Opening a performance shop...(long but need help)

[needcash]

right now i am 18, in college, and i am planning on opening a performcane shop in my area (minnesota). im going for accounting in my 2 year school and am debating going to a 4 year and finishing it up. anyway i have a few questions would like you guys to answer if you could. thanks

1. in generla do they do "ok" finacialy? do they turn a decent profit?



2. i plan on selling products, intalling, building, and rebuilding, tuning maybe. just about everything. so what kind o expericane would i need. plan on buying a firly cheap GN and rebuilding it, suspnsion, roll bar , all the goodies ect... and getting a old chevy 350 and rebuilding it (bored and strocked ect...)

3. would just hiring a "expert" mechanic with alot of experiance be a good idea? i would do everything else including some labor but i would have him for more technical things and general help.


4. general startup cost? building (3 lifts 4 stalls, small showroom, tools, lifts, etc...


i think this is it im not sure...

thanks for your time

 

[TurboJim]

First, you need to learn to spell, then type so people will take you seriously. Then you can apply for a mortgage to get you started. Then you'd need to find a tech or two with experience in the field you are getting in. Not all techs....despite being maybe the BEST at the dealer, or the shop they're at, know diddly about performance, and/or what it takes to make something fast and/or reliable. I know I'm pretty comfy with most aspects of repair that I have been in, in the 20 years I have been doing this. And I am by no means even close to sharp when it comes to putting a performance package together. I just dont do it enough. Its one thing to suggest a turbo to someone, because uncle Jeb's wifes, brothers, nephew has one and his car is FAASTTTTT....and its quite another to UNDERSTAND WHY something works and WHY it doesnt. Only knowing this can you really assemble a quality package for someone.

As for money, you can make oddles, or you can go broke in 6 months. it will depend on how tight you are, how much you're watching the biz, and most importantly, your techs. If they turn out high quality, top notch work, you can charge an arm and a leg for it and KNOW that your customers will get word out. If you hire a tech that talks a lot of crap, and uses scotchlocks, or other butchery type work, you wont be in biz long.

I dont know what a shop costs in Minnesota, but here in NJ you can expect to pay 3-7k/month to rent a 3 bay shop. Expect your expert tech to cost you 25/hr MINIMUM...thats $4000/month PER TECH for a 40hr week..not including OT, you really cant pay flat rate, because most of this type of work..there is no way to put a time on (again, NJ wages), dont forget workmens comp, liability ins, most likely health ins for your staff...yes, you can have the tech(s) contribute, but if they're leaving say a dealer, you're gonna have to sweeten the deal because most dealerships I know furnish medical.dental packages. Thats a big perk for anyone with a family.

You'll need to investigate hot stuff for your stock. You dont want to keep 4 sets of headers for a 1974 Datsun 240Z that you can get for 20 bucks each, there just arent enough of them on the road (yes...yes...they ARE cool cars ) and this will sit in stock forever as wasted money. Anyway, you'll really need to investigate your market to see what will and what will NOT sell. Then you can base your financial estimates on that.

If I can make a suggestion? RICE. Stickers, fartcans, cold air intakes, wheels, colored wiper blades...whatever.... if you have the market there...and there are few to no shops...you can make a KILLING!!

I will suggest however, you plan on bring home little to no paycheck for a good amount of time, so make sure your g/f or wife works (or both <grin> ). Set yourself up so that you will have reserve liquid for 2-3 years while you establish the biz.

Of course, you probably know all this already. And I'm sure there is lots I am missing, but I ran my old shop for a long time and have a pretty decent idea what it takes to keep the doors open.

And of course, there is a huge amount I dont know, so hopefully there are voices here who can help further.

 

[2quiktocare]

LMAO Jim, great advice all around. Mark

 

[KillrV6]

hey this is great! im 18 and i have the same dream as you man.
im curently taking automotive tech classes at my JC, than ill take some buisness, but im debateing taking mechanical engineering
degree also.

so any more advice you have for this guy would greatly help me too folks

look out ATR, IM COMIN UP!

 

[Pronto]

Wow, yor in coollege? Witch won? Watsa Matta U? Sorry dude, I guess your not an English major. I commend you for thinking of having your own business. Performance shops are a tough one to swing. There was a shop in our town that catered to high end rice stuff, you know rims for 1k each, $600 exhaust, NOS kits. They lasted less than a year. Depending on the weather in your area that your start the business in, I would look into starting a moble oil change service. That wouldn't require the outlay that a shop with tools and inventory would need but if you do it right and get steady customers you could make a living.

 

[ULYCYC]

Everything that Jim said. Also don't expect to earn any money for a least a year or two. Figure on what your yearly personal cost of living is then double it and put it in the bank before you open your doors. Be careful with partners, friends or family.

 

[John Larkin]

There's an old saying in the classic car business: the only way to make money restoring cars is by working on someone else's. I'm in the car business and it is stressful everyday. There's always a bomb dropping; you just do your best to make it work to your benefit.

My advice is get your accounting degree and a minor in law. You will be bulletproof in business. Get a good job and start something on the side. If it grows, then you change over and do that, knowing you have something to fall back on. Keep your options open.

 

[needcash]

john, when you said get a degree in accounting did you mean 2 or 4 year? and why a minor in law? i know why but to what significance would it have? make scence?





thanks everyone for the help. but i do have a few more questions (i always have a few more )


1. what do i need to get the buisness loan? i have bearly anything for colatarol (sp?)

2. location? right in the middle of town or on a popular commuting road right out side of town? i figured being right out side of a decent size town would bring land prices down ect...


3. just hotrods? newer gms? just ricers? or all? i would like to do all but would it help to focus or specializer in one? there is 1 mustang shop (little not well know) shop within 15 or so miles from where i live



thanks again



sorry about the spelling and stuff... i dont take my time when im on forums, you get the point right?

 

[TurboJim]

Originally posted by needcash
sorry about the spelling and stuff... i dont take my time when im on forums, you get the point right?

Yea. I do get the point....

You know what? Get your accounting degree and work for someone who DOES pay attention to detail. What you just said makes me uneasy. If your attitude is screw it, you get the point, thats good enough right? Instead of it takes the same amount of time to do it right, then you're not the type to be successful among perfectionist customers who want something done right the first time.

BTW: You capitalize the beginning of a sentance and names. There are 2 shift buttons on your keyboard. They are for capital letters.

If this sounds rough, then good. Its supposed to. This is nothing compared to an unhappy customer that just gave you 10 grand and wants their money back!

 

[Jack Evers]

Originally posted by TurboJim
Yea. I do get the point....

You know what? Get your accounting degree and work for someone who DOES pay attention to detail. What you just said makes me uneasy. If your attitude is screw it, you get the point, thats good enough right? Instead of it takes the same amount of time to do it right, then you're not the type to be successful among perfectionist customers who want something done right the first time.

If this sounds rough, then good. Its supposed to. This is nothing compared to an unhappy customer that just gave you 10 grand and wants their money back!

Excellent advice! You might want to print this out and save it if you plan on going into business for yourself..any business.

 

[phil conrad]

What would scare me the most is help. In any business they can make or break you. The fact that you are depending on them for the techinical part would worry me. What happens when you expert quits or has a personal emergency in the middle of a high dollar job ? The customer will not care about your help problems. All they want is their job finished.
Plus what the others have said about the big $ outlay. Banks normally do not lend out money to those just geting started in business.
I think the idea of doing it on the side untill it gets going good would be an excellent idea.

 

[kenmosher]

Boy, I find myself nodding vigoursly at EVERYTHING Jim is saying here!

As far as a business loan, good looks and charm aren't going to get one. You have to have a solid business plan (preferably a 5 year plan with the first 2-3 year's financials detailed). This includes market research, competitor research, cash flow analysis, inventory requirements, asset analysis, etc. The Small Business Administration is a valuable FREE resource to help you prepare one ... they can also help with some of the research and can get you in touch with the financial community.

I'd like to strongly underline Jim's statements about customers and attention to detail ... this is not something that you can be successful doing unless you do a LOT of preparation work.

All that said, my advice would be to finish your degree, go get a job and learn about how the work-a-day world works. Get some experience in working in your chosen field, get experience in working with a professional environment, develop relationships, etc. Find a mentor! Find someone that you admire and is doing something similar to what you want to ulitmately do ... and then be a knowledge sponge! Learn from this person and heed the advice.... it might actually lead you to your ultimate goal, but with a "safety net".

 

[neverenuf]

Originally posted by TurboJim
Yea. I do get the point....

You know what? Get your accounting degree and work for someone who DOES pay attention to detail. What you just said makes me uneasy. If your attitude is screw it, you get the point, thats good enough right? Instead of it takes the same amount of time to do it right, then you're not the type to be successful among perfectionist customers who want something done right the first time.

BTW: You capitalize the beginning of a sentance and names. There are 2 shift buttons on your keyboard. They are for capital letters.

If this sounds rough, then good. Its supposed to. This is nothing compared to an unhappy customer that just gave you 10 grand and wants their money back!

Jim, not to be picky but how do you spell the word "sentence"? I agree with everything you say, especially in the economy we have now. Businesses that do not go the extra mile for their customers are not going to last.

 

[PhilthMonger]

I have witnessed a couple of businesses fail for a couple of reasons. If you want to be successful, you will need to either specialize in something and be good at it, or cater to everyone. there is a shop local that makes good money just selling bling-bling....like shift knobs and altezzas. There is also a shop that does very well for itself selling and specializing in Mitsubishi/ DSM....online sales is where its at. this guy pulled in over a million in sales in one year, and pretty much stopped installing since it was more profitable to do the online sales, and was quite busy just with shipments. Once the business takes off, you can venture into other things, as this shop has done with the release of the wrx and turbo neon. Young guy, makes good money. Here's the plug http://www.diamondstarmotorsport.com/ look at the website, he makes good money with this. On another note, there was a local shop "specializing" in all imports....he lasted 3 months because of shoddy work and less than honest business practices. He spent a week in jail after he was sued by customers and his landlord. Not something you want to go thru. Personally, I would love to run a shop, catering to all turbocharged vehicles. I have been working on turbo mazdas, dodges, mitsubishis for over 10 years, and recently turbo buicks. there is absolutely no way in hell I can possibly know everything about every car....the trick is to know people that specialize in the fields that you do not. I got my tuner guy, can pretty much tune the hell out of any car using any method, I got my mad scientist buddy that's the electronics wizard, I got my install buddy that helps out....etc. you get the idea. You can't take on something like that by yourself. Start out building cars on the side, work on your friends' cars, work on local club members cars, build specialty cars such as conversions, B18 bubbleback civics, VR6 MK2 Golfs, 4g63 turbo Mirages, kids love that ****. Good money in that, and if you have somewhere to work, friends garage, customers garage, whatever.....make a name for yourself and you will keep busy just by word of mouth.

 

[TurboRegal84]

I wanted to open a Performance Shop, but it all depends what type of car you choose to provide parts to....I thought it over, and IMO it is a tough field to make alot of money in.

If I were open my doors tommrow I would stock my shelves with Import parts...These guys drop Tons of money into their car's, and the trend seems to keep growing. The BBC, and Muscle cars are a dying breed, and for the most part many turn to Summit or Jeg's for all their needs.


Sell tailights, 'intakes', body kits, and anything else you see on local import cars.

Most important....Go to a local race track and 'STUDY' what cars are there. Pay attention to whom has what in their car...sometimes its the things outside the classroom that help you make money.

If you don't listen to me...Don't worry about it...Im just an 19 year old with 4 cars, and making 4 digits a week

 

[Chuck Leeper]

BTDT!!

BTDT, and have the t-shirt to prove it!
When you take in a customer's car, you also take him/her to raise!
If you don't want to be a "babysitter", do as has been mentioned, and sell stuff on-line. Walk-in business is good on some products, especially if they are very special in nature. Run of the mill stuff as in the Summit/Jegs world will kill you w/ low margins and inventory costs.
Find a niche and enjoy what you do....

Back under my rock....


How did I do on the spelling, grammar and such??

 

[KillrV6]

what do you do herb?

 

[dhauser]

Well, I am where you are talking about: I just quit my job and am pursuing a higher-end classic car retailing business, primarily via the internet. It takes a lot more to do this than just the desire. It takes money, determination, ability to focus, and attention to detail. Take Jim's words to heart--if you aren't interested in being detail oriented, I will guarantee you 100% 7 days a week you will faceplant big time! Honesty, integrity, and good communication and networking skills are absolutes!

Get some good job experience and start your biz on the side, and take BABY steps, but do not lose sight of making SOME kind of progress, every day, every week, every month, and every year.

Volunteer to work at the types of shops you want yours to be modeled after. If they won't pay you at first, they will after they see you're "in it to win it." Trust me, good help is wanted and appreciated.

Have a good attitude. Without it, you're hosed.

Get a good accountant. However you have to figure it out, make sure he/she isn't lazy. Most of them work inside the box. Your loss.

Save money. I am doing this completely on my own at this point. ALL my own money, no wife, no income to fall back on, just me. In some ways, I wouldn't have it any other way. In other ways, it scares the piss out of me.

Complete your degree, whether 2 or 4 yr. You need something to fall back on. I know you might not think you do, but trust me, 80% of all businesses fail within 1-2 years.

It is easy to be lazy. It's easy to take the path of least resistance. It's hard to be truly successful. But that's the way it should be.

Good luck, dude. Listen to the others on this thread. There is a lot of truth and good advice here.

 

[Reaper]

i think keith is in a 12 step program lol




WOW all this advice is great one day i would like to be my own boss however it will be in the sports related, health and fitness industry. i will make sure to save this as its all good to know.

thanks guys!


Dathan

 

[KillrV6]

ok here is a question i have:

where to get started? how do i start up? i have the name down, and i can invision what i want it to look like. but i was thinking of a dyno, and start out as a dyno shop (that way we could cater to everyone) and offer competative rates on dyno sessions.

but how do you just buy a shop and a dyno and all? where do you look for quality workers to work for you?

how do i get the initial cash it takes to startup?