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.