Going into the Auto Body Business with a friend – bad idea?

Tags: Shop Management

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http://www.howtopaintcars.com/wp-content/gallery/misc-images/nasty-garage.jpg?i=478138271I recently got a bunch of questions from a couple of guys I know that think they want to go into business together. They wanted to know if its a good idea and what they should do to get started. They met in grade school and have been friends for about 10 years. Both of them work in the industry but they have never worked together other then on personal projects.

As for personal life one of them is married with a young kid and the other wants to be single for the rest of his life it seems.

Now the first thing you have to realize is that even marriages where you take an oath before God don’t last today. If fifty percent of marriages end up in divorce then you can expect more businesses fail because of personal reasons and they do.

The fact is most businesses will fail within the first 5 years whether they are sole proprietorships, partnerships or even corporations. That is when people have a plan and stick to it.

And the Body Shop business is as difficult as any when it comes to dealing with regulations, material and labor costs and getting paid.

What do you need to start a body shop business?

So, what do you need to get started? Well a lot of people would say you need to run down and get a business license then rent a building.

Honestly though the first thing you need is experience.

You want to know how to perform the work you will be offering your customers but you also want some experience taking care of the day to day shop duties such as ordering parts, working with insurance companies, dealing with customers and processing payments. You need to know just about as much to run a shop as you do to repair the vehicles.

After you understand about how a shop is run you need to learn accounting, taxes and how to work with banks and accountants.

Once you understand that you need to understand all of the regulations and who you need to deal with on the local, state and federal level for all purposes in your business.

Finally after you understand how the business functions to process work you need to understand how you advertise and network to get work. You should be able to guarantee enough business before you open your doors to justify starting your business. This means you take in side work after your regular job and on the weekends. You learn how to generate work for yourself even if no one else is pounding on your door asking you to repair their car.

You need to get to the point where starting a business in the government’s eyes is just another technicality that you have to deal with and you are not thinking about that so much as you are thinking of how to find places to stuff all your money away.

Whats Reality?

The fact is these guys have known each other for many years and they can trust each other to be there but business has a sneaky way of making enemies out of friends and destroying even the most loving marriages.

What these two need to do is start taking in work together on the weekends. Work together and then they will see who is really interested and dedicated getting the business off the ground and keeping it going.

If they can’t spend 2 days and a handful of nights together they won’t be able to add that time to 6 more days in the shop all day together because businesses don’t stop when the front doors close. There are tons of things the business owners need to do at home and after hours that are required to keep the business working.

There are two ways this partnership could go.

The guy that is married could be dedicated to the shop because he has a family to feed or it could all rest on the single guy’s shoulders because the married guy needs time to spend with his family and says since you are single you don’t have anyone so you stay late every night and you work on the weekends.

These two really need to figure these things out before they end up investing a ton of money and time into something.

The best option would be for the guy that is more dedicated to the business to be the owner and then the other guy to be the manager as an employee. They could even write up a deal where the owner of the business gives the manager first right of refusal if he finds he needs to sell the shop. Set the price based on 3 to 5 years income or another method that would pay off the current owners debts and give him a nice profit.

If the manager / employee decided to bail because of other commitments then you could write up a deal where he could not work for anyone within 50 miles of your shop for a year. Thats called a non-competition clause in a contract. And it could be in force whether the guy gets fired or leaves.

I think in this way each of them would understand their responsibilities and the weight would not be unfairly shifted after the business got its start. Everyone is enthusiastic at first but then they realize that their family means a lot to them or they realize that their business partner never had good business sense and wasn’t willing to learn.

Final Note

Going into business with anyone is quite a risk. You end up tied someone or a group of people and you end up with equal liability.

A Partnership means that both parties are equally liable for taxes, bills and any problems that happen.

Even though you might be planning a business with your best friend or a relative or even a spouse you may find yourself in over your head and in debt or liability because of the other person’s actions and not your own.

And lets face it … it is hard enough living up to your own responsibilities when starting or running a business.

In my personal experience watching other guys try to make this work I have only seen deep resentment result in the end.

I would personally stay away from it unless you have a trial run for an extended period of time such as these two guys finding cars and selling them for profit, to see who is dedicated and who may not be.

If everything is fine in the end then go get the paperwork or form a business like a LLC or Corporation where it can be dissolved or transferred without hardship on the other party.

 

 

 

 

 

 

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