Thinking of opening a repair shop

[bluelimos]

Hello to all members,

I came across this forum, and I was happy to see a good supporting community here. I am a Mechanical Engineer, own a limousine business for about 10 years with a fleet of 8-10 vehicles here in Edison NJ. I take my vehicles to Newark NJ, to get it fixed at a commercial repair shop that specializes in Lincoln repairs. Our repair bill is about 25-30k per year.

 

I can almost do most repairs my self, but not having the tools, lift, and the time, I give all my work to this commercial repair shop. I can do brakes, rotors, all to do with radiators, catylic converters, (brake-coolant-Tranny-engine-differential) all liquid flush, belt change, ac repairs, and many more. Just keeping up my 10 cars as 100% perfectly work horse for 10 years, I have learnt a lot and now I am burning too much time and money.

 

In my area, there is a huge Indian and Chinese community and there are a lot of Indians who own a repair shop but not a single Chinese owned repair shop. I am kind of second generation Indian, and I see all the Indian repair shop brutally ripping off their own country men, senior citizens and lot more. I would even call them terrorist at repair shop, they are that bad.

 

Since I have my own work to manage, I am kind of leaning to open my own shop, like 2 bay shop. This will save me a lot of time and I will get things done my way, which will also save me more time and money. I talked to a lot of friends and to get numbers, I have a good 250 cars committed to bring me their work, some are retail, some are commercial vehicles. Once I open, I know I can get that number to 600 cars within 3-4 months. I tend to have good friends who have large organizations.

 

Now getting to reality.... I can design a differential but can't repair it, that's two different things...I don't want to work on cars personally, I am good at presentation, explaining and convincing clients and more as a manager. I will have to hire technicians and labors to get the work done. Besides that I will buy bays, wheel balancing and changing equipment and many other things. I want to try this for 2 years to see how it works out and I have spared 100k to try this. Rent goes around 2500-2800 for 2 bays around my area... So I assume the rent, equipment, insurance and some small things will suck up my spared fund for this project. For the technician, I will have to earn or brake even to another 60 per year...

 

I am a very honest and reliable business person, I wouldn't cheat just to make profits like many other shops do. I rather have a good relations with my clients that will go for longer term. I see the community here is open to such business that I plan to establish. My limousine business is profitable, but I am getting tired of it as it is a 7 days/14-16 hour work. I would love to have a 8am-7pm 5 days per week for my remaining life

 

Should I risk this plan, should I go for it or wait....I would love to have your opinion on this...

 

Thanks for reading this long post, brain storming, and possible help.
~Dave.

 

 

[mspecperformance]

Hi Dave,

 

I wouldn't be so quick to call the repair shops "rip offs." You may want to do some research in what you would actually have to charge for your services to keep your shop open. What these shops are probably not providing is enough "value" for the price of their services. Either that or you do not have enough perceived value for what they are providing you.

 

I would be very weary on starting an auto repair business based on "everyone else is a rip off." This will lead you to charge less than your competitors because you think this will give you the market share you want where in fact you should be charging what it cost for you to do business.

[bluelimos]

I know one has to charge around $80-90/hour to be profitable, I am not against making any profit. A good service will cost higher and I am all for quality service as I myself provide A1 quality service in my limousine operation. What I am against is, taking a full advantage of senior citizens, veterans, and technically unaware people.

 

For example :: $450 for brake repair ( they would claim they changed brakes, calipers, and hoses where they changed only brakes )

$780 for radiator flush that was not needed

$600 for radiator fan assembly (some times only a fuse is needed )

$650 for ac repair ( They would claim they changed compressor, where they put 2 cans of Freon in it )

$350 for trans oil change.

 

You will be surprised the horror that I have seen. Generally, within the same ethnicity one would assume some trust is there; its usually the opposite here.

 

Many of my family members have paid this amount several times, back then I was not aware of the cost and parts. Many people are still paying this price.

[mspecperformance]

I know one has to charge around $80-90/hour to be profitable, I am not against making any profit. A good service will cost higher and I am all for quality service as I myself provide A1 quality service in my limousine operation. What I am against is, taking a full advantage of senior citizens, veterans, and technically unaware people.

 

For example :: $450 for brake repair ( they would claim they changed brakes, calipers, and hoses where they changed only brakes )

$780 for radiator flush that was not needed

$600 for radiator fan assembly (some times only a fuse is needed )

$650 for ac repair ( They would claim they changed compressor, where they put 2 cans of Freon in it )

$350 for trans oil change.

 

You will be surprised the horror that I have seen. Generally, within the same ethnicity one would assume some trust is there; its usually the opposite here.

 

Many of my family members have paid this amount several times, back then I was not aware of the cost and parts. Many people are still paying this price.

 

What you have listed out is flat out thievery. Do you know this for absolute truth?

 

If a shop sells a brake job (pads rotors sensor and flush) for $5000 and the customer agrees I see nothing wrong with that as long as all the work that was listed out was actually performed. If they sell a brake job for $50 and don't perform all the services that were promised then that would be "ripping people off".

[bluelimos]

Yes, I know these owners. In 2002, this auto repair shop did a brake pad job and charged my father $500, my uncle bargained with him to help my father and showed old receipts stating he got the job done for $350, so owner reduced it to $400. In 2003, my father had a Subaru, and he had to tow it to this shop called Quality auto repair in Iselin NJ. They gave him an estimate of $1800 to fix some gears, convinced my father to sell it to him and so he did. The owner/manager still is driving that car. Every time I see him driving that car, I feel the pain realizing what happened; especially that time when my father didn't have a job. These folks have now become a chain, owning 4-5 shops within 10 years from one shop.

 

Anyway, they will do what crooks do, I will offer a genuine service based on what I find it should be right. ON top of that, I have some client base and my own cars to repair also.

~Dave

[mspecperformance]

Yes, I know these owners. In 2002, this auto repair shop did a brake pad job and charged my father $500, my uncle bargained with him to help my father and showed old receipts stating he got the job done for $350, so owner reduced it to $400. In 2003, my father had a Subaru, and he had to tow it to this shop called Quality auto repair in Iselin NJ. They gave him an estimate of $1800 to fix some gears, convinced my father to sell it to him and so he did. The owner/manager still is driving that car. Every time I see him driving that car, I feel the pain realizing what happened; especially that time when my father didn't have a job. These folks have now become a chain, owning 4-5 shops within 10 years from one shop.

 

Anyway, they will do what crooks do, I will offer a genuine service based on what I find it should be right. ON top of that, I have some client base and my own cars to repair also.

~Dave

 

 

 

 

Dave,

 

No offense at all but I don't believe that the examples you have given to show that these shops are "crooks."

 

I am a little confused as to what you mean by your example. Did your father authorize a $500 brake job and then your uncle negotiated after the fact? You could look at it the opposite manner and say the shop owner decided to make a customer happy and give you a reduced price. Whatever the job cost and authorized at is completely fair as long as the customer agrees to the charges and the work is done as stated. All estimates will vary from shop to shop, your uncle's argument in my honest opinion is invalid. For the record I don't believe in negotiating prices and absolutely never after a job has been authorized.

 

In regards to second example, do you have proof that the job did require the repairs that your father was quoted for? If it did then I don't see how the shop owner did anything wrong unless you can prove that your father was coerced into selling his car.

 

The only reason why I am playing devil's advocate is that if you are trying to open up a business under a consumer's perspective that does not understand service will vary in price and quality from one shop to another then you will most definitely not understand how to operate a repair shop as a business. I had made the same mistake a long time ago and everything you are saying is almost exactly the same experience I had before I opened up my business. It took me a lot of years to see the light.

Edited May 25, 2015 by mspecperformance

[Joe Marconi]

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[bluelimos]

Yes, such is the nature of the forum, it goes side ways easily. Well, I know two owners here, they should give full estimates, but they don't, and then tag a lot of labor hours. I had one mechanic that worked at their shop, and he quit, he was hired at my repair shop and the reason he quit is because the owners were dishonest to people and he couldn't take it. My shop owner is very honest, he has saved my skin so many times and I have increased his business a lot by personal referrals. Bottom line is, if I stay honest I have a potential anyway, if I am honest where there are few crooks, I have even better chance.

 

Getting back to my point, is 100k enough budget to start and survive for 2-3 years to try out? I have a dedicated 250 cars as of now that will come to my shop if opened, and easily another 500-600 cars in a year time. On top of that our Limousine industry customers and affiliates will also come, but not counting on them too quickly. Is such volume enough to generate revenue? Once I open, I know for sure that for a few months I will be advertising and putting fliers etc... if not just repairing my own vehicles...
~Dave.

Edited May 25, 2015 by bluelimos

[Joe Marconi]

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[bluelimos]

To open a repair shop in NJ, not much is required, the procedure is easy. I run the limousine business with 8 employees on the side which is going great so far. Management, employment, advertising, accounting, tax matters, permits, insurance all that I am good at. My questions are more on sales side and more less for the X factor that brings in a lot of expenses. And not knowing how the revenues are coming and what the profit levels are, I am a bit concerned. Bank has already approved a loan up-to 100k so money is not a big issue for the moment either...

 

Thank you for your help

~Dave.

[John Pearson]

If you already have all of your equipment and your ready to do work and the 100k is for operating expenses your good to go...

 

here is a quick Idea of start up cost.

 

scan tool snap on modis 6k

 

1 twin post 6k installed

 

1 drive on with alignment set up 50k

 

special tools. 10k

 

ac machine 4500

 

trans flush machine 4500

 

coolant flush machine 2500

 

Tire machine and balancer 18k

 

And the list goes on.

[bluelimos]

Thank you for your in put John. I don't have any equipment yet. I have a good senior master technician that likes to work for me when I open the shop; I have known him for 3 years and he has his tools as well. I am not sure how to set up the pay with him. He is very reliable, honest, and always early, this makes me think I want to make him a partner, but I stay away with legal issues on partnership. Should I give him salary base or commission base? Which turns out to be the best for both in your experience ?

.

As far as alignment set up goes, I am going to skip that for first 2-3 years, just too much investment on start up, may be keep an eye for a used one whenever that happens.. Everything else on your list I am fine with it.

.

Tire balance machine, I am not going to compromise on that for sure; I hate the slightest imbalance on tires and cheap balancer just don't do the job.

I like Hunter's Road Force GSP9700, I also like Bosch WBE 4510.

[andresauto]

A true engineer is a creator that turns concepts into realities. In engineering you must consider fit, function, strengths, weak points, tenacity, points of reinforcement, duty cycle, failure rates, etc.. Back when, when I trained at Grumman amongst some of the best engineers in the world we were taught on worst case scenarios highest possible failure rates, previous mistakes and misfortunes as well as successful actions and procedures, standard operating basis, policies, etc..

 

Now, I'm writing this to be informative and NOT as an attack!

 

First, it is just as easy to be successful in a business as it is a to fail at business. It's the actions that create success and the standard operating procedures you DO on a daily basis that will dictate the direction of your business. It is the intelligence you implement in the business that matters more than the car count that will create perpetual success. AS a mechanical engineer you should and must understand the laws of mechanical function. Opening and running a business is like buying and driving a car, you have to know what car to buy(size you need and what you can afford), maintenance costs (operating costs), when to start the car and shut it off (operating hours) because sitting there idly just wastes time and money, what kind of fuel to use(promotion and marketing to fuel your business), hitting the accelerator(creating SALES) income will get you where you want to be in life at a faster or slower rate, keeping it tuned up (right people for the job(parts for the car), when to apply the brakes(stopping the ineffective actions , employees, and bad habits of the business), parking the car (holidays), detailing the car(addressing imperfections), selling the car at right time (either to upgrade or knowing when to cut your losses). There are mechanical points inbetween but I think you get the idea.

 

Perseverance and resilience will be the ultimate test through bad times. Ethics level will be the make or break factor towards happiness and expansion.

 

Here's the reality check - Opening your own repair shop WILL NOT SAVE YOU ANY TIME since it will be another entity that requires YOUR SUPPORT. It will do the exact opposite. If your business purpose is to SAVE TIME AND MONEY you need to re-evaluate. Ownership and MANAGEMENT is not a time saving activity, it is another responsibility for continuous action. Management being defined as directing the actions and functions of an activity and directing people toward a specific target for accomplishment of tasks and goals.

 

Add in your new rent, your insurances, your labor costs, income taxes, property taxes, trash bill, workers comp., equipment maintenance, new tools and equipment, repair software, billing software, training materials, office supplies, promotion and marketing, accountant costs and responsibilities on this new venture. Starting up a shop to save time and money sounds ludicrous.The rent alone will cost you $30,000. a year. Now if you said that your vehicle maintenance costs are $100,000. dollars a year then maybe a consideration can be made for that purpose after doing the math. What sounds really crazy to me would be telling your customers that you don't have time to work on their cars because you're too busy working on your own fleet in a 2 bay shop and having the fixed monthly operating costs. That would be like telling your limo customers you can't drive them to the airport because your to busy driving your family around in the limousines. The limo company and the auto repair shop are two different entities and the purpose of a business is to create income.

I haven't met anyone who became wealthy clipping coupons and/or looking for the best deal. But I am blessed to to know those wealthy individuals who create alot of money every day by creating valuable products and experiences for their customers. I can't remember anyone one of them whining or complaining that they have been ripped off by crooks, instead they focus on creating more wealth daily.

 

In my opinion if you want to pursue this venture and you want to make money you will need at least a six bay shop. Four fully functional bays for your customer base and two bays for your limousine work. Those two bays will cost you less money as a six bay shop than as a two bay shop and you can still produce income out of four bays. Also depending where your limousines are currently stored, I would look to consolidate by keeping everything at one location.

 

 

 

 

 

[davine4real]

It's possible that you should rethink the "rip off" argument. Open your business because it will satisfy your desire to do so, not because of your theory of "rip off" artists. Your examples: " brakes at $450". Do a brake job on Nissan Frontier at 3.2 hrs book time @$95/hr and buy 2 new rotors AND bearings and pads, all with GOOD QUALITY parts and sell it for under $450...lol. You're in the RED on your first job.

The radiator fan and fuse: most often if a fuse blows its because a circuit was overloaded. The fan fuse hence the replaced fan. The customer will Love you when you send them on their way with a $25 repair bill....but Will SUE YOU when their head gasket fails when car over heats because the FAN stopped working with your NEW FUSE. I'd definitely suggest staying focused on being the best owner you can be, not on who is ripping who. As for the $100k for 2 years....well it's definitely a great start. But if you think the shop will float "hook or crook" with just that then no it won't. But honestly you can Start with a lot less. Heck You can pay your first month rent and get a cheap lift and air compressor for under $6k. As to save time and money....lol no way! It will cost you that $35k yr in rent alone. Not to mention salaries, etc. Also, you mention that money isn't the issue because you have a loan longed up for 100k if youwant. Well that means money IS an issue if a loan is needed. $100k will cost you more than $100k to repay...unless the bank is handing out long-term INTEREST FREE loans. If so send me the info lol.

[Handson]

If you think that because you have your own shop your lino repairs will be "free" that is your biggest mistake there.

[bluelimos]

Andre, that is one amazing post. I almost re-opened my Engineering management books, very energizing. Our repairs are about 30k per year, and 95% repairs are preventive maintenance, rarely there is a total break down and repair on such... I need just one bay and about 15 hours per month. I know a lot of mechanics who only work on Lincoln town cars and I can call them on Sunday and get my work done. My own work wouldn't come in the way of generating revenues for sure. Now going from the idea of going from 2 bays to 6 bays is a struggle for me, I will have to process that and struggle in to it a little bit.

 

Davine, $350 is just for replacing the pads, nothing extra; NOT A THING EXTRA. In a small community, people don't go to court, and they have zero knowledge of mechanical issues, they just believes whatever the shop owner says and that is the problem. Anyways, I touched a sensitive point and may have offended by even using "rip-off", so accept my apology please...

 

I have 40-45k saved, and bank loan is additional. My rent for limousine business is costing $1200, but it is creating parking issues lately so if I get a garage with 12 -20 parking spaces, I will use up 4-5 for myself. At the moment half of my rented office is nothing but tools and parts, having a repair shop will organize my office better. I am finding the limousine business and a repair shop will kind of complement each other in terms of operation and sales.