the surrounding areas with bigger population, but to my knowledge there are no specialty shops within 100 miles so demand for one in that area is good.

I need to find out if the seller may include equipment with the purchase. That would give me a head start in the right direction.

all good advice from your fellow CCR members.......my only caution is to have a good bookeeper/system.........to make sure you know the tax system and pay them timely.........and don't get into the trap of hiring too many employees until you are established. Just because you make 10k/ month with 2 employees doesn't mean you will make 20k with 4 and 30k with 6 employees.........it doesn't work that way believe me. And having spent 28 years as an IRS collection officer, I know from whence I speak..........I have closed down many businesses that failed to follow those simple ideas............

I agree with Bob...........at LEAST double both time & dollar amount for start-up. You are going to find MANY hidden expenses that will have to be addressed.
Also........get yourself a GOOD accounting firm to do your books for you- they can be found from checking with the local (or nearest) federal tax office. These are people that WANT to see you make it in business, and will work with you to keep everything legal.
Bill has very good advise on where to start also, unless your of the Jesse James school of thought- I belive he has a degree in enginering, and a rich bank account I would consider Saginaw suburbs for location.
Good Luck to you on your new quest,

Thanks for all the replies, keep em coming, i'm taking notes

I'm NOT a shop owner however, I thought I would throw in my two cents worth. I'm not sure what you presently do for a living . Myself, I have a job that has nothing to do with cars, but I have a couple of cars, and projects that I work on as a hobby.
I love it - come home from my (non car related job) and go out to the garage, work on my project, while the speed channel is blaring away on the TV in my garage. I fiddle and do what I enjoy ( working on cars). When I'm tired I close the garage , clean up and go in the house.
NOW my point is: as a hobby I throughly enjoy working on these old cars, however if I had to work on cars everyday for a living, for other people, within their time frame, schedules and dead lines, with a quality of work and unrealistic expectations from some of the customers, then soon my love of the hobby , may soon become hate for the work, resulting in ruining both my hobby and my work.
The only reason I mention this is because sometimes people such as myself have a hobby that they think would make a good business, however remember that if you turn it into a business, its no longer your hobby; its your job and you a no longer working for yourself; you are working for your customer.
And re-read Bob Parameters answer above: I agree with him wholeheartedly - you need to know more about how to run a business then you need to know about cars.
Good luck with whatever you decide - Get someone you know and trust that has an existing sucessful business and have them help you create a "business plan".

did it for 25 yrs. and had as many as 21 employees at one time, started with nothing, made a little money, but the only reason it worked was because i didnt wont to stop at night and couldnt waite to get back there the next morning. i loved it. i was working as a fleet supervisor for UPS, so i saved up a little money and i took what i learned at UPS (and belive me they know how to run a bus.) i went to rich. va. found the busiest st. corner i could afford and never looked back. it didnt hurt anything for 80,000 cars passing your door every day eather. the first prioritie you need is you have to have the "wont to" (you and your wife both if your married)second enough money to buy equipment you need, the start up coast, something to live on untill you get going,but most of all, pay your bills, pay uncle sam, and if its any left over put it back in the bus. live with-in your means, untill you get on your feet, and you might have to kiss a little butt to . id also go where the traffic is.

Oh yeah, check into the insurance you will need also. That is one more thing lots of start ups forget about, make sure what the cost is going to be. Check on it now, and you will have time to shop around a bit for a decent rate.

NO VACATIONS at all!! whats a vacation ? does that have something to do with no sick days?

Oh Yeah.....I forgot about those.......lol. Get sick now- cause ya can't later. Take pic.'s of the kids...get a B I G dog.

Originally posted by Streets
Just wait until the DEC/EPA get their hooks into ya and you'll wish ya nevah had this dream!! Oh, it's so nice to be retired from havin' my own business and all the headaches, and NO VACATIONS at all!!

I go on vacations all the time. Why, I've been on 3 in the last 20 years alone.

Originally posted by pro70z28
I go on vacations all the time. Why, I've been on 3 in the last 20 years alone.

thats about, right my wife and i took a long weekend one time at the first of the yr, the first of the 7th yr. !!!