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What to know in opening your own hot rod shop?

Discussion in 'The Hokey Ass Message Board' started by dirt slinger, Aug 28, 2013.

  1. I tried that stunt once. It was kinda fun for awhile. Got to make my own hours. 8 to midnight every day.:)
  2. Give some honest answers to what your strengths and weaknesses are. Turn the weaknesses around. Don't plan on a Ridler winner, just yet.

    Know who your competition is. You're close to Shelbyville; an established shop is there. Are you able to do smaller jobs, or for less than he does?

    Know what your fixed expenses are. Rent, power, insurance, alarm, taxes, consumables, toilet paper. Everything! This is overhead. Parts are a cost of sales expense, the customer pays for these UP FRONT. Keep your inventory to a minimum. Hammer out the best cost deal you can with suppliers.

    Make a simple operating statement and stick to it. Get a PC program to track it. Pay yourself a salary or hourly.

    Sales - cost of sales = gross profit. Gross profit - overhead = profit.

    Set up as an LLC, or something to protect you personally.

    Run an honest business, and try to resolve issues.

    Just think, when YOU unlock that shop door, everybody made it to work. You will be living many a guy's dream, instead of fighting the corporate grind and BS.

    Last edited: Aug 28, 2013
  3. partsdawg
    Joined: Feb 12, 2006
    Posts: 2,698

    from Minnesota

    There is a thread on here with a title something like
    "what I learned in my first year of running my own shop"
    One of the smarter guys will have subscribed to it and can post a link.
    Read every post.
  4. filthy frank
    Joined: Jan 25, 2008
    Posts: 541

    filthy frank

    do it yourself ! dont go into a partnership ! ever ! but if you do , make sure you write it up as 51 for yourself , and 49 for him !that way you can get rid of him like a bad flu !
  5. Flootiebuell
    Joined: Jun 16, 2009
    Posts: 281


    Yeah...what he said....sound advice.

    I havin started multiple businesses over the years...some successful, one not as much. Just don't try to let your ego outway your skills. Above and beyond all the great advice already posted, I have found that marketing yourself and shop is super important...especially with the local town folk. Hot Rods and car culture still has that hoodlum mystique surrounding it so doing something for the community is always a good idea. I used to do a spaghetti feed for the local high school football and baseball teams...carshow to benefit the scout troops, and things like that. Get to know your local government and community groups. Then go kick ass! Owning your own business is exactly that... business, but it CNN be super fun!

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  6. panheadguy
    Joined: Jan 8, 2005
    Posts: 995

    from S.E. WI

    Someone here suggested to contact the SBA. They are going to work with a local bank and require a personal garranty....Like what ever you own or have equity in to cover the loan. I would never borrow from them again having defaulted on a business loan thru them. Grow it slow and finance your growth thru cash flow.
  7. dirt slinger
    Joined: Jan 30, 2010
    Posts: 645

    dirt slinger

    I can say this, I have been informed of some valuable info today. I will be taking every word very seriously. I will be a one man show in my existing own shop, nothing more nothing less. Also, pride in honesty and quality work. i learned in my electrical business that he customer is always to get what they want, as long as its safe. With a couple thousand dollars of tool investment I think I would be good. This is a long process to get this going. I will be soaking up info and taking notes. I knew the hamburger would come thru again. I think I may hone some of my skills thru a few school coarses just to be the best I can. Keep the info coming. Thanks guys!
  8. druids62
    Joined: Oct 1, 2009
    Posts: 188


    Man I wish I got some of this advise when I went out on my own!! I've been on my own for sometime now but I wish to add one piece of advice that I received from an old fella (RIP). "The masses are asses".
    I do truly wish you all the best, and heed all the above advise.
  9. Gasserfreak
    Joined: Aug 31, 2004
    Posts: 1,339

    from Yuma, AZ

    I'm currently in the process of doing this myself. I've been a working mechanic my entire adult life, and building old cars even longer.

    After years of not, I started taking side work some time ago. The projects quickly out grew my home garage. I took some money I saved to buy a home and rented an industrial shop space. I still work from 6:00-3:30 then go to the shop from about 4:00-8:30, and everyday all day on the weekends. If you have a young family like me it's hard. The end goal is my own shop as my full time job.

    What I've learned thus far: Everything is gonna take longer than you think, so factor that into your quote a little to cover the difference. Do not negotiate on your quote, because everything becomes "negotiable". Do not over promise and under deliver. Do not over estimate you ability or confuse it with passion. Whatever you think it's gonna cost to get started, double or triple it. Stick by your work and your word.

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    Last edited: Aug 28, 2013
  10. HotRodMetal
    Joined: Apr 13, 2007
    Posts: 167

    from USA

    My first recommendation is to keep it as a hobby.

    If you are determined, I would tell you to
    1. Never work for free. Cars are a luxury not a necessity. Don't ever feel bad, or apologize for what you charge.

    2. Charge time & materials. Don't do flat pricing. What you charge depends on your skill and market conditions.

    3. Don't use a one customers deposit to finance any other builds.
    4. Create a Real business plan. Your time doing this will pay off.

    5. You will never be able to build a project for yourself. You may find you just want a break from cars in your free time.

    This isn't blind advice. I work on hot rods every day.

    If you decide to open a business, I hope it goes well.
  11. ElSupremo
    Joined: Sep 19, 2007
    Posts: 33


    CYA should always be Step 1. You don't want to put everything you have at risk over something you want. Even if you have nothing now, you'll always have future earnings. Protect them.

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  12. joe--h
    Joined: May 15, 2012
    Posts: 47

    from New Mexico

    Lot of good advice here, but I didn't see too much about the PAPERS. A shoe box full of receipts is not a bookeeping system, you need to keep track of every penny that comes & goes. The government wants to know & "I don't know" ain't the answer.
    The licenses cost money. My experience is in California so may be different for you, but a fire permit is not a permit for a BBQ, it's an invitation for the local fire dept to come to your shop twice a year and fuck with you. You won't believe what they can come up with. Ever heard of an air compressor permit? Costs money. I had a Hazardous Waste Permit. If you ever get the chance to choose between "Do you want a dose of herpes, or a Hazardous Waste Permit?" go for the herpes. You'll be way ahead in the long run.
    The only license that's relatively painless is the business license, they only want your money and won't come around to fuck with you. Just pay them every year and you're good.
    Papers papers papers, that's a business.
    And then your buds that think they'll drop by for a beer after work (their work, that 9 to 5 gig) while you're still trying to get something done. Hard to deal with that one, and most of them don't even bring the beer.
    35 years in the car biz in CA, don't miss it at all. Joe H

    PS; from the hard way..........they can stop payment on a Cashier's check
  13. Don's Hot Rods
    Joined: Oct 7, 2005
    Posts: 8,319

    Don's Hot Rods
    from florida

    One of the best pieces of advice I ever heard relating to doing work for customers came from Jimmy Shine on that show Littleman won on. He said "you have to decide what parts need to be a 10 and what parts need to be a 2." That is absolutely the truth.

    I know that when we hot rodders build our own cars we spend hours and hours making each part as perfect as possible, both structurally and cosmetically.......we love showing off those little details. But when you ar doing work for someone else how can you charge them 8 hours worth of labor to make one simple little bracket ? Answer is, you can't, so you have to decide what parts you are going to make perfect and what parts are still good, but not works of art.

    A good example would be a bracket to hold the battery in place. It should be strong but it doesn't have to be the best battery mount ever made. No customer is going to pay you the kind of money for a simple battery mount that you would need to charge for it.

    It all comes down to being realistic and reasonable about the work you perform. You want it to be really good but you also need to balance that with what the customer is willing to lay out for it. I had a guy who was admiring my 27 one day at a gas station say " I feel like bringing over $10,000.00 and having you build me one of these." I told him "Bring twice that and we will order the parts to get started !" Everyone wants a cool car but few people are willing to pay what it takes to get one done.

  14. gary terhaar
    Joined: Jul 23, 2007
    Posts: 655

    gary terhaar
    from oakdale ny

    Been on my own for 5 1/2 years and doing well. Started quickly when they closed the car dealer I was at for 20 years. Saw it comming and prepared for the change.
    What I have learned is diversifie you will have welders, than find people who need small repairs often and work a deal.
    I have a outdoor furniture company who needs aluminum welding done,in the summer it gets hectic but for a few hours it pays the electric for a two month period.
    Small jobs are your money makers and I am sure others will agree.
    Got a lathe and a mill,someone always needs stuff made. Do good work,give a little more than expected and they will come.
    Word of mouth is key,especially in today's day and age.when things get tight people want to know they are taking something to someone they or someone they know are comfortable with.
    Get a book keeper,the best thing I did. They are always looking for work,ask someone you know in business for a reference. Even for one day and two hours a week,just get one.
    Lots of stuff to know and you have a leg up owning your own for six years,so good luck I wish you the best.
  15. spiders web
    Joined: Jan 16, 2011
    Posts: 384

    spiders web

    First thing you need to do is buy several pairs of pants with a minimum of 8 pockets per pair. Then earn some money and move it from pocket to pocket really fast so the f@#$-$^ government can't put their hand in the right pocket to get it, but remember you have to keep moving it while you try to make more. Changing pants several times a day also helps. Then if your going to have employees you should run as fast as you can at a concrete wall and just before you get there put your head down as you hit it. You will undoubtedly fall to your knees but if you can get back up, do it again. Continue until you are unconscious, then your employee will come take the money from your pocket before the government does, but remember that just because now you don't have the money anymore you will still have to pay taxes on it. That pretty much sums up the joys of owning your own business. Good luck you entrepreneur. Oh by the way, that's a french word that translates "YOUR FUCKED!"
  16. trollst
    Joined: Jan 27, 2012
    Posts: 1,755


    Biggest thing not mentioned here....owning a hot rod shop isn't for everybody, it wasn't for me. It aint fun working on others cars, its a job, I went back to the hobby before I was ready to give it all up. I hardly drove my own stuff, just wanted to get away from it when I could. Good luck.
  17. If you want to make a small fortune in the rod shop business, start with a large fortune!
  18. old round fart
    Joined: Jun 9, 2008
    Posts: 134

    old round fart
    from Norman Ok.

    Put a sign on the wall that says:

    PICK TWO!!
  19. gimpyshotrods
    Joined: May 20, 2009
    Posts: 17,366


    Form an LLC.
    Do not have a business partner.
    Get insurance.
    Obtain every single certification, license, endorsement, permit, that is applicable.
    Open two business accounts at the bank, one for daily operations, one for long-term business function.
    Keep well-detailed, highly-accurate records.
    Get everything in writing.
    Put everything in writing.
    Have a lawyer draw you up a liability waver for what you build. Have everyone you do work for sign it, with a witness signature.
    As soon as you start making money, hire a part-time accountant.
    Establish a salary for yourself. Pay yourself only that.
    Pay your taxes on time.
    Abide by local, state, and Federal law.
    Be honest.
    Do excellent work.
    Establish your rates, and post them.
    Don't negotiate your rates. Those who cannot pay them, you don't need as customers.

    I suspect that most of the "horror stories" stem from ignorance, or an attitude problem. Running for a solid decade, IN CALIFORNIA, I never had any trouble. My local fire marshal loved me. He and the boys would come over and hang out at the shop, whenever they were in the neighborhood. The local building inspector came exactly once. His first words: "Wow, nice, you really made my job easy."
    Last edited: Aug 28, 2013
  20. gimpyshotrods
    Joined: May 20, 2009
    Posts: 17,366


    Never, EVER quote a price on a service. A quote is a final price (plus tax).
    Establish with your customers that an estimate is best though of as a floor, in other words, the job will cost no-less-than that.
    Never work-trade.
    Never EVER work trade for your personal benefit, with the labor of your employees.
    Have set hours.
    Be on-time.
    It is always your job to open the shop every single day, and close the shop every single day.
    Never use company money like it s your own money.
    Know your limits.
    If something is beyond your capability, hire somebody who can do it, and, if they are good at it, pay them like you want them to keep doing that job for as long as you need them.
    Last edited: Aug 29, 2013
  21. bad440
    Joined: May 30, 2010
    Posts: 12


  22. CNC-Dude
    Joined: Nov 23, 2007
    Posts: 887


    I've seen it mentioned here several times in the past "If you want to F*$# up your hobby....turn it into a job". If you could keep it a side interest or still a weekend venture, don't quit your day job and enjoy it more.
    Joined: Aug 28, 2013
    Posts: 10

    from Dallas, Tx

    Lol! I needed a good laugh ha!
    Joined: Jun 3, 2005
    Posts: 8,048


    What "Don's" said about 10s and 2s, right on. My gig was restoration. Ever try to explain to a customer why it took 1 1/2hrs to get the door and it's guts apart, but it took 4 1/2hrs to put back together? Be ready for product failure. 90% of the shit sold today? Well "shit" is quite charitable as a description. Part of running a shop as a business is your projections. They're important to know where you're going and how you're doing. I've always considered the best case scenario and deducted 25% from that bottom line figure. By the day, week, month, quarter, year, remove that figure and you'll be right on the money. Why? Your best worker broke up with his wife/GF, your compressor broke and parts are a week away, some epoxy didn't harden or paint didn't dry. You spent an extra 1/2hr on that fuckin stud that wouldn't come out, or the part you bought from Joe Shitdick turned out to be worse than what you had to begin with. Shop life looks fun on TV. It can be too but the reality is that it's work. Work gets old, humans need a challenge, being alone gets boring. All of it will take a toll. Deadlines are sort of stupid too. I won't raise a right hand to one. What if I get hurt? Get sick? Lose a family member? "Lack of planning your part does not constitute and emergency on my part." In my world it's done when it's done, not before, not 1/2 way to make a fuckin show, done. I allow 5-7 weeks to do a woodgrain job. It's art more than simple tech. I have a friend and colleague in the restoration biz who needed an instrument panel in 2 weeks. I did it for him to challenge myself. Came out as one of my best, but it was just the 1 pc as the rest was wood. And that last little story was to remind you that flexibility can also be success. To sway a bit, ok, to bend over, no thanks.
  25. oj
    Joined: Jul 27, 2008
    Posts: 6,247


    Reread what 'Gimp' said.
  26. Big_John
    Joined: Mar 28, 2006
    Posts: 327

    from Upstate NY

    Some great advice on this thread!

    I've been in business 13 years now. Not a repair shop, but a lot of the same principals apply.

    Partnerships can work out if your partners compliment each other and bring skills to the table that each other don't have. Example: I have a partner that is an accountant. I can't do the books to save my ass.... and he can't do anything technical that I do. It works well. Don't expect to be friends at the end of the day though...

    Employees.... value good ones, just tell them upfront what you want which is basically 40 hours work for 40 hours pay. Don't do any big favors for them (like lend them money), it generally will bite you in the ass hard. Remember that they are not your friends.... they are your employees.
  27. Keep your overhead low. A fancy shop and high dollar equipment everywhere is not necessarily a sign of success.


    You'll be better off in the long run turning down work you can't get to or can't complete on time and budget, and sticking to the jobs you can handle and giving someone a good job for a fair price.

    People who get rich overnight tend to go broke overnight as well.
  28. A digital camera is your friend. We had a long distance customer that I kept up to speed with dozens of photos a week. His car was the biggest basketcase ever and the pics showed him how much work each step was. There was bondo over an inch thick that looked like sedimentary rock.
  29. Mike51Merc
    Joined: Dec 5, 2008
    Posts: 3,832


    I never owned an auto shop, but I do counsel various small businesses.

    Is there a strong market for Hot Rods in your area? If not, you may have to take on general repairs which isn't necessarily a bad thing. Insurance jobs are bread-and-butter work.

    Remember Hot Rods are customers' toys. The minute things get tough, the toys are the first to go.

    Customer's desires and expectations will always initially outweigh their ability/willingness to pay. Manage their expectations accordingly to ensure they are able & willing to pay.

    Never let the customer get financially ahead of you. Collect progress payments in advance/never in arrears, except for final (which shouldn't exceed 10% of job).

    Never rob Peter to pay Paul. Don't use today's job money to pay for yesterdays jobs. If you do, you'll fall into a trap that's usually impossible to escape. Use today's job money to pay for tomorrow's.

    Your reputation is everything.

    Under-promise and over-deliver. Never the opposite.

    Always stay in legal compliance and be diligent about it. A toxic cleanup or a zoning violation can shut you down.

    Document, document, document. Get all deals in detailed writing, including your B-to-B leases, provider contracts, customer contracts, etc.. Take progress photos before, during, and final. In today's digital world, it's easy to word process contracts and even easier to shoot and save photos.

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