Point well-taken, and thanks.
The one thing we DO know for sure - repeat customers are way more valuable in the long run than sticking it to one guy big time once. We won't have sales people, techs or mechanics around that feel otherwise. Word of mouth reputation is HUGE.
Hopefully that will work out for us.
Warehouse/Inventory is the BIGGEST problem you will face in the shop...
Bare shelf space costs you TWICE!
Once for the money you are loosing for what could be selling from that position,
And costing you for roof, taxes, heat, lights, ect.
Stocking something that doesn't sell is costing you FOUR TIMES...
All of the above, but you paid for stock in the fist place,
That money/shelf space could be used for something that DID move on top of the rent and other costs.
It's VERY easy to have $250K in a very small stock room or warehouse!
If you live someplace there is a delivering store or warehouse close you are a FOOL to waste shelf space on items you can have in an hour or two, delivered to your door!
On the other hand, there are things you MUST stock,
Oil, Filters, Ect.
There is just no way around it!
Keep an eye on the 'Consumables' also!,
Shop supplies will KILL your profit margin if they are wasted or walking out the door!
Buying disposable gloves cut WAY down on the 'hand washing' time, and all the expenses that goes with someone washing greasy hands 20 times a day...
Soap, solvents, water, heating, time loss, ect.
It protects the employees against chemicals and waste products that can present problems with long time exposure...
Saved a BUNCH on greasy finger prints on all the paperwork and manuals also!
I don't know how many $300 sets of manuals I've gone through because they weren't legible anymore!
Clock your techs in on a JOB... they get paid when they are producing BILLABLE RESULTS...
This puts them on Percentage instead of salary or hourly where there is no incentive to stay busy.
The easiest way I found was to staple a time card right to the service contract/work order.
The tech picks up his next job, clocks in, and does as much work as he can, then clocks out, and clocks back in on something else until his parts arrive, stuff gets done in machining, ect., then he can clock back in on the first job and you have an absloute record of how much time that tech and his production!
You will be AMAZED at what some techs will produce... and not look busy,
While others won't pay garage bay rent and be running around like a chicken without a head all day!
And if the tech that is producing more for himself, and the shop needs a raise... Well, you do the math!
Also lets you decide which should stay and are working out,
and which should seek employment with a dealership!
I think the best profit margin I had was industrial electronics...
Heavy equipment starters, alternators, batteries, wiring, cables, switches, ect.
To mines, construction companies, trucking companies, farm supply places...
Anywhere a nation wide warranty wasn't needed...
That stuff FLEW off the shelfs, had about a 110% markup, and made about a 45% profit margin!
Delivery to the heavy equipment places was a snap, and special orders were $$GRAVY$$!
Mines and other places want it RIGHT NOW, and aren't bashful about paying hefty premiums for expedited repair and delivery!
It's not GLAMOROUS like building racing engines was,
but it was a good, solid, steadily increasing income stream...
And I have to admit, now that my 'No Compete' contract has expired, I'm SERIOUSLY thinking about doing that again here!
Watch your pennies, but don't let small change get in the way of making real bucks!
Some guys sweat the small stuff to the point of insanity...
That's what DELEGATION
Your shop guy should be on the job for stopping waste and getting jobs IN- & Back out the door!
Your bookkeeper should be on top of the invoices, billing, and receipts...
ALWAYS SIGN YOUR OWN CHECKS!
ALWAYS BE THE PERSON TO PICK UP THE CANCELED CHECKS!
(I learned that one the hard way!)
If you do those two simple things, no one can ever walk away with any substantial amount of your CASH!
Make up your mind if you are...
A. A Service/Mechanic Shop.
I know you MUST stock some things, but keep the inventory to a MINIMUM, and do the same with the machine shop.
B. A Machine Shop.
Machine shops are EXPENSIVE to start up, and they are EXPENSIVE to operate, they are EXPENSIVE to supply!
Machine tools and bits/cutting tools/parts are EXPENSIVE,
And you MUST stock them since there usually isn't a local machine tool supply shop handy in most areas!
Skilled, Qualified Machinists, what you need for a REAL machine shop,
Are a dying breed, and they come at a PREMIUM!
C. A Parts warehouse or retailer.
With the advent of the 'Discount Sore' places that sell cheap 'Import' crap, it's VERY HARD to compete with them, and it's impossible to keep up with the nation wide media campaigns...
VERY long hours, VERY little profit margin, VERY large investment for buildings, stock, sales help, ect.
D. A 'Speed' shop...
Everyone thinks they would like to make a 'Killing' owning a 'Speed Shop' that only does work on CLEAN HOT RODS, and deals in new, shiny parts...
Again, the online retailers will KILL your profit margin,
There probably won't be enough local HOT RODDERS that DO NOT do the work themselves,
(Whitness all the 'Import Tuner' shops that have popped up, and been gone in just a few months,
Or the 'Low Rider' shops that deal with Mini-trucks and such that have come in gone in a flash...)
It's the oil changes, brake jobs, water pumps from 'Average Joe' that keep most independent service shops in business, and unless you have a HUGE potential client pool,
The chances of getting the "Hot Rod 15%" to notice you will be VERY HARD,
And out of that 15%, you are only going to get service work from about 15% of that narrow slice of the population...
Most 'Hot Rod' types do their OWN work at home, and most 'Hot Rod Shops' or 'Speed Shop' start-up's forget that part!
One 'Niche' in the market that has been a stead stream of income for me is Magnetos and ignitions from old farm tractors...
You would be surprised what some of the Mag and distributor work for those old antique tractors goes for!
And stupid me, I was actually going to throw away my magnetizer for magnetos and permanent magnet starters a when I sold the shop because I though it would never be used again!
I have units in here on a 6 month waiting list, and the owners are more than HAPPY to have someone that will dink with them at all!
I tell them I'll call or Email them to send when their turn comes up close, but most just send the units to me anyway, so they sit around here for 5 or 6 months with the work order laying in their boxes...
Just something to think about for extra work...
Look for the Niches in life, you never know where they are going to pop up!