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startup questions, suggestions

#1
I'm looking to start a small shop doing restorations and full resprays, with some detailing and blasting on the side. I've been thinking about it for a few years now and took some pretty major steps to make it a reality, but I haven't gotten there just yet. I believe I'm skilled and determined enough, but I don't know where to start, so I'm looking for advice. Any of you guys that have owned or currently own your own shop, how did you go from working for a few bucks out of your garage, to legit, legal business? I have a bit of work and word of mouth seems to be getting around, but I don't know where to go next. Seeking advice!

Thanks
 
#2
"took some pretty major steps to make it a reality"
What steps have you taken? What's your current job status, working for someone else full time(same line of work), doing this on the side now? What's your overhead, family to support? How about medical insurance, do you have it with your current job, you'll need to pay your own if you work for yourself full time.
Can you scale up your operation in you own garage (or existing property), or do you need more space?

By no means trying to scare you, but just giving you things to consider.

Getting your business out of the garage is one of the hardest steps to do initially, but with some planning and sound advice, your chances of success with be greater.

Great idea getting advice from folks here that have done it. You can also get free advice from here: https://www.score.org/
 
#3
min 200k line of credit, tax consultant , little to no debt.
never ever use a book keeper . do your own spreadsheet .
it takes a 4 man crew just to support overhead .
 

Chris_Hamilton

Trying to be the best me, I can be
#4
When I opened my own Shop for the first time I was about your age (29) and I thought I had it all figured out. Been in the biz for 9 years and I had saved some cash. Bought a Chief EZ Liner and a used Paint Booth, owed the Snap On guy my first child but I figured as long as the work came in I'd be OK. Well the work came in (sorta) I didn't have enough experience to turn down jobs, started losing my ass on jobs, that combined with not having enough working capital doomed me. It took me almost 10 years to completely recover financially. Failing at that was the most humbling experience of my life. (in many different ways). I looked on your profile page, you said your occupation was "network support"? Have you ever worked in the biz for a Shop (someone else)? If you have only done it on your own you should try to work at a good shop for a few years because I guarantee you if you have only done it on your own, "you don't know what you don't know". Working at a good shop will help you so much more in the long run than starting up on your own right away.
 
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#5
the busiest shop in town is the cheapest shop in town and the first one to fail.
#1 reason shops fail " treating the money like it is yours "
 
#6
Thirty-nine years ago this month I started full time painting cars out of the garage behind my house. I had already been painting customer cars on nights and weekends and making more money than my day job. It's been a long hard road. My advice is have a good solid business plan. Don't over estimate revenue and don't under estimate expenses. Finally be very careful about taking on debt. After thirty-nine years I have two great employees (one for over twenty years), a great location, a great commercial building and thirty-nine years of customers. Would I do it again? I don't know. It sure was a lot of work. ~BOB
 
#7
thanks for all the sound advice! I have an IT education and worked it for years but it's never been what I "want" to do, so as i had free time there I learned to paint, do body work, weld etc.. I painted a few cars and when I got laid off I took the chance to go to Wyotech to be sure I was doing things right so when I'd do work for other people it would last. Now I work in a rod and custom shop where it's just me, the owner, and an older guy that comes in two days a week.

I'm looking to keep overhead as minimal as possible so I'm looking for a place with a garage, or property to build a small building because I don't want to rent. For now I'm doing parts here and there for friends and I still enjoy the work, and enjoy doing things my way even more. One of the main things I'm trying to work out for now is how "legal" is it to hand out business cards with my information at car shows, without being set up just yet. Have you guys done this? I figure a few jobs here and there from this route would help build capital to get things rolling.
 
#8
i built my shop here on the farm . no commute no rent and much more secure. my shops was broken into twice over the years. impossible to get good ins without spending a fortune . be careful on advertising if it is a home shop. you do not want the public strolling through your home. you can build up plenty of work without ads. best bet is building to sell . i no longer work for the public except for my customer base. if possible get out of city limits so you wont be hounded by the bs of the city counsel .
in winter i have to use chains for my commute :)
 

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#9
Same thing here shop on my property altho we do have the right zoning. As far as cards maybe have your name and " custom rod builder " or something like that but if your good the work will come to you. I also mostly built to sell with a few customer cars. Its almost no in the middle stay very small or go very large w/ big overhead. good luck
 
#11
when you guys say build to sell is that your primary income, or are you doing other work as well? Location is my biggest road block right now. I have an attached garage and no room to build a small building, and I don't want the overhead of renting or leasing. We're looking to move into a house with a detached garage or at least property I can build on without neighbors. My other option is to buy a small piece of land and build there. What are your thoughts on these? My debts right now are only mortgage and around 11k in school loans, no kids or anything like that.
 
#12
I buy old antiques , hot rods and some newer cars needing some body and clean up but not basket case. Will tie your $ up so I will do some collision work and resto to fill in. I am a bonded dealer also and have the correct zoning so no one can mess with us. Very hard and sometimes we go weeks with out a paycheck!!!! For a small guy out in the country I think now adays you have to be into a few income producing areas. Heck I may try to make paint and sell it LOL. Just a joke. Raised by my uncle who came from Italy and learned the old school body and frame work but back in the 50's and in even in the late 80's with hard work like he did you could make it. Not so sure in this world. I wish you all the luck and Please ask any more questions as there are a lot of great people on this fourm to help.
 
#13
Thanks for all the replies. This Friday I'm going to an event hosted by the Small Business Development Center to get an idea on how to get set up and started.

Another question I have is how do you guys determine an hourly rate? When a job comes in that you know is going to take a long time, how do you charge for that? I'd want to give my customers a great deal, but obviously need to pay the bills and charge what I'm worth. In this area, Southwest PA, I'm thinking around 35-45 an hour would be enough for me and a deal for them. Any input on this?
 

Chris_Hamilton

Trying to be the best me, I can be
#15
those are 1980 rates. check ins and dealerships in the area. you can not survive on that kind of rate .
Here where I am Collision Repair Shops in the Lynchburg/Roanoka VA area are only getting $46.00/hr. If you aren't going to focus on Insurance work you can charge what you want but if you plan on any Insurance work you'll get whatever the accepted Insurance rate is in your area. Friend of mine in Chester County PA has a Mechanical/ Sheet Metal Fab Shop and he charges $105.00/hr and he stays busy. FIgure what your costs are going to be (figure in a salary for yourself as a cost) and go from there. Also factor in that every hour you spend working is not going to be billable. Realistically a maximum 60-70% of the hours you spend working are going to be billable. Depending on any number of factors that number could be lower.
 
#16
damn we were at 32 dollars an hour in the late 70's. luckily here in texas the insurance companies dont control the trade . you do not have to accept their estimates or rates . most times they will just stack hours until they meet your estimate. had a 41 sedan that caught fire under the hood. they did not like my estimate so they sent a headhunter out. told them fine just pay me for the estimate and for time setting in the shop. they learned quick when shops hear streetrod and fire they got a dial tone. they paid and everybody was happy .stand your ground .
 
#17
Where I am, rates for insurance work we can get around 50$ CAD an hour, 55$ if we provide the customer a courtesy car. Plus they control everything, add something and you have to show the bills for all the parts, and they cut you if you get the parts for less than they quoted.
 
#19
Thanks for the replies! are any of you guys running your shop alone and doing all the work? If not, how many employees do you have? I'd like to do it alone for a while and if anything one or two employees eventually. Not looking to run a huge operation, just enough for me to get by and be happy doing what I like to do
 
#20
You need to either stay small 2-3 including yourself or go big like 8-10 or more to make it, anything in the middle of that and you loose money or break even. When you go big you now have a problem with infighting and bitching which never looks good in front of customers or within earshot of them and you must be able to trust they can do quality/safe work. Then you get into hourly or flat rate and benefits and holiday pay, vacations etc. Insurance work will never completely pay for all the material at best you might break even and that will take some creative negotiating skills, the Ins Co.'s put up a crybaby fight. Then they are always calling wanting to know the progress and will call the customer telling them that their rental is up and because of you (the shop) they will have to pay any additional days making you look bad even though it might have been their adjustor who drug their feet to estimate additional damage that can't be fixed until he ok's it. The allotted repair days start when the adjustor first looks at it and some want to see it before tare down. The bean counters don't look at any supplemental repair times before they start their nagging.
There is a lot of special equipment and knowledge of how repairs have to be done and shop Insurance and liability insurance needs to be addressed to. New shops will be looked at for code issues and waste disposal fire code inspections city ordinance yada, yada, yada. The list can go on and on.

Chris is correct on the rate they are paying bodyshops, what makes me mad is if you take something to the mechanical shop they will happily pay them double what they would have paid you.

It's all food for thought, you might be better served working in a bodyshop and see first hand what goes on and needs done and how to do it before you lay your money down.