*Shop Overhead* anybody willing to reveal how much it is?!?

I've seen a ton of questions by guys wanting to open a shop, or people saying prices are too high(one of the reasons I try to do everything myself, I'm the only help I can afford! )

Is anybody willing to give us an approximation of what their shop or a similar one costs to run? Do you have a weekly target or daily or monthly? maybe your profit percentage, if you're really bold !

I had a u joint replaced in an emergency a while back, and it cost about 225 dollars to put in a $30 u-joint .

That was brutal, but the guy has to pay for the time to order the thing, has to eat it if he orders the wrong one or the wrong one is delivered, has to pay for the electricity to run the place and the lift and the shop press, the guy that's doing the work, and the rent, which must be a *TON* of money in that area. Then taxes and insurance and everything else

It was still a ton of money, but it was night and I was out of town so I'll pay what they ask.

So anyway, cheap a-holes like me bellyache about the cost of work, I was curioius if anybody wanted to share what it costs just to keep the doors open every month. It would be interesting to know also since I always have a fantasy of opening/buying an oil change place or something and bankrupting it in months.

Anybody?

Thanks in advance.

 

I think that might vary from region to region. You need to account for price for square foot (rental), cost of hydro, water, waste management, gas (heat etc) and then you need to think about zoning/property use permits.

Interesting thread though, I'd like to do this up here in the cold white soon, but I'm leaning on just rebuilding my garage and working out of that.

 

That right there tells me you haven't a clue.

Not trying to be mean- just honest.
Business owner for 35 years.

 

I never said I had a clue. Why don't you break us off some of your 35 year knowledge or are you too cool?!?

 

Go price Health Insurance for a family of 4, Before OBAMA Care takes over, then watch out.

 

Man don't even get me started on that.

I'm not pointlessly complaining about what a shop charges, it is wwhat it is, I just wondered what that overhead is like.

Maybe someone that used to have a shop can shine a light on things.

I don't think it's a secret that California hates businesses and tries to run them all out of state.

I don't know how any of them can stay open and turn a profit much less have health insurance.

 

I run my shop out of garage in the basement of my house. My only overhead is the garage owners insurance that i'm required to have by the state for my inspection license. I get deductions on my heating oil and electric on my Federal taxes. All my tools i buy are tax deductible. You can earn as much as you want depending on the hours you want to put in a week. I don't have anyone working for me so no hassels on insurance. My wife carries me on her insurance policy. If i had it to do over again i would have opened a garage 30 years sooner instead of working for that Chevy dealer. Go for it Johnny.

 

OK.
Business is business- mine is HVAC & Plumbing
You need a business plan. Plain & simple.
Techs make the worst owners in most cases.
Insurance in California will eat you alive.
Workman's Comp, Liability, commercial coverage, payroll taxes will eat you alive.
Rent a space or ? Your home policy won't cover squat if your home biz burns to the ground w/ customers cars in it.
Advertising- how are you going to get your name out there?
Tools? Equipment?
Licenses? Permits?
Who's going to run the day-to-day?
Who's doing the work?
Who's keeping the books?
Employees?
Material suppliers?
Working capital?
Plan on working 7 days a week & no vacations or time off for....years!
No paycheck for you until everyone else & bills are paid.
Start-up, better have 2 years wages in the bank. You will need it.

That's just off the top of my head.
My biz overhead is about 8k a month to keep the doors open.


It's not what everyone elses overhead is- it's what YOUR'S is that counts.

 

Thank you for the info, Hank, it sure looks like you put out some nice work! Any pics of the falcon body?!?

I'm surprised you're able to run that legal in PA. Are you out in the boonies or is it I guess zoned for business?

I'm just a know-nothing hack, I couldn't open a garage myself. It's just kind of a dream for me.

That's fantastic, congrats on doing what you want and being your own boss!

I've been looking in to truck driving, the tax advantages *appear* to be pretty sweet. When the time is right I'll ask some hambers about it.

 

Thanks Steve, that's really good to know and there's not many places to get the unvarnished truth from a business owner.

FWIW my buddy had a O/T coffee house for 3? years and had someone run it while he wworked in his field. Financed with a HELOC, naturally, SBA laughed in his face. After figuring out how much the manager embezzled, he ended up with a paid off pickup truck after he sold it and nothing else.

 

Have you tried to secure comercial space yet? Checked into insurance and a business license?
What kind of shop?

 

I gotta get working on that falcon body still gathering parts. I'm legal for PA. state inspection station and had property rezoned to commercial, i'm located 5 miles outta town. Also should have said for my house i have renters insurance as the garage owns the house so everything is covered in case of fire. I learned the trade working my why up through several garages and eventually up to service manager at the local chevy dealer.

 

Here's a list to consider once your up and running.
Advertising, Auto expenses (company owned), bank service charges, contributions, dues/subscriptions, equipment rental, Health, Garage, Liability Insurance, Licenses and Permits (annual fee) Office supplies, computer programs (one time fee or monthly depends), Accountant/Tax specialist, Legal Fees, Rent/Mortgage, Building repairs,equipment repairs, shop supplies on hand vs shop supplies used, taxes -state federal etc, Phone-Cells, Business phone 1 line or multiple lines, Fax line, Internet Service, Meals on/off premise, Travel, Training/Education for certifications, Utilities-Gas, Water, Sewer, Electric, Lot upkeep-rock, asphalt etc, Snow Plowing service, and all that before you even have an employee to keep going.
Then you have to factor in your personal/Family living costs-Home and Car Ins, phone/internet, etc etc etc.

Then you'll need working capital, credit with suppliers if you can't or don't want to write checks when parts/supplies are delivered, MOUNDS AND MOUNDS of paper work, Keeping up with Federal/State employee rulings/laws, determining what pay system you'll use, 401k/IRA for yourself and employees, did I say MOUNDS and MOUNDS of paperwork. Copier machine breaking and service calls etc etc. Depending upon your set-up you'll need to realize you will do less and less actual work and more and more office/number crunching/customer care/etc etc.

If you sign a Triple Net lease you are the one who maintains the building, lot, HVAC etc not the landlord. Most if not all Commercial Leases are this way.

Depending upon codes you may need fire suppression even if it is not a body shop. The list goes on and on and on.......
Costs? Small shop in Central Illinois maybe 3000.00 a month and that is without employees or your pay. Just to have building leased, lights, shop insurance, phones.

 

Friend of mine in New Jersey was paying over $5,000 a month in rent,
plus electricity, phone, heat, etc. And that wasn't in a fancy part of town.

 

I helped a guy get a shop going, and the one thing that impressed me the most was that he could NOT build a quality car to save his soul (or business).

Now I'm not trying to bag on you or anyone else, but the quality of your work is going to be one of the keys to staying in business. If you haven't built a show winner yet, don't turn the key in the door.

Cosmo

 

First 20 hrs billable labour each week Pay the overheads to stop from going backwards. I rarely get more than 25 hours billable out a week. remind me why I do this again?

 

jersey is the worst state in the country to start/run a business. i say hide all the money you can

 

How about the cafe, lowsquire, does that make some $$$?

edit: come think of it I used to know a chef in Chicago. Basically the bar carried the restaurant or they invariably went under when the under capitalized? owner ran out of retirement money.

It was sad because the product was great, just they couldn't charge enough to make a profit.

 

My shop costs about 1,200.00 per month and I own the building so there's no rent.
Power, tool upkeep, consumables , etc

 

the truth is it's all in what you put in it. the building, tools, elec, water and personnel are all overhead. no one can really tell you what it will cost you. you have to figure out what you want and do a biz plan. labor rates are generally the same by region. and for hot rods etc it tends to be lower than say your new car dealer rates. my suggestion is to go as small and cheap as possible and grow as your customers grow.

 

Not only is overhead going to vary by state, it's literally going to vary by location, because even two identical buildings in neighboring towns will have different tax bills. And you as the customer pay towards all those things -

 

Another thing besides the overhead you need to understand is that only about 1/2 the hours you will be working will be billable (you can charge for), the other 1/2 the time you spend doing all the other crap that either you do, or you pay someone else to do.

I'm working out of my garage (its zoned business) and my expenses run about $1300 a month (that does not cover any taxes). Expenses are more if I'm busy, but do not ever drop below $1300. Some months I cover my bills, some months I do not. You quickly learn you can not spend everything you make, a couple slow months in a row can put a hurt on you quickly. Gene

 

If Im lucky, the cafe makes me lunch money for the week, my one extravagance is $4.oo vietnamese pork rolls at lunchtime..pisspoor extravagance, but there it is.

 

rent in my neighborhood runs about 2500/mo for a 4 stall shop.
phone
internet
water
trash
electricity
insurance
business license
corporation costs/taxes/fees
haz mat disposal
county haz mat fees
bookkeeping
income taxes (double that if you have employees)
workers comp insurance (if you have employees)
credit card processing (2.5% of all transactions)
subscription to technical information
maintenance and upgrade of equipment
tool purchases (gotta have them special tools)
office supplies
compliance materials and fees
vendors and sales taxes

my shop is modest by most accounts... and we own the building outright.
suffice it to say that my shop needs over 10k a month before i get paid.

 

as a retired CPA i would offer the following. be sure you consider your family and invole them as appropriate in decision. the government at all levels has more time and resources than you do-file TIMELY ACCURATE returns. Don't short change record keeping. do it right- the wife or girlfriend typically doesn't have the time and if not done adequately it will cost you. select a CPA who speaks your language and you can talk wth candidly and openly. good luck-hope you make a million.!

 

I know your original question is how much it costs to do business but that's only part of the picture. Auto repair is my deal. About 2500/ month in the Denver Co area for overhead then my salary on top of that. I have to bill 23 hours/ week of labor at 75/ hr to cover business overhead plus my personal bills and that's not making me rich. Mark up on parts is pretty minor so not a lot of $$ there.

It's sorta been said but be honest w/ yourself;

Are you a businessman?

If not you damn well need to learn how to be one or your run won't last long.

I'm a very good tech and a lousy businessman. I know that so I'm learning. I talk w/ other business owners, have taken some accounting classes, learned how to write a business plan. I pay an accountant 4 times a year to make sure there's no reason for the IRS to perform a dry colonoscopy.

You will find weird little expenses will pop up when you least expect them so you have to have some cash reserve for that. Or for the months when you don't make enough to pay yourself and cover the mortgage. A cash reserve is critical.

As a business owner, I work harder than I ever did when I worked for someone else. Not because I gave them less, but because I have to do more. Are you ready to work 7 days a week or be in the shop from 7 AM to 11 PM? You're gonna have to make some sacrifices.

Still, I wouldn't trade it...

 

Here is the over head for a plumbing shop in Chi town. monthly
Rent 900 sf space $1300
Phones $250
Truck fuel $400
Insurance Liability $ 175
Electric $120
Heat $110
Cleaning services $ 75
Workers comp $ 475
LLC paperwork $ 500 annual
City biz license $ 125 annual
State, city, licenses $ 750 annual
replacement Tool fund $150 month
Truck payments $600
Misc consumables and shop supplies, paper towels uniforms, ass paper, stationary, coffee, pens all that crap. $50
Water bill $50
Advertising $ 900
So every month you wake up on the first day of it and find yourself in a $4000 hole, if you work real hard and only use 3 squares on the charmins you may be able to see a little light by day 29, except February with the 28 days. And then you have to go every day and listen to all of these people tell you how you must have quite a spread and no worries. The best part is listening to some dope who you gave a really excellent price to explain to all his pals how his $220 job just about paid in full for your hot rod. Most shops do not break even until hour 28 of weekly operations. If debt stresses you out stay working for others.

Oh yeah, I forgot health insurance, that's because I have a minor issue and they refuse to cover me, so none for me, I get to go sit on the hill with my blanket and wait for a bear to come eat me.

 

I own a small engineering and light manufacturing company. It would take too long to explain the accounting process here, but as a rule of thumb, by the time you take into account all the various expenses incurred on labor, you more than double the actual wage rate, so if I'm paying someone $20/hr, my costs are closer to $42/hr to keep that person employed.

I also have to recover other costs associated with material handling, General & Administrative costs, and also add a (small) profit to grow the company.

It still amazes me that a couple of hours of labor can add up so quickly, but that's the reality of keeping a business alive.

 

Renter's Insurance, is that a residential policy?
You better check on that insurance. Your business may actually void the policy for anything business related. Check out http://www.jalopyjournal.com/forum/showthread.php?t=449088&highlight=shop+fire
He thought he had insurance too.

 

I have a small hot rod shop. 5k + or - a month, and i dont pay my self. If i was to do it again i would build a big o shop behind my house and stay off the grid.