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What surprised you the most in your first 5 years of business ?

Discussion in 'The Hokey Ass Message Board' started by CHOPSHOP, Nov 12, 2007.

  1. What surprised me most, was how people think you must be loaded with cash,.....cause you own the biz.
    Still, this way of thinking sure brought the girls in. Ha ha. :D;)
  2. Motorhead Extraordinaire
    Joined: May 19, 2009
    Posts: 225

    Motorhead Extraordinaire
    Alliance Vendor

    I have done partnerships before and they all seemed to have their issues until now. My current business partner is my wife; I handle one part of the business, she another and it works out great. If you do a partnership, it must be with a 100% trusted person and who best but your spouse. We both have the same goals in life and business so it works out just fine.

    People keep asking me "How can you possibly work with your wife?". Easy, especially if you both set the responsibilities, boundaries, and mutual respect needed to work together.

    In naming our business Motorhead Extraordinaire, I am the Motorhead, she is the Extraordinaire one. Works for us.

    Joined: Jun 26, 2005
    Posts: 1,920

    from Malden,MA

    cool. Joe what a class act you are. :)
  4. Motorhead Extraordinaire
    Joined: May 19, 2009
    Posts: 225

    Motorhead Extraordinaire
    Alliance Vendor

    Thanks Lenny and congratulations on the Adirondack win over the weekend. Billy D. was telling me all about the Camaro you did. Sounds awesome.

    Another nice feather in your shops cap.

    Congrats again.

  5. pg409
    Joined: Sep 27, 2009
    Posts: 122


    What I learned in business that it takes 15 years to have "overnight success":):)
    Joined: Jun 26, 2005
    Posts: 1,920

    from Malden,MA

    Because I get asked at least once a week from people and I think its great to pass these 'pearls of wisdom' along to those who might be thinking of running their own places....;)
  7. oldcarfart
    Joined: Apr 12, 2005
    Posts: 1,436


    People's attitudes, friends expecting stuff for free, people changing mind on direction of project while underway and expecting all incured time and money to disappear since it was "no longer needed", arguements on costs after contract and project completed. Thinking all can be done in 7 days as on TV.
  8. goose-em
    Joined: Aug 23, 2008
    Posts: 349

    from Louisiana

    Run your money like a lawyer would.

    Establish a trust that your customer deposits money into prior to starting the job, call it a retainer or down payment. You only need one trust, just have to keep track of how much each customer has in there.

    Next have an operations account. As you buy things or do work for the customer you transfer money from the trust to the operations account. A good bookkeeper can help with this.

    The trust is not your money it is your customers and you are just tending it for them.

    The operations account is your money.

    The way this works is you should always have more in operations than in the trust. However the trust is what ensures you will be able to get the job done and have the money to do so.

    I typically have a 50% - 40% - 10% policy.

    I take 50% up front, another 40% when the job is 50% complete and the final 10% when the job is done before I deliver. Doing it this way ensures you get at least 90% of your money, or at least 50% before the customer dries up.
  9. Roger Walling
    Joined: Sep 26, 2010
    Posts: 1,149

    Roger Walling

    My biggest surprize is that just when you think you have money to spend on yourself, you find out you need to spend it on the bussiness just to keep going.
  10. oldcarfart
    Joined: Apr 12, 2005
    Posts: 1,436


    And BTW this had been a great read. Once my health gets better I'm going into business for myself. I'm tired of breaking my back for $15 bucks a hour, when my employer is making $20 off that hour I just worked![/QUOTE]

    just for thought................what if your health takes a dump again?, and have you seen how that $20.00 is divided up?

    Invisable costs are killer, unemployment, taxes, upkeep, outside resources (accountant, rags & uniforms), shop consumables, multiple insurances, etc. many shop owners take home less money than employees but all the headaches.
  11. oldcarfart
    Joined: Apr 12, 2005
    Posts: 1,436


    My mentor once told me the best way to have a $1m business is to start with $2m, I busted my ass to show him wrong, it happened! I did bust my ass.
  12. We have been through about 20 bodymen in that past several years because of their poor work ethic/skills. It's really hard to find good help......

    When you find good help, be prepared to acknowledge that by paying them above scale. They know how good their work is. Pay them well and they will make you money and stick around. Pay get Monkeys!
  13. Dzuari
    Joined: Jan 28, 2011
    Posts: 250

    from Muncie, IN

    I can't say much for auto work, but for manufacturing:

    1. one of the biggest is keep every customer that you do business with, less than your total overhead for the month and generally never more than 25% of your work, that way if they ever decide to pull out you're not sitting with no work and lots of bills. Kinda the same way investors say, never invest more than 1% or your net.

    I've heard horror stories of foundry's and CNC shops where big corps come in and say, hey we will give 3 million sales over a 5 year period, which sounds great, so you go out and buy all the equipment needed for the job, hire the extra workers, only to then find out 1 year into the agreement they need to rethink their sales projections and ur stuck with a ton of machinery bills and employees to pay & or layoff. which leads me to rule 2 and 3.

    2. Money up front for any overhead needed on a job (machines, tooling, paying employees to get everything set up.) Saves a lot of time, money, risk and worries in the end. Also keeps your overhead down.

    3. If you find a customer becoming more than 25% of your total work, go out and get more work, not only will your company grow more but it reduces the risk of rule number 2.

    4. always do better work than the guy next to you, even if it takes twice as longs, in the end there is always someone willing to pay for the better quality.
  14. What suprised me and still does is how uneducated most consumers can be.

    I've always said that an educated consumer is the best customer.

    IMO: There's nothing worse than dealing with someone that don't have a clue except for someone that thinks they know what they're talking about.
  15. Raven53
    Joined: Jan 12, 2009
    Posts: 442

    from Irwin Pa

    This about sums it up ......
  16. You can't take of when you want to.
  17. nsra_23
    Joined: Oct 7, 2011
    Posts: 27

    from Indiana

    One of the things i am learning is that there is a HUGE difference between running a shop efficiently and effectively. My ex boss who was/is a good mechanic but a great business man told me, when i went to him for advice about opening my shop, to buy the building under my name and lease it to the business. And i read where some people mentioned some books to read that help with the business side of things so i wanted to mention a class that another former employer sent me to and that is 7 habits of highly effective people by Dr. Covey. the week long class that i attended is available in paperback and there are several valuable bits of information that help you set up a system to help manage your time both at and away from the shop.
  18. Flathead Johnny
    Joined: Jul 26, 2011
    Posts: 744

    Flathead Johnny
    from MA

    just spent 2 1/2 hours reading every post.....very good information, the most valuable thing I have learned from this thread is not to start a business...really a great thread and wish the best for everyone that shared their opinion
  19. lordairgtar
    Joined: Oct 11, 2009
    Posts: 416


    I own a DJ business.
    I would rather be happy in it than deal with those that cause me to be stressed. So I stopped doing weddings. I only do car shows and similar events. I won't get rich, but I get to spend more time with people I like. Things I learned....

    Family will invite you to weddings and expect you to DJ for free.
    In DJing, the customer (bride-zilla) is never right.
    Don't do discounts just to get the gig, the next guy will want it cheaper.
    Never hire girl friends or family...they won't work efficiently. friendly with your competitor, sometimes the show he or she can't do will be yours.
  20. desotot
    Joined: Jan 29, 2008
    Posts: 1,993


    what surprised me is how little food I can live on.
  21. burnout2614
    Joined: Sep 21, 2009
    Posts: 612


    I went out on my own on April Fools day '97. Biggest surprise was lack of respect from my banks and Insurance companies. I have always paid loans on time, filed zero ins claims. Building/maintaining those relationships has been ridiculous. In 01 I had a NAPA store,tow service, auto repair shop and Wholesaled cars. In 03 all that was left was the shop. I revamped and started servicing/repairing custom bikes and Harleys. More busy now than ever. peace
    Joined: Jun 26, 2005
    Posts: 1,920

    from Malden,MA

  23. oldcarfart
    Joined: Apr 12, 2005
    Posts: 1,436


    Unexpected costs (fee's, permits, misc. bullshit), employee theft and never hire family or friends. Use an accountant and never forget it's your business and the bottom line affects your pocketbook. Be prepared for long days, much stress but a satisfaction that is unexplainable and makes you feel as if King of the Hill.
  24. Model Eh!
    Joined: Nov 16, 2011
    Posts: 5

    Model Eh!
    from Manitoba

    #1 Never do business with friends or family.
    #2 Live by rule #1
    #3 Start every day off with a prayer, it doesn't necessarily change what will happen that day (although, sometimes I believe it does) but it will calm you enough to deal with it
  25. MistShift
    Joined: Oct 27, 2011
    Posts: 136


    There is a TON of great advice already here, and here is one more piece...

    RULE #1
    Have well written work orders, with lots of fine print outlining YOUR rights - to payment, mechanics liens, cost per day for storage on units unpaid for ($100 a day is good) and get every single customer to sign them. Sounds harsh, but when the customer flakes and leaves you holding the bag (or the sh*tbox) if you don't have a SIGNED work order, you're screwed in front of a judge.

    Rule #2

    When your buddy/relative/preacher/3rd grade teacher brings in their vehicle, SEE RULE #1 and follow it to the T!

    Remember what George Thorogood said in One Bourbon....

    "Everybody funny. Now YOU funny too."
    Joined: Jun 26, 2005
    Posts: 1,920

    from Malden,MA

    bump- this stuff is great reading
  27. 57Custom300
    Joined: Aug 21, 2009
    Posts: 1,398

    from Arizona

    Being the owner means you get to clean the bathroom (pigs) & take out the garbage yourself. Dont ask how I know.
  28. yetiskustoms
    Joined: May 22, 2009
    Posts: 1,932


    well put. difficult to do, but nessesary

    QUOTE=Mazooma1;2357676]1. There is no such thing as an 8 hour day.
    2. You MUST put yourself on a salary.
    3. You MUST take any funds over your "salary" and re-invest in the business
    and take some to put in IRAs...EVERY month.
    4. Learn the difference between what you want and what you need.[/QUOTE]
  29. Rusty O'Toole
    Joined: Sep 17, 2006
    Posts: 9,620

    Rusty O'Toole

    I worked for a very successful garage owner although you would never know how much money he had to look at him. He seemed to be a natural at making money. Some things I learned from him-

    Do a good job for a reasonable price. Build up word of mouth business. When you start to get more business than you can handle, raise your prices. This will drive away your worst customers and keep the best, and you will make more money.

    Tailor the job to what the customer wants. You get what you pay for, and no more. If we priced a body job with all new parts etc. and the customer wanted to chisel he would chisel too. OK we can do it for your price but not use new parts, or use cheaper paint etc.

    When you get a new customer give them a super deal and get them coming back. Then fuck the dog on the next job.

    You promised to pay for the job today but just can't do it? No problem, your car will still be here tomorrow. The job does not leave the shop until the last dollar is paid. In some cases we had to lock the car in the shop every night or chain the rear axle to a telephone pole but they all paid. Some were so pissed off they swore to never come back but most of them did come back eventually, and we never had any trouble getting paid.

    I want to emphasize that every customer got what they paid for. There was no charging for work that was not done, or skimping on jobs the customer paid well for. Nobody cheated the customers and the customers did not cheat us.

    He stayed in business for years and gradually expanded the shop but only when he could pay cash. The shop was behind his house, in the country, and never had a sign out and he did no advertising. Didn't need to. Word of mouth built the business. They knew where we were and how to find us.
  30. fossilfish
    Joined: Dec 16, 2010
    Posts: 320

    from Texas

    I learned that if you open a shop in Houston Texas ..even a small shop in the rear of a big lease space with no sign, a police detective who just cruises these places all day will eventually drive by when your shop door is open and tell you that you need to pay the Houston Police department money...lot's of money so they can know that you work on cars and give you a piece of paper saying you paid them a lot of money so the detective can drive around and make sure you and all the other shops have paid for the protection...eeer piece of paper.
    You will also get a special visit from many folks employed by the city who also want you to give them a bunch of money for other pieces of paper to display showing the guys who drive around checking that you have paid them too...
    I don't have a shop in Houston anymore and never will again.

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