Anyone here a millionaire?

[Jay Huh]

Anyone here a millionaire? I'm  not talking about assets, I mean $1 million in the bank.

This industry is good to make a living but not to get rich. Wondering if you guys think the same or I'm wrong and people are making a killing.

My goal is to become a mlillionaire in 5 years but I don't think it'll happen through my automotive business

[mmotley]

I would think if you are hitting the proper margins (while paying yourself an appropriate salary), doing enough in sales, and not living an extraordinary life style, becoming a millionaire (in the bank) is not impossible.

Based on what I've seen you post, I would bet that you are pouring a lot of your money back into your business to grow. That's fine, but it will certainly hinder how soon you can have that much money saved up.

A saying comes to mind “If you will live like no one else, later you can live like no one else.” - Dave Ramsey. He is talking about watching your personal expenses and habits right now and saving, so later on in life you will have enough saved up to live life comfortably.

If you can forgo the 5 year deadline, compounding interest will definitely get you there. Plenty of good books out there that touch on this topic (again, Dave Ramsey does a great job at explaining it).

If you're not hitting the proper margins and sales goals in your auto repair shop, I would think it would be a bad idea to go getting into other business types. Personally, from what I've read, I'd say having 3 months of operating expenses saved up would be the best starting place, then look at investing in the market. I'm nowhere close to what you would call a financial advisor, but I have read a few books on the topic.

To answer your question though, I'm not a millionaire. And I don't think it happens overnight for most people either. I think it's probably a slow, methodical, well thought out plan that you have to continue working at. 

Edit* Thought I would add this one thing. When you have a goal you want to achieve, I've found it's easy to work backwards. IE, Your goal is 1 million dollars saved up in 5 years. That means you will need to be accruing $200,000 each year.  Or, $16,667 a month. With that, you can figure out ,based on your margins, how much you need to do in sales to be saving that much a month. You can also calculate daily sales requirements, how many techs you're going to need to do those sales, etc, etc. 

Edited March 8, 2017 by mmotley

[HarrytheCarGeek]

No one here will tell you they are sitting 1mm cash account, that's like saying look at me and sue me. mmotley is correct:

Quote

I think it's probably a slow, methodical, well thought out plan that you have to continue working at. 

 

[xrac]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[mspecperformance]

In the grand scheme of things a million dollars is relatively easy to obtain. Anyone who is trying to attain wealth is not going to leave cash sitting for long. They will be investing that money to allow it to work for them in various forms of investing. Networth is a better measurement of wealth vs cash sitting in the bank. 

Shop owners can probably become millionaires in 5 years without having multi locations. If you have a shop grossing 2 mil at even a 10% net you will be a millionaire in 5 years. 

Edited March 9, 2017 by mspecperformance

[Wheelingauto]

Yeah, but if you have a shop grossing 2 mil at 20% net you'll get there a lot quicker

[xrac]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[mspecperformance]

46 minutes ago, Wheelingauto said:

Yeah, but if you have a shop grossing 2 mil at 20% net you'll get there a lot quicker

I used 10% net as an example as that might be a more attainable number for Jay... then again 2 mil is a pretty daunting number as well haha

[HarrytheCarGeek]

7 minutes ago, xrac said:

If you own the property in a valuable retail area like we do it is easier. 

And that is the single key in becoming wealthy in this line of business, control the property, set an objective net return; find a hungry, reliable candidate with integrity that want to own his own business, train him and help him achieve his dream, and there you have another egg for your retirement nest.

[mspecperformance]

11 minutes ago, xrac said:

If you own the property in a valuable retail area like we do it is easier. 

Correct. If you are measuring your networth which includes equity in real estate then absolutely. IMO if you are a smart business person you will make profits in your auto business and funnel them into other investments which can include other businesses, more locations, real estate, market investments, life insurance, etc. 

[alfredauto]

the millionaire next door is a good read. The guys you see in new sports cars with rolexes usually are credit rich but are probably worth very little. I know guys with multi million dollar dealerships who put water in the ketchup bottle to get the last bit out. 

[autorepairuniversity]

This is interesting stuff. I'm new to this group (pretty excited to have found it). I've owned an auto repair shop for almost 6 years. I have 5 bays. This past year we grossed approx 500k, however barely made a profit this year when all said and done. Kind of frustrating because were ALWAYS busy and working our butts off. I am considering expanding to get a few more bays. However, there is also another great location (Building) for sale near me. I have thought about adding another location, then wonder if I've lost my mind!!!. I'm pretty young, so I don't mind upping the ante so to speak, if it would be a good long term move. Any advise would be greatly appreciated.

Sent from my SM-G930P using Tapatalk
 

[Jay Huh]

55 minutes ago, alfredauto said:

the millionaire next door is a good read. The guys you see in new sports cars with rolexes usually are credit rich but are probably worth very little. I know guys with multi million dollar dealerships who put water in the ketchup bottle to get the last bit out. 

Yes! THis is so true! I read that Sam Walton drove a old pick up truck at the time of being name the richest man in the US

[Jay Huh]

7 minutes ago, autorepairuniversity said:

This is interesting stuff. I'm new to this group (pretty exited to have found it). Ive owned an auto repair shop for almost 6 years. I have 5 bays. This past year we grossed approx 500k, however barely made a profit this year when all said and done. Kind of frustrating because were ALWAYS buisy and working our butts off. I am considering expanding to get a few more bays. However, there is also another great location (Building) for sale near me. I have thought about adding another location, then wonder if ive lost my mind!!!. Im pretty young, so I don't mind upping the ante so to speak, if it would be a good long term move. Any advise would be greatly appreciated.

Sent from my SM-G930P using Tapatalk
 

Hey! Welcome to the forums. I am pretty new myself but I have grown considerably since joining and getting help from these seasoned professionals.

I just opened my second location and I thought I was nuts as well- been in business for 2 years. In the works of opening a third, suppose to hear back from the landlord tomorrow. Risky but you only live once. Hope all works out! I'd say go for it

[Wheelingauto]

11 hours ago, autorepairuniversity said:

 because were ALWAYS busy and working our butts off. I am considering expanding to get a few more bays.
Sent from my SM-G930P using Tapatalk
 

Just like in fixing a car you need to analyze the numbers to understand the underlying cause of this. The old AAA business model of if your not making money you need to work harder is not the answer. Adding bays is not an automatic fix....

[xrac]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[AndersonAuto]

19 hours ago, autorepairuniversity said:

This is interesting stuff. I'm new to this group (pretty excited to have found it). I've owned an auto repair shop for almost 6 years. I have 5 bays. This past year we grossed approx 500k, however barely made a profit this year when all said and done. Kind of frustrating because were ALWAYS busy and working our butts off. I am considering expanding to get a few more bays. However, there is also another great location (Building) for sale near me. I have thought about adding another location, then wonder if I've lost my mind!!!. I'm pretty young, so I don't mind upping the ante so to speak, if it would be a good long term move. Any advise would be greatly appreciated.

Sent from my SM-G930P using Tapatalk
 

Get some training that covers both the sales side and the expense side. Maximize sales, minimize expenses. I belong to a 20 group and it's been great. I would caution you about expanding until you've figured out how to be profitable in your current situation. There's no reason to go from being a very busy but unprofitable 5 bay shop to being a very busy but unprofitable 10 bay shop, or worse, 2 unprofitable shops.

Funny story about being unprofitable. For many years I was running by the skin of my teeth. My general manager went to training a little more than a week ago on how to read your financials in an automotive business. The trainer included some samples of P&L and balance sheets in the training materials. He recognized the balance sheet as one of mine from back in 2013. The trainer told the class that the shop in the example was probably not losing money, but was dangerously close to getting into trouble due to lack of cash. He was right of course. Since then I've gone from barely scraping by month to month to having 250K in my checking account and 100K in an investment account, all due to knowing what benchmarks I need to hit not only on the income side, but on the expense side.

[Wheelingauto]

39 minutes ago, AndersonAuto said:

Get some training that covers both the sales side and the expense side. Maximize sales, minimize expenses. I belong to a 20 group and it's been great. I would caution you about expanding until you've figured out how to be profitable in your current situation. There's no reason to go from being a very busy but unprofitable 5 bay shop to being a very busy but unprofitable 10 bay shop, or worse, 2 unprofitable shops.

Funny story about being unprofitable. For many years I was running by the skin of my teeth. My general manager went to training a little more than a week ago on how to read your financials in an automotive business. The trainer included some samples of P&L and balance sheets in the training materials. He recognized the balance sheet as one of mine from back in 2013. The trainer told the class that the shop in the example was probably not losing money, but was dangerously close to getting into trouble due to lack of cash. He was right of course. Since then I've gone from barely scraping by month to month to having 250K in my checking account and 100K in an investment account, all due to knowing what benchmarks I need to hit not only on the income side, but on the expense side.

Best advice I've seen and I completely agree.

[autorepairuniversity]

Great advice, its so nice to be able to talk to other shop owners, other than your neighbors (which are competion). Where I struggle, is that I know I could find more ways to charge more per job. But in the end it either feels like im charging a fair rate, or im charging too much. Example, if I charge $200 for a brake job, I feel like its a fair price. Say I were to mark up parts more and add more shop supplies, now Im charging $250 for the same job. I feel like that would be considered too high for my particular city / area. I can't think of any practical ways too save much more $. Any more advice. Again thank you!

Sent from my SM-G930P using Tapatalk

[HarrytheCarGeek]

7 minutes ago, autorepairuniversity said:

Great advice, its so nice to be able to talk to other shop owners, other than your neighbors (which are competion). Where I struggle, is that I know I could find more ways to charge more per job. But in the end it either feels like im charging a fair rate, or im charging too much. Example, if I charge $200 for a brake job, I feel like its a fair price. Say I were to mark up parts more and add more shop supplies, now Im charging $250 for the same job. I feel like that would be considered too high for my particular city / area. I can't think of any practical ways too save much more $. Any more advice. Again thank you!

Sent from my SM-G930P using Tapatalk
 

The cure to your problem is to visit other shops and size up their operations. I have found some really crappy shops in the dumps that were charging premium prices, it was there that one of their customers told me that "it is expensive being poor". Found that yes, indeed, the poor pay much higher prices.

Edited March 14, 2017 by HarrytheCarGeek
a word, spelling fat thumbs

[AndersonAuto]

14 hours ago, autorepairuniversity said:

Great advice, its so nice to be able to talk to other shop owners, other than your neighbors (which are competion). Where I struggle, is that I know I could find more ways to charge more per job. But in the end it either feels like im charging a fair rate, or im charging too much. Example, if I charge $200 for a brake job, I feel like its a fair price. Say I were to mark up parts more and add more shop supplies, now Im charging $250 for the same job. I feel like that would be considered too high for my particular city / area. I can't think of any practical ways too save much more $. Any more advice. Again thank you!

Sent from my SM-G930P using Tapatalk
 

Problem no. 1 is that you're managing off your feelings.

What's your gross profit on parts? GP on labor? What's your break even? What's your car count? You're inspecting every car aren't you? How many jobs are your techs finding per RO? What's your average HPRO? What's your rent factor?

What's the benchmark you should be aiming for on all of these numbers and many more?

If you're managing by your feelings, what happens when you have 2 shops? Or 3? How do you manage those shops if you're not going to be present in each shop every day? I could go on and on, but the point is that if you don't have a good handle on your numbers it will be very difficult to be a profitable shop.

I looked at your demographics, and your customers are not wealthy, but that doesn't do very much to change the cost of auto repair. It is what it is. If you're feeling uncomfortable about what you're charging, run the numbers and find out what you should be charging. The numbers don't have feelings.
 

[xrac]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[autorepairuniversity]

I totally agree. Its easy to get caught up in the day to day hustle and not look at the big picture. Sounds like I should spend some time examining the numbers, and possibly raise my prices a bit... I honestly feel like I have more work than I can handle most of the time. Thanks for the advice. I'll put some time / effort into this. Also probably have some more questions along the way. Thanks guys!

Sent from my SM-G930P using Tapatalk