Typical cost to run an indy Auto repair shop ???

[Mr Nice]

Just a curious question about running a business.

Typical cost to run an independent Auto repair shop ???
4 technicians the size of a typical Firestone / Tire Kingdom with alignment rack and also does general auto repairs no engine rebuilding or transmissions.

Just a ballpark figure, I understand taxes and rent play a big factor...

 

[edwardh1]

no its salaries and parts

 

[Mr Nice]

What about the overhead costs ???

Monthly expenses: rent, insurance, utilities, ... etc...

 

[NHGUY]

A lot! This is why the hourly rate is expensive and markup on parts prices are so stiff. Similar to an auto parts store.Think inventory,insurance,workers comp,utilities,rent/taxes,upkeep,payroll (that's why employees don't get paid much),delivery vehicles/gasoline/repairs.....

 

[Chris142]

our biggest cost is permits. a permit to have a solvent tank.a permit to have open flames.a permit to have a lift etc.also must include advertizing,rent etc. the cost to run our shop not including salaries is around $250\day. we are just a 1 door shop. a larger shop with 4 doors could easily pay $20-$50K a month in rent alone.

 

[The_Eric]

Originally Posted By: Chris142
our biggest cost is permits. a permit to have a solvent tank.a permit to have open flames.a permit to have a lift etc.


What? Are you kidding? A permit to have an open flame? only in California....

 

[jrustles]

In this city?

Rent can put you out. Ask me how I know.

If you're in an area with controlled real estate prices, it can still be a good bit. Are you renting/leasing the equipment?

 

[Rick in PA]

I don't have a number for you, but I don't believe it's much of fun work (any independent business). My brother was an indie for quite some time, he had a nice shop, my sister also had a (non-auto) business for a while. It seemed like somebody always had their hand out demanding a fee and it was like he had a bunch of "bosses" demanding this or that. Independent business is not for the faint of heart, most of the time I'm glad I work for a company and get a regular paycheck and just have one boss to answer to.

 

[supton]

Originally Posted By: The_Eric
Originally Posted By: Chris142
our biggest cost is permits. a permit to have a solvent tank.a permit to have open flames.a permit to have a lift etc.


What? Are you kidding? A permit to have an open flame? only in California....


Pop a cigar in their mouths and say that the flame was to light their smoke if ever caught.

Or do smokers have to apply for the same permit too?

Geez...

 

[Silk]

Unless you are freehold, the lease is the biggest problem. I had a good lease for 8 years, a change of landlord and then an $11,000 per annum increase, no way you can add that to your labour charges. They even increased the rent during my sale negotiations, and I had to drop my price again. With the new owner there was another change of landlord and they started a campaign to get him out...it was pretty stressful for him, and he finally had to go.

If I was to do it again I would want to be freehold, or have some bullet proof lease that was forever, a 5x5 doesn't mean much in the end.

 

[Chris142]

Originally Posted By: The_Eric
Originally Posted By: Chris142
our biggest cost is permits. a permit to have a solvent tank.a permit to have open flames.a permit to have a lift etc.


What? Are you kidding? A permit to have an open flame? only in California....
ya. cutting torches and such

 

[Mr Nice]

So $5000 - $8000 per month is a reasonable figure excluding parts from vendors?

 

[Quattro Pete]

Originally Posted By: LT4 Vette
So $5000 - $8000 per month is a reasonable figure excluding parts from vendors?

Huh? Just to pay those techs' salaries and all the associated benefits/payroll taxes will cost you $20K/month.

 

[The_Eric]

I think it varies wildly by location- both geographical region and where in relation to a business center you're located.

What it would take to run our shop is in no way, shape or form, indicative of what it would take to run a shop in NYC, Chi town or LA. We're out in the country, outside of a smaller city in a building that is free and clear. In short we run (comparatively) really light.

Quattro Pete my be a bit high on employee costs in my opinion, but it's better to err to the side of caution there. Lifts, alignment racks, tire equipment and shop tools would probably average out to as much as 10k/ month depending on options and debt payment schedule. Then of course comes rent, insurances, taxes, permits and the rest of the mountain of paper that can torpedo a business.

IMO, you're the only one who can give a semi accurate account of what it will take to run this shop since we don't know where you're at and what location you're thinking of, if you're thinking of new or used equipment and how much you expect the potential employees to provide.

 

[Silk]

Parts and labour shouldn't be an overhead, you sell parts and labour at a profit, that's how you make money. We work on an 80% productivity for mechanics,more is a bonus, any less and you are not making money - we don't do flat rate in NZ, we charge by the hour, and pay by the hour. 30 years ago (1984) I earned half the charge out rate, got 10% of the workshop profits, and had full use of the company ute, and generally averaged 100% working sole charge, although some weeks were not so good. These days I'd be lucky to earn a 1/3 of the charge out rate (he has far more overheads, but is freehold), I see no perks and pay my own way to work.

Much, much harder to earn a living doing this these days.

 

[Chris142]

im sure that a huge sears tire and repair center at the mall will pay more rent than a guy with a shop in a 2 horse town. i would not be suprized if sears was paying $100k a month in rent alone. rent on our bear valley road which is the major road in this area is $10k\month minimum when my boss looked into it a few yrs ago

 

[KenO]

Originally Posted By: Chris142
im sure that a huge sears tire and repair center at the mall will pay more rent than a guy with a shop in a 2 horse town. i would not be suprized if sears was paying $100k a month in rent alone. rent on our bear valley road which is the major road in this area is $10k\month minimum when my boss looked into it a few yrs ago




Doubtful. I see the rent charge on my P&L Statement as a parts store manager for the biggest parts chain - it's $6k/month.

 

[hattaresguy]

I'd figure a few million to set up and overhead in the $20k-$50k+ a month range.

Larger operations like car dealers cost a lot more.


The marina I keep my boat at pays $150k a year in property taxes alone, which is why the yard guys are billed out at $100 an hour.

 

[Chris142]

Originally Posted By: KenO
Originally Posted By: Chris142
im sure that a huge sears tire and repair center at the mall will pay more rent than a guy with a shop in a 2 horse town. i would not be suprized if sears was paying $100k a month in rent alone. rent on our bear valley road which is the major road in this area is $10k\month minimum when my boss looked into it a few yrs ago




Doubtful. I see the rent charge on my P&L Statement as a parts store manager for the biggest parts chain - it's $6k/month.
all depends on where the shop is located. as i said rent in our main drag starts @$10k a month for a small 1 bay shop.

 

[Win]

Originally Posted By: LT4 Vette
Just a curious question about running a business.

Typical cost to run an independent Auto repair shop ???
4 technicians the size of a typical Firestone / Tire Kingdom with alignment rack and also does general auto repairs no engine rebuilding or transmissions.

Just a ballpark figure, I understand taxes and rent play a big factor...




Rent is fairly predictable - figure on paying about 10% of the value of the property annually, plus the taxes.

Employees will be the largest monthly expense, in addition to the wages and your matching contribution, you have to pay unemployment insurance and workers comp insurance for them which is based on payroll expense and a liability factor, depending on the industry. In effect, you are prepaying their medical bills for when they get hurt. Some of them will steal from you - giving free or discounted parts or services to their friends, which drives up their cost.

Liability insurance is expensive ( I believe it is garagekeepers ) for a repair shop or car lot, you can reduce the cost by increasing the deductible. The property owner may require you to insure the property against casualty loss and will require that he be named on your general liability policy as an additional insured.

Utilities and government exactions for the "privilege" of doing business will vary by location, obviously.

Inventory is expensive and just ties up your money until you sell something - try to locate close to a parts store and you might be able to lower your inventory cost. As noted above, some percentage of it will just disappear.

Equipment costs will vary by what you want to do - sometimes you can get it at a reduced cost by buying up a place that has gone out of business or bankrupt.

If you have to borrow money, interest will probably be five per cent, ball park, on the debt. Maybe a little more. Maybe a little less. Plus principal repayment.

You won't make money right away ( but everyone else will ), so you need to have the means to lose money on the venture for a year or two, probably.

I doubt that it would take $1M, but you can go through money pretty fast. $250 - $300K would probably get you started and carry you for a while.