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Mobile/Independent shop operating costs?

Discussion in 'General Industry Questions' started by Ruger_556, Aug 15, 2017.

  1. Ruger_556

    Ruger_556 Well-Known Member

    Joined:
    Oct 17, 2015
    Messages:
    66
    Location:
    Pacific Northwest
    So for the guys that are mobile/independent mechanics, I have a couple questions...

    - Is it worth it or would you do something else if you could go back and start over?
    - What percentage of the hourly rate that you charge do you pay yourself and put back into the business?
    - What do you do for paperwork? Have an accountant handle it all or do it yourself?
    - What are your operating costs just to exist (insurance, etc...)?

    I have a few fleets and local farms that have voiced interest in this and I have been debating whether I want to go out on my own for awhile anyway. However, I'm not sure I would actually bring home more money after all is said and done. I've done some diagnostic work on the side for a fleet but I know I don't charge them enough to really be profitable as a business.

    I have a couple hundred hours of comp time to use where I work now so I could easily cut back to 3 or 4 days a week and start working a day or two on my own, stupid idea or can a guy make a good living on his own?
     
  2. partsandservice

    partsandservice Senior Member

    Joined:
    Feb 14, 2011
    Messages:
    844
    Location:
    Georgia
    I have been independent for 20 years. I would not have it any other way. Through the years I have been able to specialize repair type, but when I started I had to work on anything, from skidders to cars( the checking account does not care where the money comes from). So Don't take the following as discouragement to your goal but facts from my experience.
    Facts... In no particular order
    1. Cash flow is not profit!!!
    2. The banker is only nice to you when times are good.
    3. Changes in the economy can make your market evaporate almost instantly.
    4. The books can show profit with taxes due when you have no money.
    5. Insurance is expensive and often required by those you contract for
    6. Tools make money, Tool boxes do not.
    7. Doing the billing is as important as doing the work.
    8. A certain percentage of customers will be trying to beat you from the get go.
    9. When billing by the hour your income becomes finite.
    10. Quality work brings more work.
    11. The longer you are in business the more overhead you acquire.
    12. 6 day work weeks are the norm
    13. The service truck always needs tires or whatever.
    14. Welding supplies are expensive and should be a seperate line item on the invoice.
    15. I am a workaholic .
    16. I would not have it any other way.
     
  3. DARO

    DARO Well-Known Member

    Joined:
    Sep 8, 2014
    Messages:
    178
    Occupation:
    Mechanic
    Location:
    Duluth MN USA
    You could put more cash in your pocket working roads or pipeline. Im only 6 months in on my own and i can see that a one man service based biz is like a game of wack-a-mole with serious side effects if you miss a few. I was working for a road builder and the freedom that i have now is worth the trade off of cash in the pocket.
    I would advise you to find a bizness coach and do real numbers with them. Some one who has talked numbers of people though a start up will ask the right questions.
    Accounting is a major expense. So is insurance. Both you cam get pretty close budget numbers from whom ever you use.
    The working partime would have been real handy starting out.
    Also start the bizness right away even if you dont work it right off. You can always moth ball it for a few years. You cant go back in time to start it.
    Bank money drys up pretty quick when you fill out the loan app self employed. So if you need a truck or something big buy before you quit.
     
  4. Numbfingers

    Numbfingers Well-Known Member

    Joined:
    Oct 28, 2016
    Messages:
    136
    Occupation:
    mechanic
    Location:
    Alaska
    This is my first year full time, but here's some info maybe you can use:
    1. $1M liability and truck insurance is about $2600/year
    2. I have my teenage son enter all my daily receipts into Quickbooks and help cut invoices. Gives him a little pocket money, then I have a bookkeeper review my stuff every two weeks.
    3. I take 15% of every invoice total after parts deduction and put aside for operating expenses. 20% goes back into business for tooling, equipment.
    4. I work more hours as a business owner since I have to manage it and turn wrenches but would not have it any other way.
    I started out part time for about 6 months before enough customer demand allowed for me to go full time. A little slow In the middle of winter but right now I have to turn away work.
    Ditto on the banks not lending money too easy to self employed, even with great credit like mine.
    Hope this helps.
     
    Ruger_556 likes this.
  5. Ruger_556

    Ruger_556 Well-Known Member

    Joined:
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    Messages:
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    Location:
    Pacific Northwest
    Do you guys take credit cards, do your own billing etc...?
     
  6. DARO

    DARO Well-Known Member

    Joined:
    Sep 8, 2014
    Messages:
    178
    Occupation:
    Mechanic
    Location:
    Duluth MN USA
    You get paid faster if you take cards. And if it is someone that is scatered then it wont matter if they lose the invoice. Thay already paid you. Its simple to do billing. Its time consuming to enter slips,pay bills, do sales tax and self enployment tax. I spend around 10 hours a week on non billable work.
     
    Ruger_556 likes this.
  7. Numbfingers

    Numbfingers Well-Known Member

    Joined:
    Oct 28, 2016
    Messages:
    136
    Occupation:
    mechanic
    Location:
    Alaska
    I use Square for taking credit cards and only pay as I use it, but almost all of my customers pay by check.
     
  8. thepumpguysc

    thepumpguysc Senior Member

    Joined:
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    Occupation:
    Master Inj.Pump rebuilder
    Location:
    Sunny South Carolina
    The thing about CC is, its easy to get paid, but also easy to dispute the charges & your money gets put on hold a lot quicker.. & lets not forget about the service charge the CC co. charge.. 3-4% for using their service..
    SOMETIMES its hard for a customer to swallow when you tell them the bill is 1000.00.. THEN they whip out a CC & you say, "I'm gonna have to add 3% to that bill"... I see it time & time again.. you'd be amazed at the "hissy fits" I've seen from grown men...
    Personally I don't take them.. cash or check is my way.. BUT, its always good to find out HOW the customer is paying BEFORE you go to the site.. Will this be cash, check, CC or purchase order??
    THAT WAY, you can be prepared to do the paperwork on site & "hide" the CC service charge in the bill..
    PO's are another grey area.. some invoices take up to a year to pay, as in govt work.. or working for the city/county.. Good luck w/ your venture... TPG
     
    bgkimber@bigpon likes this.
  9. DMiller

    DMiller Senior Member

    Joined:
    Feb 21, 2010
    Messages:
    13,008
    Occupation:
    Kinda Retired
    Location:
    Hermann, Missouri
    Costs outside of my control and bad debt from rubber checks or less than informed bargain chasing customers shut my home business down before it came along far enough to set up my own shop/service company. Can only discount so far before you are not making enough to pay overhead, then there are the rubber floaters that even after court proceedings you cannot attain the original figures as they just have nothing to pay with or the legal fees eat it up.
     
  10. Ruger_556

    Ruger_556 Well-Known Member

    Joined:
    Oct 17, 2015
    Messages:
    66
    Location:
    Pacific Northwest
    Thanks for all the comments guys, rough draft business plan is written, truck is bought, and crane is ordered. Planning on starting up part time January 2nd
     
  11. old-iron-habit

    old-iron-habit Senior Member

    Joined:
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    Occupation:
    Retired Cons't. Supt./Hospitals
    Location:
    Moose Lake, MN
    Part time is a good way to start and to build up your business. Don't forget to charge enough to pay yourself wages and be able to stick some into a retirement account. After all none of us can work forever. If you are getting all the jobs you are looking at you are working to cheap. Lots of good advice here. Paperwork is everything. Good luck.
     
  12. Ruger_556

    Ruger_556 Well-Known Member

    Joined:
    Oct 17, 2015
    Messages:
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    Location:
    Pacific Northwest
    Will do, I ran all the numbers and I know what I need to charge to make money, I certainly won't be the cheapest guy in town.
     
  13. check

    check Senior Member

    Joined:
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    Location:
    in the mail
    You will have to decide if you're going to be working more than 40 hours a week. If so, the returns are diminishing compared to a regular job. Either that or you will have to bill overtime but I think it's generally expected that you won't.
    When I did this out of my 1966 Ford one ton in 1981-1982, I got by without any insurance. I didn't charge much and didn't have much overhead. 97% of my work was for two companies who paid promptly.
    It all depends on the math. The devil is in the details. If I had people skills it would have been more lucrative.
    I'm sure things are a lot different nowadays than they were 36 years ago.
     
  14. kjkoch

    kjkoch Active Member

    Joined:
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    Messages:
    40
    Location:
    Texas
    I started doing machine work part time at home 13 years ago, while working out of my own truck for a construction contractor during the day. Now my 3 sons sons and I all work on our own and help each other out on different projects. The biggest thing I can say, and I tell them all the time, try to keep your overhead as low as you can, so when it does slow down , it doesn't hurt so bad. And be cautious of new customers, until you really trust them. I have always been a little soft heart ed, and that sometimes backfires. None of us have general liability, none of our customers insist on it anyway, even though we probably should. I do work weekends on occasionally still, sometimes its easier for me and faster if no one else is around the customers yard on sunday. If you can work for 3 or 4 good people and keep them happy, you should be fine.
     
    G Doyle and check like this.
  15. 63 caveman

    63 caveman Senior Member

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    Location:
    western Pa.
    I am a low overhead guy too, doing mostly mobile work. Most of my customers have a yard and building for major work and like that I will work on their stuff at their place of business. I agree with all the advice given so far but will add:
    1) Get some business cards made up (cheap) to give to other contractor that will come asking questions when on the job sights.
    2) Learn how to say "NO", If you take on everything you will get buried.
    3) If you do regular maintenance and service keep your own records for the machines. My customer like that I can tell them that such or such machine is soon going to need a 1,000 hour service soon, "Would you like me to get all the stuff together (I already have capacities, type, and filter numbers) and schedule it with you?".
    4) Stay away from stuff that isn't properly maintained. Every call you get will be an "emergency" or "just patch it up", unless you like that kind of chaos.
     
    pajibson likes this.
  16. pajibson

    pajibson Senior Member

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    Location:
    metro detroit
    This...I have had a bunch of those and for some customers I still entertain them. but man what a pain.
     
    63 caveman and Numbfingers like this.
  17. DMiller

    DMiller Senior Member

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    Occupation:
    Kinda Retired
    Location:
    Hermann, Missouri
    I had a single comment line for those that brought me machines to patch or "just get it by awhile as I can't afford to fix it right" was: please take it somewhere else. I had in my early days taken a few of those on, most were a money pit or at best a losing proposition for my little operation. One small problem would lead to two, three, five or more added problems the owner would NOT pay for or not OK to work on as did not or would not authorize the extra expense where a few even threatened to sue as "KNEW" I set the other problems up for more money. Just easier to say NO.
     
    63 caveman likes this.
  18. 63 caveman

    63 caveman Senior Member

    Joined:
    Nov 11, 2017
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    274
    Location:
    western Pa.
    5) Watch out for the ones that tell you how easy it is or what is wrong (meaning what to replace). I have a standard answer for the easy ones that "I'm sorry in my mind I can think of several things that could be causing your problem maybe you know someone that understands how the system works you can call?"

    That brings me to :

    6) Sometimes "people skills" are more profitable than technical skills (I'm not there yet).
     
  19. check

    check Senior Member

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    Location:
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    That's very true. What I found, with very few exceptions, is that people who have people skills (the manipulative skills) seldom bother to become good tradesmen. The few that do work their way into related positions that require some people skills and often become a burden the rest have to carry.
     
    63 caveman likes this.
  20. thepumpguysc

    thepumpguysc Senior Member

    Joined:
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    Occupation:
    Master Inj.Pump rebuilder
    Location:
    Sunny South Carolina
    I'v had a few of those Caveman.. & i'v packed my tools & walked off a few jobs because of it too..
    I "normally" end up saying> "you know more about this than I do, you fix it".. a day or 2 later I get a phone call to come back & fix it..
    One could say, I'm "lacking" in people skills.. Lol
     
    mikebramel, DMiller and 63 caveman like this.