Business question

[PTmowerMech]

A little about me to start off with, because it might be important later on.

I'm 49, I've been doing this for about 3 years now. I'm self taught, with a lot of help from the good folks here and youtube. But no schooling for it.

Last year sucked to high heaven. Went though a divorce and depression. Sold my home and moved in with family, in a town far far away. One of the reasons I moved here is because my brother said there was no small engine shops close by. It was in August of last year that I made the move. Honestly, because I was new here, I just sort of barely scraped by. My credit is shot and my savings are non existent.
Yesterday I was at the scrap yard in the next town over (about 30 minutes from the very small town, in which I live way outside of) looking for some parts, when I happen to meet up with the mayor of that town. (he owned the scrap yard). He said "we need a small engine shop in this town." And that he could help out with some sort of city government development thing. I have no idea what that even means. He told me about the building that used to be a small engine shop, so I swung by and took a peek inside. It still had all the small engine signs, counter and work benches. The back has an 8 ft chain link fence around it, with big sliding gates on both sides. I got VERY excited.
The guy who was there before, moved to another town, and his son took over the small engine business in that town, in a different building a few blocks away. He's still in business. But, from what I understand, he's rarely there. The word around town is that people have stopped using him because he's never there to fix anything. And the commercial mower guys, refuse to do business because they need their stuff right away.

Now, my question: I don't have a clue about starting a business. It's got to be more than just getting the lights and water turned on. I'd have to rent the building, because of my credit. Stocking the parts? Tax ID number? Coming up with the money things I'll need (saw sharpener, leak down tester etc etc). And a whole slew of other things that will have to address.
My first hurdle is a lack of confidence in being good enough. There's gotta be a thousand things I don't know. What I don't know, I can usually figure out. Or get a legit answer here or on Youtube. And the other is weighing the difference between a public store front in town vs doing this out of the shop here at the house. Which is what I've been doing since I started doing this. Which is dayum easy. I don't have to worry about taxes getting paid. Including collecting and paying sales tax. Lot's of cash payments. (almost all, in fact). Nor do I have to worry about insurance.

Maybe some of you who've opened up a shop in town, could give me some insight on all this? Is a store/shop more trouble than it's worth? Would it be better just to work from home? And maybe throw in some details. I'm all ears.
Being January, I have a little time before things get busy. But being in the south (Arkansas), I don't have a lot of time before the rush hits.

 

[AVB]

There is a lot involved running a business. Main problem is your resources, you got to have fairly deep pockets to start up an location dependent shop. As you said you will need insurance for at least the liability part plus having an inventory is a plus but necessary if you have vendors that can deliver is a couple days. Renting a building can be problem during the off season if things are like mine where repairs and sales are non existence this time of year.
Time is also a problem as single person shop you would need to be there all the time during business hours but hiring an employee(s) has it own drawback as the paperwork, insurance, and taxes. Paying someone when there is no income is a will downer too.

Having a good business accounting/shop software is a big plus as it can do a lot paperwork, inventory tracking, equipment repairs tracking and invoicing, along all the other accounting that you would need to do.

Here I run my shop out of a two car separate garage at home so I am here most days for parts runs on the dealer only items. Since 2009 I have finally manage to get a few distributors online so I am currently reducing the 35K in inventory due quick parts delivery now. I currently down to 25K in house parts with that reducing even more this coming season. Here my is usually dead until late March here in South Central Tennessee. I was really surprised that things didn't slowdown until late October last year.

Just a few thoughts but others will jump in with their ideas and experiences.

 

[ILENGINE]

You would have to get liability insurance, and a tax ID number to start. You could run it as a sole proprietor which is what I do. A lot of small engine shops use Quickbooks for their accounting software. Something to keep in mind is the fixed cost of electric, water, heat, rent and insurance. And depending on where you are located you will make 75-90 percent of your annual income between March and October.

Also keep in mind if you want to get serious you will need to pick up some OEM engine manufacturers and maybe some authorized service center lines like MTD, Husqvarna/Poulan lines. or a major Z turn manufacturer. That whole setup could run in the $75,000-150,000 range.

I suspect there is more to the other guy is never there, which could mean there isn't as much business for repairs as people would let on, and because of that the owner is needing to work a second job.

 

[bertsmobile1]

I bought this service run some 8 years ago.
I have been faffing around with old motorcycles all my life so was familiar with engines, just not mowers.
Things went very well for 6 years then the drought bit and work stopped dead so these last 2 years I have been running at a loss.
Like AVB I run things out of the garage under a friends old farm house and " rent" is hours of farm work.
If I was paying rent then this year would have sent me bankrupt.
My best week last year was the first week of december when I did 17 fire pumps at an average $ 65 a hit due to bush fires nearby and that would not cover a weeks commercial rent.
I carry around $ 80,000 in inventory which was built up simply by buying 2 of every thing that was needed .
Down here parts a very expensive so I can get away with adding a 100 % mark up on most parts bought wholesale thus most of the inventory was effectively free.
Confidence comes with experience & knowledge, I take it one step further and run everything I fix for at least 1/2 hour before the customer gets it back .
Every person who posts a problem on here & the other 9 or so forums I haunt, I diagnose in my head regardless of weather I post and by now my hit rate is about 80%.
I run MYOB for billing and FileMaker for inventory of selected parts .
The latter is just to make it easy for me to find if I have the parts & monitor their useage, particularly blades & belts .

Regardless of weather you have a shop front or not you must have public liability insurance.
We all make mistakes and the first time some one gets hurt , you will get taken to the cleaners without it. Even when testing a mower you can find a rock, and hit a person or property with it.

I have found that time spent with customers is my biggest advantage so running a shop is not on as I can not be in 2 places at the same time.
If the town is not too far away get some flyers made up and work there mobile if you think that pickings will be better there than where you are.
Pick up their mowers after hours, try to do several in one hit, quote them all a week and do not charge for pick up & delivery.
Hold off delivery till you have a pick up if possible. Right now your biggest asset is your time which costs you nothing .
There is no mower shop in my town, one in the next town , 3 miles away & all the rest are 10 miles away.

Do not put your head in the shopfront noose if you have no capital particularly for stock.
Walking into a shop that does not have shelves full of goods sends bad vibes to the customers that you are just holding on and they will be uneasy leaving their mowers with you.

In your down time buy as much junk as you can afford and repair them.
Keep them for "loaners" so in peak season you can drop off the loaner then take your time repairing their mower.
I sell most of the used mowers like this because the customer finds that my loaner is as good or better than their main mower.
This is particularly important with things like chain saws & blowers where a new one from Wallys will be cheaper than you repairing their old one.

For all you know, the Mayor's brother could be the owner of the old shop and it might be empty because it is not a viable business, particularly if they have a Lowes or Aldi handy dumping cheap Chinese goods .

 

[AVB]

Bert check out Adminsoft accounting with Auto Manager. I think you will find it is more of what you need for shop software. Just be aware that the payroll module is for the UK only. Even without the payroll module you should find it rather robust software especially for zero upfront cost program.

PTmowerMech, As for my shop I kinda lucky to be 20+ miles from of the local shops. Because most of them are not that good a repairs does help too. Even the JD shop has rather bad rep on repairs of lawn care equipment.

As for advertising if you do good work then word of mouth referrals are the best. In the 10+ years I have been in business I have yet to advertise the business other than a sign in front of the shop. The winter months are the roughest for me so I started learning ATVs repairs with customers understand that I am new at the repairs so it takes me a little longer than most shops. But considering most of the ATV shops are running at 1-2 behind and I get one out in a couple weeks isn't all that bad. The new tools are the biggest headache at the current time.

As noted watch the repair costs vs replacement costs. Some things are just not worth the headaches if it is not something minor. As buying or just getting it gave to you used broken equipment it is a good way to learn new procedures on without guinea pigging your customers equipment.

Now my business nearly went under in 2014 but it wasn't the lack of business it was that my mother developed dementia and it was a full time job taking care of her. No regrets though.

 

[Gearjammer]

I question whether in this day and age of the big box store, craigslist, the internet and a throw away society, one can make a legitimate profit consistently working on small engines only. I'd look into a full or part time job for a business owner with deep pockets ( maybe a dealership or hardware store that sells mowers and chainsaws or bikes) and start a side business for added income. It wouldn't be nearly the fun, but Fridays would be payday. Just my two cents. I wish you the best whatever you decide. Gearjammer

 

[PTmowerMech]

Thanks for all the replies. After some thought about this, I'm leaning towards just working out of the shop here at home for a year. And just see how much business I can drum up. My only advertising is through facebook. My brother is a contractor around here and knows everyone and their mother. That's been a nice help. I learned where I lived before (Texas) just how well word of mouth is.
All this expense of stocking, insurance, taxes and other stuff, sounds like a bit much to jump into without really checking things out a little better. if things go really good here, I'll be able to ease into a shop in the other town. I've never been one to jump into many things without at least checking out few aspects.

I found out that the other repair guy has a wife with cancer. So then there's that.

 

[bertsmobile1]

Bert check out Adminsoft accounting with Auto Manager. I think you will find it is more of what you need for shop software. Just be aware that the payroll module is for the UK only. Even without the payroll module you should find it rather robust software especially for zero upfront cost program.

PTmowerMech, As for my shop I kinda lucky to be 20+ miles from of the local shops. Because most of them are not that good a repairs does help too. Even the JD shop has rather bad rep on repairs of lawn care equipment.

As for advertising if you do good work then word of mouth referrals are the best. In the 10+ years I have been in business I have yet to advertise the business other than a sign in front of the shop. The winter months are the roughest for me so I started learning ATVs repairs with customers understand that I am new at the repairs so it takes me a little longer than most shops. But considering most of the ATV shops are running at 1-2 behind and I get one out in a couple weeks isn't all that bad. The new tools are the biggest headache at the current time.

As noted watch the repair costs vs replacement costs. Some things are just not worth the headaches if it is not something minor. As buying or just getting it gave to you used broken equipment it is a good way to learn new procedures on without guinea pigging your customers equipment.

Now my business nearly went under in 2014 but it wasn't the lack of business it was that my mother developed dementia and it was a full time job taking care of her. No regrets though.

Thanks for suggestion.
Sorry to hear about your mother.
Mine was in & out of Hospices for over 10 years which made me a mental wreck.

Like a lot of things , we use what we have & know.
The hire car business & the delivery business were both run with MYOB.
With no employees ( I pay myself a dividend every 6 months ) I do not need the payrol tax updates so I can use the old ( MYOB 10 ) application that own & I have on old computers. so they are now free.
I did try to use the MYOB inventory system, but t was way too much work to set up and where possible I try to charge parity prices for a lot of parts so I would be forever updating it.
Thus all the invoices are service invoices with a second line that simply reads "parts" with a price next to it.
Showing under $ 75,000/pa turn over I can & do opt out of GST ( sales tax to some ) so it is just a labour charge & a parts charge.
Similar story with Filemaker.
Been using it for decades on an old computer as it is version 7 ( 1998 ? )
I can invoice out of it as well which I do for the commercial customers so they can monitor parts useage and for the odd residential who wants a detailed invoice.
Filemaker also is my job register and customer record.
The trick to it is to use filenames that make sense to me.
Thus Robo Robs Lawncare gets a file name of RRL and invoice numbers RRL 2020?? to RRL 2020?? ( FOR 2020 ).
Dave Smith being a private customer is DaSm 001 onwards
Thus a find on RRL or DaSm will bring up all of their invoices in chronological order.
IT also makes it difficult for the tax auditor because I have better than 300 different invoice number sequences and they can not understand that.
And my bank statement has number sequences all over the place for the customers who direct deposit so the tax man does not notice invoice number 1234 that you got paid cash for & forgot to bank.
A blank page with no data except for the customer name & machine details printed out becomes the job card which cuts down the paperwork and the "office costs" a lot.
It did take a couple of years to get the data files to where I wanted them but it works really well.
Stens wanted me to use their "free POS " softwear and it looks good but of course it also allows them to work out whose parts you are using and is preset to replace all parts used at the end of every month.
I still have around 100 job tags out of the ones I inherited with the business and when a customer asks for one I use one of these but most don't bother because they quickly realize they are a person and not a job ticket number.
When it is all said & done I would average about 3 jobs a day and it would be really nice if they came in that way and not 20 chain saws the day of the heavy winds that knocked down hundreds of trees or 15 fire pumps the day the bushfire got to 5 miles away or 42 generators the day the power went out & was going to be out for a week but that is the nature of the beast.

 

[bertsmobile1]

I found out that the other repair guy has a wife with cancer. So then there's that.

That is how I got this run in the first place.
The owners wife who was 22 years younger than him was diagnosed with a terminal heart condition.
So it was sell the house, sell the business & get stuck into the bucket list while she could still walk.

Please do not baulk on the insurance way too many good people ended up in the poorhouse cause they were "too small for all that stuff "
Also check how you stand as a LLC or sole trader the set up costs might be a hurdle but if I get hit with a massive claim, the only thing to sue is the business.
The busines has very litle money in the bank and only asset ( on the books ) is the parts inventory.
All the tools are my personnel property and branded with my drivers license number .

 

[ILENGINE]

Ptmowermech. If you do nothing else at least look at having liability insurance. Don't have to insure the inventory just need something to cover you if something goes wrong. Basically something to cover you if something goes wrong with a repair.

Here is a personal example that happened to me two years ago, and I was found not to be at fault so not a charge against my insurance, but most policies have what they call a no fault clause, which is an out for the insurance company to pay somebody to go away. I had a customer come into the shop with his new saw that had thrown the chain from the bar. I inspected the bar and chain and found nothing really wrong other than a few burrs on the bottom of a few drive links that I knocked off with a file. Test ran the saw with no problem. Got a call from the customers wife the next evening saying that the chain had come off again and the husband had to go to the emergency room and received 34 stitches in his leg. After all was investigated I was not found to be at fault but the insurance settled with paying him $5000 to cover medical bills. And the kicker is his son was using the saw and it became pinched and when he pulled it out of the tree he flexed the bar at full throttle which threw the chain off of the bar and cut his fathers leg. Chain didn't break and never left the saw since it was contained by the sprocket and side cover.