Startup Funding

[ncsvoboda7]

Hi everyone,

 

As many of you know i am planning a complete tire and auto shop that i would like to start in a few years, i am currently looking into the financial section of my business plan.

 

I would like to know first of all if anyone has any advice for me when it comes to finances and funding the startup? Also if you have stories of what worked or didn't work that would be great!

 

Lastly I am looking for resources for funding the business startup when i am ready to start so how did you all fund your business startups? what resources can i use to fund the shop when i start it? What can I expect for a typical startup cost in general?

 

Thanks for your input!

[phynny]

Are you sure you want to do tires immediately? Tires are the worst when it comes to making money and we only do it as a service. This being said, if I were to start a new company I wouldn't do tires until I got everything else up and running making me money.

[mccannable]

I am in mid start up(soft open later this month and grand opening early feb) and have spend two years living very tightly to save for this. I have also taken out a small(18k) personal loan as emergency back up. I have no plans on touching that money unless things go bad quickly. There are government backed micro loans, under 25k, but are difficult to get to my understanding. I would get in touch with your local SBA office and talk to them.

[mmotley]

In my experience, take whatever rough ball-park figure you have in the beginning and double it. That's how mine went. Folks tend to overlook how much goes into starting a shop. Just the small, miscellaneous stuff (lug nuts, valve stem caps, drain plug gaskets, additional shelving and storage, etc.) can nickel and dime you to death.

 

A lot also depends on your business model. If your looking to open up shop in a high rent part of town, you're probably gonna need loans unless a family member has a few oil wells. If your opening up a one man shop in a poorer part of town, maybe not.

 

Also going to depend on how well you advertise when you open. If you do a soft open mccannable, you might just be breaking even the first few months (that might mean no personal income). If you do a massive mail out campaign (5000+ mail outs), radio ads, facebook and google ads, newspapers, and phone books a few weeks before you open... you will probably have the phone ringing off the hook and people showing up from day one... But all that advertising is going to cost money...

 

There are so many variables, it's tough to give advice without more detail from you.

 

I started off with funding from my Dad and personal savings. I got completely debt free and saved quite a bit before I jumped ship into self employment. It should be known that my Dad is nowhere near rich/wealthy, and I bought well over half of my shop equipment used on craigslist from other shops going out of business (how depressing that was a times). I've rented a crappy, non-insulated metal building, 40'X100'. It has 1 big bay door on the end, and a smaller bay door on the other end. I'm in the poorer part of town, and it sucks but workable. It has allowed me to open shop and learn by the seat of my pants, and not go broke doing it. Now that I've been open for 6 months, hired a part time employee, bought another lift, and learned how to advertise, I'm now talking with the bank about a loan to build my own shop in a nice part of town. Doing it this way allows me to go into the bank with numbers showing business increasing, along with other figures I've got since I opened.

 

By no means am I saying this way is the best, just giving you my story. Hope this helps some.

 

Edit: I also had no management experience, parts department experience, or service writer experience before, so I felt I would have had a tough time getting a loan with nothing but mechanical experience. Now that I know industry figures and averages, combined with reading some business management books/free online classes, I'm better situated to manage a shop and can bring that experience into the bank when it's time to get the loan.

Edited January 9, 2014 by mmotley

[ATLAuto]

I would get in touch with your local SBA office and talk to them.

 

Agreed. An SBA loan is the way to go for a startup. They will want to see:

- How have you lift the last few years? Answer, very frugally and wisely.

- How is your situation now? Answer, debt free.

- How are you going to pay back the loan? Answer, a great business plan and possibly a side job for awhile.

 

I found this list for our area. It showed the big banks in Atlanta giving loans. I'm sure one for Lincoln exists:

http://money.cnn.com/smallbusiness/best_places_launch/2009/loans/districts/Atlanta_GA.html

[ncsvoboda7]

Are you sure you want to do tires immediately? Tires are the worst when it comes to making money and we only do it as a service. This being said, if I were to start a new company I wouldn't do tires until I got everything else up and running making me money.

Well this is the thing, I initially had it in my business plan that we wouldn't start doing tires and alignment until we got going. The only reason I changed that to servicing them right off the bat is because I want to get my name out there right away and let people know that we do everything tires and mechanic work. What is your reasoning for not doing it that way?