The skills required to run a business ...

togwt

togwt

The Old Grey Whistle Test
A large % of the people attempting to open a detailing business fail; as too many focus solely on the technical side of the business but never learn how to run a business properly.



Education is the most important component of the success of any business. The skills required to run a business consists of; Technical (to do the actual work) Marketing (to get the work and keep it coming in) Financial (maintain company books, paying suppliers, ensure vendors are paid on time, maintain the companies credit rating, paying company taxes) Administration (maintain adequate chemical supplies, maintain a working relationship with the company Accountant, ensure bills are current (telephone, electricity, rates, water and etc) ensure client bills are received and resolve any conflicts should they arise



Knowing the products you use and their application methodologies and what works in a given situation from practical experience, will help strengthen your knowledge to provide an invaluable service to both existing and potential customers



You need talent plus experience, knowledge and understanding; establishing creditability is one of the biggest challenges for small start-up businesses.
 
TOGWT said:
A large % of the people attempting to open a detailing business fail; as too many focus solely on the technical side of the business but never learn how to run a business properly.



Education is the most important component of the success of any business. The skills required to run a business consists of; Technical (to do the actual work) Marketing (to get the work and keep it coming in) Financial (maintain company books, paying suppliers, ensure vendors are paid on time, maintain the companies credit rating, paying company taxes) Administration (maintain adequate chemical supplies, maintain a working relationship with the company Accountant, ensure bills are current (telephone, electricity, rates, water and etc) ensure client bills are received and resolve any conflicts should they arise



Knowing the products you use and their application methodologies and what works in a given situation from practical experience, will help strengthen your knowledge to provide an invaluable service to both existing and potential customers



You need talent plus experience, knowledge and understanding; establishing creditability is one of the biggest challenges for small start-up businesses.
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In addition to all of that is commitment. It's a lot more work that most people realize and requires far more commitment and dedication that a majority of people are willing to give.
 
ShineShop said:
In addition to all of that is commitment.
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Yep ! Patience is part of that as well. It can take years until you as the owner can make a decent salary from your business. Most people would much rather make more money right away, working for someone else.
 
I am currently in business for 4 months now, but i have yet to make a profit. I have broke even though each and every month thus far. Let's talk about patience. I was making 60K a year in the military to making 0. If it wasn't for my Montgomery GI bill, i'd be dead broke. Patience. How patient do i have to be to make money? When you guys were starting out, did you guys immediately make a profit? How long did you guys have to wait to make a profit? The reason why i ask these is that i am really contemplating going back to the military. I have a short window of opportunity, and if i can't pay my bills detailing cars, i will consider going back.
 
pinoyheat551 said:
I am currently in business for 4 months now, but i have yet to make a profit. I have broke even though each and every month thus far. Let's talk about patience. I was making 60K a year in the military to making 0. If it wasn't for my Montgomery GI bill, i'd be dead broke. Patience. How patient do i have to be to make money? When you guys were starting out, did you guys immediately make a profit? How long did you guys have to wait to make a profit? The reason why i ask these is that i am really contemplating going back to the military. I have a short window of opportunity, and if i can't pay my bills detailing cars, i will consider going back.
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Are you breaking even AFTER paying yourself a decent wage? It all comes down to what your expectations are. The vast majority of the guys I see enter this business are gone within a year. Why? No tolerance for the realities of how long it takes to build a profitable business and a lot can easily make more money by simply getting a 9-5 job. Ask yourself what you are creating for yourself - a profitable business? Or a job (a decent paying one?). A lot of the guys I have talked to over the years are willing to work for peanuts chasing the dream because "it's their business" when they would most likely laugh in the face of someone if they offered them the same money for a regular job.
 
How are you not turning a profit after 4 months? Are you bringing in money? are you giving away all your work?



unless you are charging $30 for a paint correction detail, I dont see how you cant make money. Lets say on average it costs ME $30 in supplies, gas getting to the job, and all that...I sure as heck am not charging $30 to work on your car!



Per car expense (supplies)

business expenses (admin stuff)

= maybe 20% at most (assuming you are working along of course)



Where is the other 80% going? Maybe you need to charge more to turn a profit!?!?!?
 
toyotaguy said:
How are you not turning a profit after 4 months? Are you bringing in money? are you giving away all your work?



unless you are charging $30 for a paint correction detail, I dont see how you cant make money. Lets say on average it costs ME $30 in supplies, gas getting to the job, and all that...I sure as heck am not charging $30 to work on your car!



Per car expense (supplies)

business expenses (admin stuff)

= maybe 20% at most (assuming you are working along of course)



Where is the other 80% going? Maybe you need to charge more to turn a profit!?!?!?
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Most businesses don't turn a profit for the first 3 years. Most detailers whore themselves out for next to nothing because they can't stay busy enough and drive their own prices into the ground. Just look at detail prices - a good deal of guys prices have ZERO relation to costs/fair market value. It's always - "well this guy is charging $$$$$ so I'll charge $$$$$". Auto dealers PREY upon that kind of stupidity and use it to drive prices well below fair market value. I have actually had a conversation with a used car manager where he laughed about beating the hell out of detailers for price and if they did a crap job he would just send it back again and again until he was happy or just wouldn't pay. After all there is ALWAYS another guy willing to step up and make exactly the same mistake.
 
That jerk deserves a swift kick in the balls.



ShineShop said:
Most businesses don't turn a profit for the first 3 years. Most detailers whore themselves out for next to nothing because they can't stay busy enough and drive their own prices into the ground. Just look at detail prices - a good deal of guys prices have ZERO relation to costs/fair market value. It's always - "well this guy is charging $$$$$ so I'll charge $$$$$". Auto dealers PREY upon that kind of stupidity and use it to drive prices well below fair market value. I have actually had a conversation with a used car manager where he laughed about beating the hell out of detailers for price and if they did a crap job he would just send it back again and again until he was happy or just wouldn't pay. After all there is ALWAYS another guy willing to step up and make exactly the same mistake.
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Basing a 'price' on what someone else is asking will quickly lead to you 'closing the doors'



Costs



Calculate an hourly rate based on your costs of operation, any cost that is incurred by carrying out business, including your salary and benefits. If the market will allow you to charge more per hour charge it, but never less than what it costs you to operate the business.



a) Materials used (car care products) + expendables (i.e. micro fibre towels, latex gloves, etc) + depreciation on tools (machine polisher, pads, vacuum, power washer, etc)



b) Overhead Costs



1. Tools

2. Water

3. Electricity

4. Rent or Lease

5. Insurance, business licence, etc

6. Marketing



c) Labour



Estimated time x expected hourly rate



To estimate labour wage cost it’s important to include paid holidays (9) 4% vacation pay, 1.73% Worker's Compensation Board (WCB) (both calculated on gross pay) a matching employees pension plan (PP) contribution and pay 1.4X what our employees contribute to employee insurance (EI).



As a general number for actual labour costs multiply hourly rate 1.35 (not including benefits). At a minimum wage of $10.25 per hour that equals $13.87 per hour. Your labour costs should never exceed 30-35% of your total costs so you need to include 3.3x labour costs included in sales to cover all your costs plus profit. This equates to approx $42-$45 an hour for a minimum wage employee. (Check these figures as they vary by state)



d) Profit Margin



Percentage profit that you expect to make on sales



e) Written Contract



Provide each client with a written estimate and ensure they sign it to agree the costs. Remember a verbal contract is not worth the paper it's written on



Profit is NOT a bad word



You need to know "all" your costs and develop a financial model and turn that into an hourly rate that will always make you a profit it you estimate the job correctly in terms of time. That is why you can get into trouble with posted prices, you are telling the customer this is the cost without evaluating the vehicle first.



"Depends on condition of the vehicle” then becomes meaningless. Your price should always de dependent upon the time, materials and a margin for profit that it takes to complete the job, unless you recover these operating costs you will not remain in business for very long



Price reduction



Reducing price obviously means a reduction in profit, although reducing introductory prices is a different strategy, which hopefully will bring future profit.

 
put quality above all else and your name will help justify the price you charge! It takes time, but still, not 2, 3, 4 years!



Entry into this business was only $500 for me for supplies. you start off with the basics of what you need and for the first couple jobs, you put it all back into the business AFTER you pay your self the $500 back. After that, you are no longer in debt and are turning a profit each and every job.



lower outside expenses and it will be easier to see you are making a profit. If you have expenses sitting over $8K per month just to live, maybe Detailing privately is not right for you. If you have $2K expenses, its easier to put some money away every month.
 
pinoyheat551 said:
I am currently in business for 4 months now, but i have yet to make a profit. I have broke even though each and every month thus far. Let's talk about patience. I was making 60K a year in the military to making 0. If it wasn't for my Montgomery GI bill, i'd be dead broke. Patience. How patient do i have to be to make money? When you guys were starting out, did you guys immediately make a profit? How long did you guys have to wait to make a profit? The reason why i ask these is that i am really contemplating going back to the military. I have a short window of opportunity, and if i can't pay my bills detailing cars, i will consider going back.
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Not that I'm trying to brag or whatever, but I was making even more than you per year as an employee, and went to making $0 as well. The shop wasn't turning a profit until about a year into it, and that profit was small. Not to mention our dead season, when the weather is -40 degrees. It takes time, a LOT of time and patience. Which most people don't have.
 
Well, all my business expenses (shop rent, water, electric, insurance, etc) equate to roughly 2200 to 2300. I am pretty much making that in a month. Thus, i have 0 profit but broke even. I have to make 110 to 120 a day to break even. I dont know if it's just the providence area, but people are turned off by prices. When i give a proper quote for a job, the next thing you will hear is i'll think about it. When you give a lower price, i get more business. So, for me to make a profit in this area, i have to price my services lower and hope for VOLUME. I did living social during my first month of business (which helped me get the word out) but now it has died down. My redeem rate is at 60 and i've been getting less calls from it. I wanted everyone to redeem so that i can showcase my work (but it wont happen). So far, its a hit and miss. Some days, people will pay for a full detail (full day of work for me, 2-stepper plus int). I've had a lot of days where people only want a interior detail. I have never had anyone inquire about paint correction. Not 1. I'ts always those quick details that they call about. Sometimes full details, but those quick ones sell - hand washes or mini detail.
 
Sounds like you need to adjust your business model to what your market can supply. Its like trying to sell diamonds to the poor, not going to happen!



If I were you, get a base $100-150 package with a wash, clay, AIO, interior spruce up. Done in 2 hours WITH helper! Hire the help on a part-time basis, and slam your schedule W,Th, F so that you and your help are busy those three days consistently. Then, when the workload becomes too much for the 3 days, throw in Tuesdays for those simpler jobs. You can easily get 4 done in 8 hours if they are streamlined and the same process for each car. I do it from time to time when a certain client has me do all his family cars. Pay the help $80-100 for the day, thats $300-500 for you. minus $5 in supplies per car, leaving you with your expenses covered and extra in your pocket.



If you are still breaking even at 6 months, I would start booking everything "at a discount" until you cant take on anymore business. You have to eat, but at the same time, dont just sit there and say ok, Ill do them for less just because you want me to. Pitch it to them like this "if you get me two cars, I'll give you $20 off, that a pretty good deal per car at a total of XXX" or something like that. That way WHEN you get busy and dont need the work, they wont be expecting it when they only bring in one car to you..."that was a multi-car discount", etc.



IDK, thats what I would do, but me with no shop, my mentality might differ slightly. But with a shop, you take whatever comes through the doors. Full Paint Correction jobs - 95% of the detail customers dont need or even know about! Doesnt seem like you are in the right area for that type of work.



Offer up a SUPER WASH, and MINI DETAIL. As a Detail SHOP, I wouldnt even bother with a $20 wash, you are NOT a car wash using automated stuff and buying in huge volume keeping pricing lower.



Super is a wash with a QD after

MINI is a spray wax
 
Random success plays a part in all industries; randomness or the ups and downs of luck, both good and bad, sometimes mask for a while anyway; underlying quality. But few people are confident enough to stand by their judgements about underlying quality or character and so remain fixed upon short-term indicators - indicators bedevilled by chance.



You also need to decide what niche market you want to concentrate on.



Paint correction - catering to higher end clients, usually ‘exotic’ or specialised automobiles, this market sector provides lower cash flow and higher profit.



Volume type work – aimed towards the average vehicle owner, which caters to ‘wash & wax’ type clients, this market sector provides a higher cash flow but small profit margins. High turnover (volume) provides the biggest profits



If you think that detailing is just a job think again, because it isn’t. It’s more like a lifestyle choice, and the spirit of what it involves will need to run deep in your veins if you are to succeed and thrive as a detailer.



The ultimate question is this: are you trying to open and invest in a properly functioning business or just trying to creating a job. Usually a business needs to operate for a period of many months before it breaks even, so it’s a very poorly paid job. You could be the best detailer the world has ever seen but unless you learn how to correctly operate a business properly you're just setting yourself up for failure



If you know deep inside that you will work as hard as it takes no matter what, and that paying attention to minute details day after day and vehicle after vehicle appeals to you even though it will be extremely challenging then this type of commitment will help you to succeed
 
TOGWT said:




It’s more like a lifestyle choice, and the spirit of what it involves will need to run deep in your veins if you are to succeed and thrive as a detailer.





If you know deep inside that you will work as hard as it takes no matter what, and that paying attention to minute details day after day and vehicle after vehicle appeals to you even though it will be extremely challenging then this type of commitment will help you to succeed
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:xyxthumbs :bigups :xyxthumbs
 
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