Im gonna jump right in here. Help me solve my business woes! ;)

[Kavey]

I made my newbie thread and now I am gonna dive right in and ask for some creative thinking on everyones part.

Lets start with my last job. I started in august of 07 as a mechanic (been a mechanic for about 12 years or so professionally). This time it was a small company and I took the chance to really learn HOW the business worked. Not just how to punch a time card and turn a wrench. I helped with everything from scheduling to service writing to setting up new accounts. I didn't let ANYTHING happen without making sure I could see exactly HOW it happened. This made me a great employee, not only was I putting out better numbers as a mechanic than anyone else in the shop, if the service advisor called in sick or got pregnant (twice) I was able to take off my mechanics hat and jump right up into the office and handle day to day operations.

So to sum it up.. this time I learned a lot about how a auto repair shop should be ran. So I had all of this knowledge and needed a way to use it. No problem.. I started doing side jobs during the evening and on weekends. I had the programs to properly estimate jobs and print out pretty professional looking invoices and impressed my "customers" with my professionalism and my high quality work at affordable prices.

I really got the hang of everything and I ended up with more work than I could handle.. worked 9 hours a day then come home for dinner and another 4 hours then another 20 hours or so on the weekends at home. I was beat but I continued doing it because I wanted to get all of my ducks in a row before I took the plunge and started my own shop.

Last october I established a LLC and got a tax Id and bank account and opened up a credit account with our wholesale parts supplier and started keeping everything seperate in anticipation for the "big day." My intentions were to take my tax refund that I will get in jan 2012 and use it to finally open my own shop.

My plan failed. Me and my boss had a bit of a headbutt and neither of us would give in. It just wasn't working. I tried hanging on and every day he made me more miserable till I finally exploded and gave up and left. The job market for mechanics is pretty over saturated so the jobs are slim picking and very underpaid. I cant pay my bills off of 12 bucks an hour so I opted to try to pick up my sidework enough to get enough money to get my own shop.

So here is where the major issue comes. I am about 4 months into this and things have been going great. I am getting a steady 3 to 4 jobs a day and making pretty decent flow and picking up new customers all the time. They all like me and hand out business cards to their friends for me and its really paying off. Even my mail lady is giving out my cards and getting me business. I couldn't be happier with how quick my customer base is picking up. The problem is I started this with very little extra money and 2 and a half months after my seperation from my job my newest baby was born a month premature and that and the complications that go along with a premature baby etc etc etc.

Anyway bottom line is I do not have the 3000 or so to get into a REAL shop right now. I figured I could probably fly under the radar until I get my tax refund and use it towards getting a shop. Problem is the county does not agree. They came by and warned me that I need to cease my operations here quickly or I will be getting a ticket and have to go to court and all of the good stuff that goes with that. It would be very easy for them to prove that I am indeed running a business here so there would be no point in trying to fight the system. I just need to move. The question is WHERE? That is what I am having a problem with.

As I said I dont have the 3 grand or more to cover first and last months rent on a shop... 1500 a month is about the absolute cheapest I have seen... right now I cant even find any (another problem) this is just what I have seen in the past. So I have been scouring everywhere I can think of looking for SOMETHING, ANYTHING that I can afford for now until maybe something better comes along. I really need to stay close to where I am though because I am very centrally located and while most of the customers I have now seem to be pretty loyal I would probably end up losing some if I move too far and I would also have a hard time attracting new customers if I am in an outskirts location.

So where should I look to find a cheap shop? Not craigslist.. I've tried there. Not having any luck with any of the realtors that I have found. There are several propertys that would be perfect but the zoning just isn't right. Apparently auto repair falls under the same zoning as nuclear power plants around here.. LOL

So anyone got a suggestion on a good way to find a place to rent in the st louis area? There are no less than 5 buildings down the road that are vacant and at one point were most likely some sort of auto business that are vacant within like 3 miles of me but not one of them has a sign or anything so either they aren't for rent or they are listed somewhere that I cant find. Any suggestions on how to contact the owners of these places?


My next thing is I spoke with a guy today who owns a shop down the road and he was actually looking for someone a little like me or something. I haven't gotten details on this yet but it seems he wants me to bring my business to him and run his shop. I have a VERY skeptical opinion on how this meeting is going to turn out (I am set to meet him tomorrow morning). It almost sounds like he wants me to bring MY customers and work for him hourly. I am not SURE that is what he has in mind and I am willing to talk to him about it but I know I am not giving up the client base that I have worked so hard to build. I am certainly not even thinking that his proposition is going to be the end to my problems.

Anyone got a suggestion on how I should approach that situation? I know this shop and I rarely even see any employees there let alone customers so I cant imagine he has many existing customers. Curious if I should maybe try to get him to go in as sort of a silent partner or something. He keeps the building and in exchange for providing the building he gets whatever percentage or something? I really dont know. Would sure appreciate thoughts on this before I go meet him so I got an idea what direction I want to turn that meeting towards :)

Thanks for any help you can provide in my mess.

[vangogh]

First of all I'm impressed with everything you've done so far. I know things seem a little bleak at the moment, but your story has convinced me you're going to find a way to make this all work for you.

Oddly one of the ideas that came to me could be something that could possibly come about from your meeting tomorrow. I was thinking maybe you could kind of rent a lift and space from an existing shop. I was thinking it would be your customers and your business within the shop, but you'd give back a certain amount of each job to the owner. That only works if you find a shop that's been slow. They might be able to handle their own customers with one less lift and might as well make something off a cut of your customers. The risk is losing some customers to the business, but there could also be days where you're slow and the shop is busy and you take on some of their overflow. Maybe it's worth seeing if something like this could work with the person you're meeting tomorrow.

Definitely go into the meeting with a positive frame of mind. He could be thinking along the same lines as you. He has the building and you have the customers. For all you know some kind of partnership is on his mind. He might even be looking for a way to get out of his lease or if he owns the building maybe he'd like to make his business being a landlord. Maybe none of those things will happen, but do go in with a positive frame of mind and see if you can get him to go along with some of your suggestions.

Are there open shops of any kind next to the vacant buildings down the road? If so maybe someone in one of those open shops knows who owns them. There has to be some kind of public records. I'm not sure where those records would be, but one of the local government buildings would likely be able to point you in the right direction.

You might just try asking around at every shop in town. Strike up a conversation with the shop owners. I realize these would be your competition and on the surface wouldn't want to help you, but you'd be surprised. People like talking about their businesses with anyone who's interested. Some might simply be happy to help. They may know some shops that are planning on closing up or looking for someone to take over a lease.

Good luck tomorrow morning and let us know how it goes. If it's good we'll congratulate you and if it's not so good we'll do our best to cheer you up and offer more ideas. I really do feel good about your eventual chances here. Your story inspires a lot of confidence in you and I do think you'll make this work even if the solution isn't right in front of you at the moment.

[Kavey]

Thanks for the encouragement.

As far as this guy having the same thing in mind it is very possible. From what I can gather of him he is kind of semi retired and owns several businesses and real estate. I think this is one of the things that just never really got off the ground for whatever reason and turned into a parking lot for other stuff. Honestly I have no clue how it will work out.. hopefully he is open and we can make that one work. The location is PERFECT and with a little cleaning up I could pick up a lot of extra business from signs. It is smack dab on the corner of the street where they just opened the nicest newest casino in the area. I could offer shuttle to the boat.. save em a half mile walk...or 10 dollar valet service... and their oil change (or repair or whatever) will be done when they are ready to leave (hopefully with some cash in their pocket still) LOL.

[vangogh]

Glad to supply the encouragement. I did mean what I said. You've clearly put a lot of thought and effort into this.

If he's semi-retired and owns real estate maybe this will work out. He may be thinking right along with you. Maybe you need to go in there with the idea to convince him why letting you run your business in his building would be good for him. Try to think of some ways that what you want benefits him and it might tip the scales in your favor.

[Kavey]

Well I met with him and I think I am going to take him up on it. Partially because it puts the least financial strain on me right now and partially because it keeps me in the same area that my customers are used to me being.

Anyway what he offered is
A 4 bay shop with an alignment rack, tire and balancer machine, 2 lifts, an office and all utilitys and any extra equipment that I think I need.
He will stay out of business affairs and just wants his cut. He is also turning over his current customers to me. And judging by how many phone calls he had about car repairs while I was meeting with him for an hour and a half he probably has at least a little. He has this kind of agreement with a few other companys and all of the people he meets that need my specific service he will send my way. I really think this will work out pretty well but again I am a very skeptical person so I wont hold my breath but I am going to give it a shot.
There is a new casino right down the road and you have to cross "my new shop" to get to it so the signage opportunity is great.
They are putting in a manufacturing company DIRECTLY across the street that should employ about 70,000 people.

I really think there is an opportunity here.... but he wants 50%. That right now is great because the shop could probably rent for 4-5000 a month. But in the future when I am bringing in good money I am not sure I will stay ahead but I still think that it is an OK deal. I get the shop I need and while I was thinking more towards maybe 30 percent I think I will get enough extra business to make it worth giving him 50%.

What do you think? Basically he is going to be a 50% SILENT partner. But realistically I dont think he will get a full 50% because he has to pay the mortgage (if he has one) and utilitys and maintain all of the big shop equipment. Basically I come in with my toolboxes and skills and customers and he is providing the rest.

I am on a teeter totter here.. I have no idea if this is a really good or a really bad or maybe just an OK deal. It certainly puts an end to my woes for the moment at any rate.

[Patrysha]

Is that 50% of gross or after business expenses like marketing, cleaning supplies, the bookeeping/accounting and so on?

With four bays would you be looking at hiring staff?

[Kavey]

That is 50% after ALL expenses. Whatever profits comes from the shop I take 50% home. He takes the other 50%. If something needs replaced or advertising money needs spent it comes out of the shops money. All other payouts (other mechanics or whatever) it all comes out of the shops money before we split our portions. At the end of the month whatever profit is left we both take 50%.

[Patrysha]

If it was my decision, I'd be all over a deal like that :-)

[Kavey]

As much of a skeptic as I am I think it would be hard to turn this one down. I have had other offers that don't even come close to this one. I am trying to convince myself that this isn't a great deal even though I know it has to be. That 50% number is sticking in my head but that counts no overhead. I just need reassurance that I am making the right choice. I am moving in monday morning if I decide this is a good deal. Considering I have not found anything remotely close to this deal I am pretty sure I am taking it unless someone talks me down between now and then.

[Patrysha]

How will moving in Monday morning allow time for a lawyer to look over the agreement and for you to plan out your marketing strategy and set up plans and goals??

[Kavey]

Well today is the day that I have to be somewhere else. That means I need to get going somewhere or face serious fines and penaltys from the county. I am gonna have to wing it and use my own judgement on things and have it reviewed later I guess. I cannot afford lost income. That is the difference between my family eating and living in the dark without air conditioning.

[Business Attorney]

I think that the arrangement sounds like a great opportunity for you. Fifty percent may seem like a lot but he is not only providing the property but also equipment and at least some business.

You might give some thought to negotiating upfront to buy him out at some point in the future. It's like a prenuptial agreement for a "marriage" of two business partners. In 34 years of practicing law, I have found that the lack of a buy-sell agreement is by far the greatest cause of disputes between partners, and usually the most expensive one.

Echoing Patrysha, forming a partnership is perhaps the biggest business decision a person can make. Make sure you get legal advice to set it up right and cover the sticky issues before they arise.

[Business Attorney]

By the way, I can't address your county but in many cases when you are cited for a violation like that, if you can show that you are making progress you can get a short extension of 10 to 20 days to have everything properly set up.

On the other hand, as long as you don't put off dealing with the legal structure of your arrangement, you really aren't risking much. The problem is that once the emergency is over, it is easy to put off working out the details. I can't tell you how many times I have had clients who said that they would deal with the issues later but never got around to it until "later" became "too late." If you don't have the time or the money to do it right now, pick a specific date (say, November 1) and both of you commit to having your arrangement put in writing by that date.

[Kavey]

Very good advice. I will talk with him and together we can come up with a date to get it all in writing. November actually would be kind of nice as it gives up some time to get to know each other and think about what will be most fair. There are lots of details to put in writing and I wouldn't mind a little time to see how things are gonna work there so I can decide what details I want on the contract.

[Spider]

From the way you describe this deal, I would say 50% sounds very sweet, indeed. I don't think splitting profit 50% for the real property only would be shabby, but to have all the major equipment as well, and an active customer list, that is great. (If my memory serves me well, this is exactly the sort of deal that gave JCPenny his start.)

Perhaps you are fearful of the "If it sounds too good to be true, it probably is" syndrome. Don't be. Sometimes we think a deal is too good to be true just because there are so many bad deals out there, we begin to accept bad deals as the norm.

Recommendations--
-- Follow David's advice, especially about a buy-out agreement, but make it a buyout dependent upon your choice. You don't want to find yourself forced into a buyout if you don't want to, in the future. You also want a time committment from you and from your partner - that the arrangement will continue for at least X years with a buy-back provision in case he wants to get out prematurely.

-- As generous as your partner is being to you, pay it forward by being as generous to your employees by making them profit-sharing. If you can get your employees to feel they are part of the business - that they 'own' the business - they will do things to make the business a success that you couldn't even thnk of to ask them.

Providence has provided you with a great opportunity. Make the most of it. Make yourself, your employees and your new partner boatloads of money!

[vangogh]

I have to agree with everyone. This does sound like a good deal, especially when you consider what happens if you don't take it. David has a good point about seeing if you can negotiate a buyout or at least have an option to purchase a greater % of the company. However everything you described sounds too good to pass up.

Seems like this is going to work out well and be exactly what you were looking for.