I'm having a problem planning a body shop business

Discussion in 'Starting a Business' started by Merab, Oct 22, 2019.

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Which plan is best

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  4. None of them

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  1. Merab

    Merab
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    Hi, hope you are having a nice day.

    What I Have:
    • Land with all the necessary approvals for a body shop
    • Project for a building
    • Lucrative location (beyond perfect for a body shop)
    • An investor open to the opportunity with sufficient cash on hand
    What I need:
    • To write a project and plan things out
    The problem:
    Currently in my country, a real professional in this field can independently earn more money than it makes sense for any profit margin I can come up with in terms of salary expenses. They work on a rent system (They rent a box and work in it) That system is simple and makes sense if there was already an existent building, however it falls apart if a significant investment is involved.

    Note: On rent basis, making profit would actually be incredibly simple, however recovering investment capital is another matter. It would take 10 to 15 years to recover investment capital in this way and the investor is not a young man, convincing him of such a long-term investment won't be that simple.

    I'm trying to come up with a system that would allow me to have a reputable body shop, while also keeping salary costs reasonable. I'm dealing with a trade-off between quality and profit. I won't profit if I don't have professionals and I can't have reasonable profit if I have professionals and I'm risking a big loss in operational expenses to boot.

    Ways of fixing the problem I've thought of:
    1. Hire one true professional and give him an X amount of semi-professional assistants with an X amount of assistants (Low-income manual labor helpers). Driving down the costs significantly. The problem with this is that I end up trusting someone singular in an environment that allows him to profit additionally with dishonest ways (Remove a part that does not need removing, declare it trash and then sell it for profit). And it is also doubtful that this one person will have the ability to monitor, and prevent others from doing this. This is just one example, there are plenty of ways to make dishonest money at a body shop. Though I have thought of ways to deal with this, and I'm leaning towards this plan, it's also generous to assume that it will go as smoothly as I imagine. In this plan I'd have to dedicate a lot of my time and energy to a business model that might end up in a loss, but also has high potential for a significant profit. I'll take the risk any day, but I am not so sure how I should deliver this option to the investor.

    2. Abandon the idea of profiting from the body shop entirely. Provide the boxes for rent and instead concentrate on making profit from the second floor shop also planned. (Sell various materials on the spot) With additional smaller investment several car-wash boxes and a parking space is also a viable opportunity in addition to the body shop (plenty of space). In this case the body shop would A. attract clients B. Cover all expenses and C. probably profit a little as well. In terms of accounting perhaps the body shop would be the least lucrative in terms of Investment capital vs profit over a period of time, however microeconomics-wise it would have plenty of significant positive-externalities for the entire business. (Largest Used/New Car Market 5 Minutes away). Downside is larger investment capital (By about 25-50% margin) Though significantly less risk and monthly expense.

    3. Start off with Plan 2, give it some time and then experiment with plan 1. Include both plans in the proposal project for the investor.
     
  2. Changed Creation

    Changed Creation
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    Hi Merab. Welcome to BAF.
     
  3. Changed Creation

    Changed Creation
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    I first wrote you a long detailed answer that didn't upload :( so now I am giving you the short of it.
    Don't use your own or another person's life savings to start this business. It is not "the bigger the risk, the higher the growth!" This is an incorrect premise promoted by financial institutions and the cause of much business failure! Rather look at you idea from outside the box!
    Hannes Dreyer, a business mentor of mine applies what he calls the Formula for Richness to all projects or businesses. In short it means you evaluate by playing at an idea until you can answer yes to all of the following! Will it be fun? Is it legal? Is it possible? (can I leverage my time and effort and skills to learn what is required till it is possible) Can I make it happen? (Me, myself and I!) Do I have control over it happening? (not anyone else- only me)
    Go sit and think, play with what you really have in your hand (the land and the fact that it is lucratively located) and come up with another way to start a business (where you can leverage the growth of it) until you can start the business you originally wanted to obtain BAF opinion on. This time with less risk, less chance of failure and more business skill in managing the business activities.
    My suggestion therefore is to start differently, using your time, effort and skills. Leverage your growth and only when you can start the business you originally wanted to start, do it with no debt!
    I had a lot more to say, but have now run out of time to answer in more detail! Good luck!
     

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