Shop talk - what not to do when opening a hot rod shop

DAMN STRAIGHT! If you've got quality to sell, DON'T under-sell it. If you don't have the quality, stop and think about EVERY step of the build until you come up with the best way to do it.

Don't cover things up. If you **** up, show the customer the mistake FIRST, then discuss the fix. If you make a mistake, don't bill the customer for the repair/rework (you'd be amazed at how often that **** happens!). You pay to go to school, not the other way around. If you overcharge somebody, give them a refund and explain your mistake.

The reputation for doing business that way will bring you all the work you can handle. I've made a small fortune (spent it too...) re-doing cars that have come straight out of other custom shops in the area.

 

I didn't own/manage the shops I worked at, but I did work as a tech, and as a service advisor.

The profitable places I worked at were the ones good at tracking time. One boss told me that he was a 'time merchant', and that fixing cars was a way to sell people his time, and his employees' time. Made sense to me.

Lots of good stuff on this thread; seen a lot of these issues done the wrong way, so I know the guys who posted are right.

Here's one: cheap parts. Buy **** from Checker/Schucks/Kragen; better yet, specify Cardone brand. I watched a team of techs feverishly stuff 3 in a row of their PS pumps in a car one afternoon trying to get it out the door for a customer.

Oh, and be sure and let the customer bring his own parts. I'm sure you won't mind tracking down why the battery goes dead, when the customer brought it (with a weak cell), and the alternator (bad rectifier), and you won't mind putting new ends on his corroded cheesewad cables he pulled off a running car.

While you're at it, remember to charge for cleaning stuff (if it is beyond the normal scope of repair/construction). He brings greasy accessory brackets for you to paint & install? Invoice for .3 hours @ the solvent tank or whatever.

Here's another one: no drama. If you gotta' go "Paul Sr.", take it the **** down the street!

Last shop I worked at, I was at the desk 40 hrs a week. One of the owners would talk **** about everybody (customers and employees alike) behind their back, and complain about everything. And, he did this in front of customers (no ****!). And I was trying to keep this image of us being a bunch of professionals... wonder why I ain't still there.

The second shop I worked in had a rule that everything had to be happy in front of a customer. Bad vibes, frowns, etc. were not allowed. You could scream obscenities in the shop, but don't get heard up front. You could tell the boss he was a ***** - out in the shop. When the customers were around, we were never confused (we were still diagnosing), we weren't pissed off (we were working hard) we didn't **** up the diagnosis or run into a problem (there was an issue that wasn't visible on the surface).

One of these two shops made more money than god, the other one was circling the drain. Guess which was which.

Best o' luck w/ new endeavor. You're living my dream, bro.

-bill

 

Keep the shop clean, don't be afraid to work for free if thats what it takes to complete a job or repair something you screwed up. And feel free to steal our sign we have in the reception area, it reads; "Thanks for stopping on your off time, just remember, this is not our off time!" Check our website and you will see how we keep the shop every day, and it does make a difference on the type of clientel we get. WWW.ARIZONASTREETRODS.COM

 

Advertising is good, word of mouth is better. My Pop has been in construction for 35 years. Never advertised once. He only has business cards. Never been out of work. Really, when you see a nice paint job, do you ask what phone book you found the painter in, or do you ask simply who painted it?

 

So far I find this to be true. More people see my work and ask about it .
On the other hand also remember you WONT please all your customers- thats that and move on...

 

I'd almost have to disagree on this one. I've gone to shops where this has been the case and if I feel I am too unimportant to be listened to, I'll take my money somewhere else. Never underestimate the power of the biggest PR tool going - yourself. Showing a little enthusiasm for someone elses dream can pay of big, so can doing the very small odd little help out jobs. Consider the time your "marketing and advertising" expense. Word of mouth is amazing and so is a "can do" at***ude when it comes to peoples cars. I have guys with cars who cannot give away thier money becuase they are met by an endless line of apathy towards thier projects from shop owners.

Danny

 

I've been in a family machine tool manufacturing business for 30 + years.
All good advice here. Keep ''friends" at arms length. If they want shop time beyond an hour or two to use my machines for their own work - I charge them a reasonable rate, they clean their own chip pans and they put **** back up when they're done. Between 7AM and 5pm, its TCB baby, the moneymakers come first.
I do***ent EVERYTHING, that way when things go snake****, I've got no one to blame but myself. I under promise and over deliver and on time for me is 15 minutes early. I hire based on experience and skill, never on pie in the sky promises, looks or friendship.

 

Not a shop owner, but I've worked in a few. Take care of your employees. If you can afford it, pay them what they are worth. Be sure they know that they are appreciated. Happy employees WILL turn out a better product. As a summer job in college, I worked in a Harley dealership. The owner was a great guy. One of his manta's for his employees was "If you're not having fun, tell me, and we'll fix it." One particular quarter, the shop did very well, and as a reward to the Tech's, hepaid to take them all to the strip joint(it was a Harley dealer afterall). He had almost no employee turnover. A year later, he was killed on his bike riding home from Sturgis. His wife took over the shop. She didn't care about employees, her only goal was making a buck. Every summer I went back after that, I had to learn a bunch of new names. the employee turnover went from almost 0 to nearly 80% annually in just a few years.

 

Great topic, Great advice. One thing I do in my buisness is keep the customer in the loop. Most people realize things happen. When they're informed on whats going on, what stage their job is in, any delays for whatever reason, everythings cool. When they hear nothing, the blood starts to boil. I have more work then I can handle, and it's side work to my full time job, all from referals. Another thing, don't be greedy, if a guy is good, pay him well. I have good guys asking if they can work for me all the time, because of that, I never worry about trying to find decent help. Good luck, you can do it.

 

No matter the business your most likely going to become a "business man" first and whatever your business does (auto repair/customization) second. Don't be surprised when your not spending your days designing and building all those great customs you dreamed of - and your time is spent sitting behind a desk and/or with a phone stuck to your ear.

DO make a business plan! Don't let it overwhelm you. It's just a list of **** you need to think about and have a plan and money for. Go buy a book on it. The one for Dummies is fine. It will save your *** from getting bit by something you didn't think of. And it will initiate you to things that may be crucial to your success but you never knew about.

There are three things you need to understand; cost of goods sold, overhead and profit. Cost of goods sold is how much it costs you to get the job done - meaning parts, labor and supplies. Overhead is what it costs to stay in business - electricity, rent, phones, advertising, insurance, licensing etc.. Profit is what's left over.

Base your pricing on this simple formula: One third to one fifth profit ratio. This means 1/3 COG(cost of goods sold), 1/3 Overhead and 1/3 Profit. Or any other split between that and no less than 1/5 Profit ratio.

Cost of goods sold is easy to factor by breaking down the job itself (every penny). Overhead is a bit harder. Add up EVERYTHING that is not COG and divide it by 160 hours a month. Hopefully it won't be greater than your average hourly COG. If it's say $25 for overhead and $25 for COG - then add $25 as your profit and each hour you'll be charging $75. And STAYING in business. A rough estimate is - if you pay your mechanics $25 an hour you need to be charging at least $75 an hour to cover the 1/3 profit ratio.

This is a Business 101 ballpark/best informed guess/strategy. Stick to it. Anything less than 1/5th to 1/3rd and you'll surely get screwed. Sticking to it you JUST might make it. Most business' fail.

Also remember $25 an hour isn't $25 an hour to your mechanic. $25 an hour means $25 an hour to you. Which is his base hourly pay plus his withholding taxes, work comp insurance and anything else your required to pay. If he pitches a ***** break it down for him. I own a private investigation firm in LA. With everything added to my field crews hourly I pay almost double the hourly rate. So somebody you hired at $20 may actually cost you $40 when it's all said and done. For instance, construction work comp is 100% in some areas - meaning you pay the work comp insurance company the same hourly you pay the employee.

Get yourself a cheap business lawyer cd ($50) and write up contracts for everything. Especially employees and customers. If everyone’s clear about what is expected of you and them - there will be no misunderstandings. Consider confidentiality agreements, non-compete agreements and customer agreements.

Don't underestimate the power of advertising. Maybe you've got the cherry location on a road with 50,000 cars a day and no shop for miles. But more likely when you open your doors no one knows you from ****. Explore ALL the avenues of marketing and advertising your business - flyers, mag articles, word of mouth, signage, print ads, car shows etc. The Dummy book will have a more complete list of all the possibilities - most cost very little.

Lastly, live by this phrase "Give me 24 hours. I'll research it and get back to you first thing tomorrow." DON'T EVER make a decision, respond to a complaint, make a big financial decision, do a favor, change an agreement, fire someone etc. - without giving yourself 24 hours to consider it. Especially if it's emotion filled. Don't respond. Give yourself 24 hours to seek wise council and then respond. It will save your ***. And if your still pissed off you'll have the 24 hours to think up a really good way to dress the person down. lol.

The dummy books ($20?) and the legal cds ($50?) aren't the best information source in the world BUT in lieu of a business degree and a high priced lawyer it may be the best advice you can afford. And the least amount of effort to insure your success.

49Lincoln

 

Two words - Cash Flow. You are open, operating and working every day. You must have $$ to pay the bills, materials, salarys, etc and have enough left to pay yourself - gotta eat, right? If you don't have the reserves to start up or carry you through lean times, you are already out of business. This means partners, business loans, lines of credit, something to operate on until you have a steady supply of paying customers. Good luck !

 

under promise and over deliver

AS a customer I have to agree with this one wholeheartedly.
I recently needed a set of shock plates modified. Brought them to one machine shop on Monday and was told 'tues, maybe wed'. Heard nothing from them and eventually picked up my not-yet-started shock plates on Thurs.
Brought them to another machine shop on Fri and was told 'probably not today, definitely by monday.' Got a call 3 hours later that they were done. Picked them up and they were high quality work and exactly how I wanted them.

2nd shops price was $30 more than I was quoted at the 1st one. I was more than glad to pay that extra $30 for good work faster than promised. And in the future the 2nd shop will get all my business and I'll let everyone who asks me know how the 1st shop ****ed me around.

 

Not necessarily a hot rod shop only thing, but as everyone else said, beware the rock & a hard place you'll get yourself into with friends and hang arounders.

 

A buddy of mine started a rod / paint shop. I was a fairly broke motorcycle drag racer. He painted my bike for free. I paid for materials. He had some neon paint laying around that he used for the stripes... cost me nothing for that. The idea was that my bike would get him some paying jobs.

Well, there were a few blems in the paint in obvious places when it was done. I couldn't *****; I had a nearly kick-*** paint job for cheap. He couldn't afford to waste anymore of his "free" time fixing a paint job that wasn't putting any money in his wallet. At the time, I couldn't really afford to pay him to make it perfect.

So we started with a half-***ed handshake deal, ended with a decent paint job, but not so nice that it ever won him any paying paint jobs...

There's a lesson for you in there somewhere.

 

Lots of great stuff here. My family has owned a lot of shops and is still running two of them now. You can barter certain work. We had our house built in exchange for truck work but there were contracts written. One of the biggest problems that we have had at our shop is our employee’s. 90% of the time the people that look the best on paper, ****. I have seen so many mechanics that have taken every test in the world and don’t have any clue about what their doing. It’s really hard to have people that care as much about the outcome of things as you do. We have also had employees having shipments of parts sent to their house to do side work at our expense. The second problem we have had over the years is people trying to sue. No matter how many signs you put up people still seem to sneak in the back and hurt them self’s. Have an attorney from day one. A very wealthy businessman told me this “every employee wants to be an employer and every employer wants to be an employee”. But take that with a grain of salt. My father raised a family turning wrenches and has made a lot of money over the years, when many people told him he would never make it.

 

I have a PHD in how NOT to succed in bussiness. I have failed because of partners, too heavy come***ion, market changes, etc.

1. DO NOT HAVE PARTNERS.
2. DO NOT HAVE PARTNERS ( this is so important I need to say it twice).
3. Investors are great.
4. KNOW YOUR COMPE***ION. Go vist them. Meet the owner. Watch what they do, how they work, learn from them what the local market is about.
5. ADD 5% for "shop incedentals" like sand paper, etc. that is too time consuming to inventory. Make a sign in your waiting room showing these items and thier cost.
6. DO NOT HAVE PARTNERS.
7. Work is work. After 5-6 PM it is ok to be Freinds again. PRETEND there is a big boss you have to answer to. Write down his rules. ADHERE to them. That peytty **** that is part of corporate america has a purpose. It attempts to keep the emp[loyees WORKING instead of goofing off.
8. Make a business plan and FOLLOW it. A proper business plan will help you gfigure out what you REALLY need to charge per hour. Get help from SCORE, your local banker, an attorney, and anyone you know that runs a SUCCESSFUL business. Do this BEFORE you open the doors. Spend a grand or more on this project alone.
9. RUN don't walk away from deals that do not make you your standard profit. LEarning to say no can save your ***.
10. A DEAL IS NOT A GOOD DEAL UNLES BOTH YOU AND THE CUSTOMER ARE TREATED FAIRLY.
11. Ask your self: Is this the most PROFITABLE thing I can be doing at this moment?

90% of new businesses fail. Most failures are blamed on lack of funding. The real core failures are lack of having a good plan and sticking to it.

 

I don't know if anyone mentioned this but Be Realistic. Don't take on more work than you can finish in a timely matter. Nobody likes to wait for there car to get done. The more happy the customer the more business you will do. I know way to many guys that will take the work in and not even get to your car for weeks, months. Not cool.

 

I agree. One of my local shops has a "Tourists Welcome" sign out front. You'd be amazed how many guys come in for work or to have a car built by this guy just because five years earlier he humored them with some advice and conversation. We all know it ain't cheap having these cars worked on, and we all want the guy working on our car to listen to us - especially the guys who are new to cars and don't really know what they're looking at. We all had to start somewhere.

 

THATS EXACTLY RIGHT

 

Everyone went to school . We became mechanics ,doctors , lawyers.
Then one day we got a bright idea and decided to open our own business. The problem for many is that they have no idea of what business is. No one ever taught them business nor did they ever take time to learn about it. Yet everyday many routinely conduct business without any formal knowledge of what it is. As professionals we all keep abreast of changes in our field through continueing education but even as trained business owners we fail to upgrade our business knowledge. Budget time for continueing education even if your approaching the end of your business career. (you need to develop an exit stategy). Join a business development group like Vistage (tec), Young Presidents, ect. Getting together with other business owners in this type of structured format on a regular basis is a great help in overcoming the daily challenges of business. You will find out your not alone in the issues that are confronting you and that others have faced similar dilemas and survived. It will help you uncover the real issues you need to overcome to be more successful in you business and family endeavors. Because as hard as you may try to keep business and family separate ,you are connected to both.

Larry

 

Don't expect to get rich. We put all our moneyback in the shop for the first year and the next 2 years we payed ourselves less then ten dollars an hour. All my employies make more then me still. But I'm building a busness like I would build a car. Putting every thing I have to offer in to it.
The outher thing is when I first got started I would beet my self up on a job.By saying I would never spend that much money on that. I bill every thing is by the hour, some times I would get done with a job and go $1500. for that. No way thats way to expensive. But I spent the hours, got the job done in the time I said and to me it still seemed to expensive. But I have never paid to have work done. What do I know? I Know how long it takes and how much I bill a hour and thats what I charge. Scott

 

good **** guys, keep it coming

 

Lots of good advice here - keep it coming

 

1-don't agree to do something for alot of money because you need the money without making sure you won't end up becoming a slave to the customer and end up making $6/hr.

2-Try to build a car on your own and sell it to keep all the money. If you build a car on your own, you will love the project and spend more time on
it willingly, instead of hating the time and making an excuse that you get $50 an hour for which you will undercharge anyway.

3-Try to build a car on your own and sell it to keep all the money. Having a customer change ideas is a waste of time. You have to charge them double and they'll never understand.

4-Build something for yourself/stays at shop that shows off what you can do.

5-Give anyone 5 minutes to feel them out, then work while you talk. if they are a potential customer, they will appreciate your hard work ethic. Others might also have stuff you want-stories or parts.

6-Friends/hangouters aren't bad. Put them to work moving heavy stuff, nurse tools, run for parts. If they come back, these friends are priceless, if
they don't then f*ck em.

7-If there's a kid helper that will work for a 20 doin cleanup or organization, get them regular. Sometimes you'll be hurtin for that 20,
but a clean and organized shop gives you time to do more important stuff.

8-Try to find a retired guy that knows his stuff. I have a great friend, REY who loves wiring and tube bending. He already makes 40+K/yr doin nothin. I could not afford an employee with his knowledge. You won't find him givin time to stupid projects though.

13th year money poor/iron rich

 

A few night school or community college cl***es on business and management certainly can't hurt.

Running a business is not for everyone; if you can recognize that you don't have the drive, the patience, the temper, or the positive at***udes you need to do it right, go work for someone else instead.

 

You hit the nail on the head, the reason is that the public education system is meant to produce and endless line of mindless drones, consuming/ workers......you are meant to get out of school, then go to work and buy a house and cars and lots of **** that will keep you in debt and slaving 9 to 5 to pay for it and pay taxes for the rest of your life.

 

Don't Extend Credit. Get Parts Money Up Front. Over Estimate Rather Than Cheat Yourself Or Piss Off Your Customer By Telling
Him You Didn't Know What The Hell You Were Talking About. Treat Your Friends Like Family And Your Family Like Friends. Remember Not
Everyone Has A Bag Of Gold And Lots Of Cats Work Hard For The Small Purchase They Make From You. Loyalty Is Everything. Let Your Customers Know That. Use The Golden Rule. I Have Seen My Pop (car Shop) And My Best Friend (bike Shop) Survive, Have A Good Life And Make A Few Bucks And A Lot Of Friends This Way. If You Want To Get Rich, You're In The Wrong Field. Good Luck.
Rod

 

I'm not a pro Rod builder, or a licensed mechanic, but I spent my life working on old cars, and employed in the Tool and Diemaking Trade as a Journeyman.

We kept a log of materials and hours on all of the jobs we did. the cutters, drills, grinding wheels, sanding discs, nuts, bolts and other trinkets needed to build a mold or a stamping die.

Our hourly shop rate in the old days was $35 per hour. I don't know what's charged today,a s I've been retired for 5 years. Lucky if you can even find a job these days. Everything is going to Mexico or to China it seems.

We got work in the door either by a quote or by time and material for the repairs. Even the T & M jobs had a time limit on hours.

Get it done and out the door.

Now they call it Multi-tasking, but several times I was running a milling machine and keeping an eye on the bandsaw, cutting off stock for the next job. Doing some polishing while watching the boring mill make chips.

There are lots of good advice given here.

As a hobbiest, I really wonder how anyone can go to a pro shop and drop off a rusty relic and have a turn key car built. For me, it's the back yard and the Farm shop for the things I do.

 

These two books are a MUST READ!

 

Wonder if Boyd ever takes this into consideration?
Seems there is always unfinished projects sitting in the background;
while the high dollar jobs get the "rush!"