OK, we have the "Things Learned in the First 5 Years" thread, and there's a ton of info in it. One topic I didn't see covered was this: Who took out a small business loan or how did you get the $$ to get started?
I borrowed $3000 from my grandmother,sold my pickup and lived on next to nothing for a few years.This was back in 1986 so 3000 was worth a little more then.It was hard to get a bank loan then and almost impossible nowadays.I pretty much figure out how to pay for something in cash now or borrow against the house if i need something big.Being in biz is tough and not getting any easier.
I STARTED MY SHOP IN 1976 IN THIS WAY....... Quit my 40 hr a week job at TV dinner plant 1....Took my last 2 paychecks from actual job=[600.00] 2....BOUGHT 3hp SEARS COMPRESSOR AND BODY SANDER= 3....OLDER BROTHER GAVE ME A BODY HAMMER= 4....BOOKED ENOUGH WORK FOR A MONTH= results= ALL THE WORK I BOOKED CANCELLED ON ME. ALMOST STARVED TO DEATH FOR 6 MONTHS. ATE A LOT OF MEALS AT MOTHERINLAWS HOUSE. THEN.... THINGS GOT BETTER,BORROWED 6k FOR NEW SHOP[MORTGAGE ON MY HOUSE] I GOT BETTER AT BODYWORK. 36 YEARS LATER IT IS STILL MY JOB...... DISCLAIMER= THE ABOVE METHODS ARE NOT RECCOMMENDED FOR YOUR ENTRY INTO THE AUTO REPAIR BIDDNESS....
Been there, done that a couple times (opened a buisness). I would HIGHLY recomend NOT borrowing money to start off. Save up enough, sell stuff, do whatever it takes to open up and run as long as possible without borrowing money. The first year or two are real tough, lucky if you get a paycheck let alone make loan payments. You borrow a chunk of change to start, bank account is fat so it's real easy to buy stuff you don't really need and spend money you shouldn't, then all of a sudden that chunk is gone but now it's a liability. Plus, as a reality check, a year from now when you throw in the towel (happens more then not) it's tough enough to realize your savings are gone, it's worst if you have 20 years of payments to go!
i was lucky enough to start my business when i was young ( 20) while i was still living at home with my parents. if i would have been out on my own i would have went under for sure. but now almost six years later business is good. i would do your best to not borrow money from any one. start small, even a two car garage. then move up as the work comes in. it usually takes 2-5 years to show any real profit when starting up especially when you buy equipment as you go. one thing i wish i would have done was have a small credit card. i did everything cash only no credit cards of any kind, and now it is hard to get a loan for anything ( to buy the building i am leasing) so i had to start at the bottom of the credit pole and start the climb up. just get one and use on things you need to buy anyway, like fuel
Your work will be your best advertisement. Work part time at your dream while holding a real job. As you get better you will get more work and can reverse things and when you have a solid following you go for broke. Best of luck.
I have started two shops with just my tools, and a few hunderd dollars. Save some money, get all the tools you think you will need, find a cheap rent building, maybe some repairs needed trade out rent for your work to fix it up. And last "DO it by your self, No Partners!!!!!!" I was good the first time around, second time I took in a partner, biggest mistake I ever made, do it on your own.
Never borrowed one dime to start a business. Bought tools as I could afford them. No partying, no beers, no wasting money. Every penny I kept after paqying monthly expenses went back into the business. Takes sacrifice, time and dedication. Never spend a dime of the customers money till its earned. To this day I always take payments in arrears. If I have to buy parts or supplies I do it on my dime, then bill the customer bi-weekly.
A good friend of mine started his own business when he was about 22. He kept his day job and worked nights and weekends. Never borrowed a nickel, just applied himself. When he was finally convinced it was time to open a shop on a commercial location, he had enough saved up to construct the building and equip it with the proper machinery. He never looked back. We bought an airplane together, he invented something that he now manufactures out of his own plant. You have to be able to see what's important. I own my own business, but it's not car-related. I can tell you that I've watched many people fail at this self-employed startup because they forget that THEY are not the most important individual, the clients/customers/suppliers are. Do NOT order up fancy letterhead, business cards, and do NOT get yourself a few AmEx business and/or Visa cards. Get an accountant right away unless you have a degree or formal education in that field. Most guys get tripped up on quarterly taxes. You CANNOT spend that money...the government wants it, and they want it every three months. Your accountant/tax person will keep you from running afoul of the IRS. Do quality work, and do NOT make promises you cannot keep. Nothing will kill you faster than taking on more than you can handle. The secret is to just accept what YOU can do - hiring others is a big step and can come after you're truly established. Do what you promise, and ALWAYS put all agreements and contracts/work orders in writing....before you even accept the customer's keys. Make sure you have both initialed exactly what is to be done - "customize car" is not good enough - too much room for misinterpretation. Be specific on how and when the job is to be paid - progressively or ½ now, ½ at completion, monthly or what. Insist that any 'change orders' over the phone be acknowledged by customer's signature and the specific change before you begin. If they balk at these procedures, they're too stupid for you to do any business with. Find customers that are smart enough to understand the nature of a good business arrangement. You may find a few that can provide some hints on a few items you're not sure of. I could go on for hours. I've owned and I've managed several businesses over the years and I'm blessed by having had some great mentors in the early years, and I've learned a ton from every one of them. Seek out successful people that you may know - networkd with other business folks. Take counsel from relatives that seem to have their poop together and know where they've put it. Above all, look out for your own interests at all times. If it seems too easy, you're not paying enough attention to something. I'd wish you good luck, but it takes a lot more than that. A sincere "Best Wishes" will suffice. dj
Had a 4000sf shop with a 1300sf computerized office, 6 idiots working for me. They were good guys but had lots of baggage. I started with a 3000.00 credit card and $ 2000.00 cash. After 18 years I only took one loan to remodel the building. The biggest lesson I learned from my business instructor is you can't borrow your way out of debt and if you don't know how to do your own books your not running your own business. I'm not saying you have to do them but you need to know what's happening with your money. Obama should have taken my class. The key word here is business. There are plenty of bodymen trying to be businessmen. If you start a business you need to realize the money is made in the office. There are lots of guys that can spend time welding and fabbing stuff but have no idea how to figure if they are making money or chasing the carrot. When your old and your eyes are burned out of your head and your joints ache and you have no money it's too late. So if you just like working on cars find a shop that needs you. If you want to go into business you need to come to terms with the fact that you can no longer count on being a bodyman.
metal man provides some good advice... I have not borrowed money from any banks or anything but did start my shop while already in debt with a car payment and owing over $9000 to my credit card company and the card is maxed out. I am still able to make my minimum payments but it does hurt the company quite a bit because I am not able to reinvest the amount of money I should be reinvesting back into the business. Sell your toys and non needed parts, payments, etc and do NOT start with any debt. Also do not buy tools and equipment you do not really need. The way I look at it is like this... You can buy all the tools you want but if the jobs are not around to use them on then your out that money. Now if you do not have the tools but then come across a job or jobs where you need them, THEN and only then should you buy them because that job will pay for them plus some (if you do it right).
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