What does it take to start a Hotrod Shop?
 

I know this is a really broad question, but I thought with all of the custom shops on this form you guys would be the best place to find the answers. I Live up in Vancouver Wa, where it rains 90% of the time so there's not a lot of Rod shops. I am trying to figure out what is the best way to go about starting up a business. I have a the basic home shop tools and a 6 axis mill, and a lathe. How did you guys start out? Did you start in a garage? Rented two bay shop, or lease a space? What are the do's and don'ts or pitfalls of starting a shop like this. What are the essential equipment, ie, welders, benders, ect.. besides skilled employees. What type of jobs did you start out with? Did you do side work for other shops?

The big plus is my day job will be supporting most of this venture so I don't need to make a ton of money, :lol:

Fishing for good advice,

Thomas

There's several quality shops in the NW. From big name shops to small three car garage shops........it doesn't make it easy to start up a shop around here.

Alot of work, alot of money, and a long time to make it profitable.

You will never make a living in a small shop like you could if you just worked for someone else. Unless you have the work and the drive to manage more then 4 guys you might as well stay small. But unless your John Buterra talented, people will never wait the million years it would take to finish a noteworthy car. You have to make periodic splashes in the publicity game to keep peoples interest. Which takes manpower that is very difficult to find unless you just want to hack up cars. If you want to hack up cars your business will last long enough to burn every possible bridge in a 360 degree circle around your shop. But hacker employees are easy to come by. But if you do quality work don't be enticed to think you have to price yourself to compete with the hacksters.

OH and The worst customers are the ones I gave the biggest discounts too.

Most of these lessons took me years to learn, I will let you know on the profitability thing.

Oh and the best way to ruin a great hobby is to try and make a living at it.


But I would not trade building cars for any other career. Well maybe a few careers........:D

Iron Works> How did you start out?

if you look at all the successful shops they have 1 thing in common it's not equipment .that helps speed things up .but you will find raw talent that is the most important thing

I want to say tools, a garage and a lot of passion. If you have that, you can start building things for yourself, tell some people about what you do, and, well, profit. But I bet it takes a lot of time to grow and have a shop big enough to keep in the business.

its like every buisness... you need costumers! Everybody can stock a warehouse, but selling it is the hard part.... and today i guess yon really need organizational skills.. you need to know what and when you can deliver and how muct to charge.... and lastly you need costumers!

Some of the best builders I work with don't have alot of big equipment,Talent will get you farther than anything else.

I have been in the collision industry most of my life . Id like to know how they bill out some of these zillion hour creations .

Balls

:woot: That i know!..... Still... I'm wondering if someone might have some more tips! Obviously you need talent, customers, guts, and a family that shares your passion or at least understands why they don't see you every evening after 5 like normal.

But how did you guys go about it? Did you take out a loan and get a space to work and bring on a couple of talented guys, or did you operate out of your garage until you had more work than space to put it? Is it better to start in small jobs and custom parts or take on complete buildups? How do you keep the doors open and the shop warm when it takes 18mo to build a quality car?

Thanks for all of your input, You guys are great!
Merry Christmas!
Thomas

I recently accomplished what you are wanting to do in a short amount of time even with the economy. Here is how i went about it.

Start with as low of Overhead as you can in the beginning, If you have a garage and basic tools, start there. Of course you will have to get a few speciality tools depending on what your wanting to do exactly. Talent is the main thing you need, I am somewhat of a wiz with diesels, mechanical, design and fabrication, and a friend is amazing with body/frame machine work and paint. We started out getting some mid level ($4-8K) finished price totaled vehicles through an insurance auction and shot to get them into the market at 50-60% of retail value. We started with just 3 cars initially and 2 guys working in my 30x40 shop. In just 8 months we now complete 2-3 cars a week which are pre orders and pre paid by the customer. We do all work auto under one roof and people seem to really like that idea. We also now control our own overhead supply wise as i am now an authorized dealer for every supplier we use. I could go on and on with the details, if you have any questions or anything feel free to pm or email me, i would be glad to help.

The key points are to provide Quality work at a quality price

Start with as small of initial investment that allows you to complete the above yet minimize risk should things not pan out.

Customer service is key, you treat them right, they will come back and bring friends. Word of mouth is a priceless means of advertising, especially with the internet now days.

Hope this helps and feel free to ask any questions you may have, i could type for hrs on this subject. All in all, good luck with your venture should you try! Best wishes! Jared:cheers:

Here's my take on your post. First you have steady employment and access to tools. Second your day job is currently allowing you freedom to play with branching out and doing something different. Instead of trying to start up your own HOTROD shop, how about joining the aftermarket and using that 6 axis mill and lathe to create some custom parts. You could start by machining some custom pieces for your own car and showing them off at various shows/events. If you get positive feedback, you could start mass producing the parts and marketing them yourself. (Behold the power of the internet) You could also become an additional build shop for an existing company looking to increase production of custom parts. Contact various companies and show them some examples of your work to see if they would use you as a build house for their products.

Good Luck with whatever you decide !!

Paul

Rodger form ironworks is right.If you try to give them a discount so you both can get started you end cutting your own throat.Because they will come back and want even more of a discount the next time.They will ask you to just work with them one more time.He will tell you he needs one more job from you to get that car built.Its funny the guys you give the deepest deals to is the one that will hardly ever tell his customers about who really does the work.Open your shop slowly.Do one job at a time do the very best work you can do.Charge what you think the job is worth.Stick to your guns.If the customer wants a discount or thinks your price is to high tell him thanks but no thanks and move on to the next customer.When a customer wants you to work cheaper that means he also cheap.Cheap and quaitly only work when its your car and you are working for fun. Good Luck.Scott:thumbsup:

I would say if your making good money at your day job keep it and do this as a hobby or side buisness. good luck!

Great First Post! lots of nuggets of wisdom here. others have given good feedback too.

My plan is simple- and I think Frank at Prodigy and Jason Rushforth gave me most of this advice. Your first build is going to be on your dime. Show people what you can do. Market the heck out of it and then sell it. I built my first car in our attached garage. I still remember spraying clear on it a week before SEMA when the furnace kicked on and sucked all that smell into the house at 3AM!

I am in the second step. A complete build for a customer in a small 24 x30 shop. Keep expenses low! Low risk...somebody mentioned that. In one year I have a legit business license, bank account, etc. Does it pay the bills...hardly...but the proceeds from this build bought an enclosed trailer and more shop tools....and money to put into my 69 Camaro...which I will market promote...and then sell...you get the idea.

Customer service. quality work at a fair price. and do deliver the car when you say you will.

Have I arrived...not even close....I'm I on the path to having a business doing something I enjoy? I think so.

baby steps..meet the right people at the right time and see how far the rabbit hole goes! - Chris

Chris and Jared, I agree with both of your posts. I am not in the auto industry but I own a retail/custom Furniture store. www.furnitura.ca

The main things I would suggest:

- Low Overhead and expenses at first. As low as possible.

- Don't be stupid with the money you make in the beginning, save it and re-invest it into the company. If you can break even and pay for equipment or inventory in the beginning you should be on your way to success. You may even have to forget about a paycheque for sometime.

- Self Promote yourself and the business. Get out there and talk to people and hand out business cards. sending out e-mails and sitting on your ass don't do much. People like to deal with people. So get out there and start doing some talking and face to face promoting.

- Offer discounts or promotions to previous customers to tell thier friends and family. Word of mouth advertising is THE BEST form of advertising out there. make sure people talk about you and your shop, and recommend your excellent service, prices and work.

- In the very beginning most of your business will depend on low prices and undercutting the next guy. You will have to bend over backwards for people. Some will appreciate it, and some some wont.

- You will make and lose money, make sure you learn from your mistakes.

- Get ready to spend almost all of your time working at your business, and to lose alot of your personal time. It will be hard in the beginning but will pay off years down the road.

- Lastly, try to find a niche in the market in your area. Try to be different. Pick a business model that you want to go after but change it up and make it your own. Have a reason why people want to deal with you rather then the bigger guy.

Hope that helps,

Ryan

My grandfarther who was very succesfull in buisness said "There are always somone willing to do it alittle cheaper, at little worse quality and alittle uglier" dont be that guy... and "its always cheaper to do it right the first time"...

great advice Ryan.

Like Ryan, I agree that business is business. Here are a few things that matter to me and won't cost you much if anything.

Professional Website: You can be building your first car but look like you have your **** together. It's very important.

A clean shop: Who wants to deal with someone that can't even clean up after themself?

Stand behind your word. The referrals will come if you take care of people.

Start a database today. Every reasonable customer or contact should be recorded. You can then keep them in the loop with emails or mail. Later you may add parts, etc. It's called touches. The more people see your business the more apt they are to call you.

Last but certainly not least. Do quality work and stand behind it.

The oldest saying in almost any business --

"You want to make a small fortune in the car building business -- start with a large one..."


You can substitute any business for "car building"... the same applies. The number one failure of any small business is the lack of capital to support the business GROWTH... By that I mean - let's say you start out with one car to build - then half way through - some friends of that guy come by and want you to build them a car too... now all of a sudden you have TWO 50K projects... but you don't have the shop space - the tools - the manpower... and you don't have the re$ources to do the 'above'.... so you can't capitalize on your business because you lack the capital. You can't afford to stay small - and you can't afford to expand either... BIG PITFAL. IF you can get lucky enough to get two or three customers willing to commit -- AND you can make that next step - then you have a good chance to succeed. So start now to plan on how you're going to go live - if the opportunity presents itself.:cheers:

Really at the end of the day you have to want to build cars more then anything else. If you get into this business thinking your going to rake in the dough, Your extremely mislead. There are very few shops that make great money. I could count a 1/2 dozen that might. And they are not Foose design and Radrides ( parts and T shirts is where it is at). The margin on your labor in this industry is very low, the amount of money it takes for skilled workers is very high and you have to take it in the shorts on the big dollar builds. They have an even thinner margin. Anytime your profit is built into the hourly rate, meaning you have to work x amount of hours times your margin to make good money, you will always run out of time before you make good money.

Now if you can figure out how to estimate quality work and make money on every estimate, you might make great money, but there is not way to estimate perfection.

Tom Hanna of drag race fame was a master metal man. I asked him this summer why he got out so many years ago to sell pet collars, Yeah dog cat and horse collars. He said the only way to make money is to close your tool box. He realized that time was not on his side to build hot rods and make money. So now 20 plus years later he makes so much money from his pet collar business that he can build whatever for whoever and not have to get some customer to pay for it. That is my dream, I just wish I was as smart as that guy.

So what are you saying Rodger? Do it for the love of the game?

Doing something you are passionate about is underated. Part of me is not sure I would want to be in the car business even though it's a passion for me. Once you cross that line and make it work........ Real Estate certainly isn't my passion but it pays the bills alright. Sometimes I wonder how dominant I could be with the passion, but then I just think it would ruin the fun. Even though it's different, as a 19 year old kid I decided auto mechanics was the direction I wanted to go. Went out and got a degree at one of the best schools, was apprenticed by one of the best techs, slung parts for a few years. You just can't get rich working against the clock. I realized at 22 that I had mixed up passion and work. I didn't like new cars, they suck. I liked the hobby. To this day, my experience working on new cars ruins it a little. I still catch myself getting irritated thinking I'm trying to beat the clock over 10 years later. Are you mixing up a passion in trade for a job?

Todd --

Very "insightful" post... and you raise a very good question.

RE: ROGER -- He does this because what else would anyone do in Bakersfield... right?? :rofl:

Todd, I have been told many times not to cross that line and to leave it a hobby!

In the hot rod business your customer will always make more money in whatever they do then you will in your business.

Rodger is right so listen to him.I think the shops that comand the big money are few and far between.And only some of those will stand the test of time.I am going back to doing industrial machine & design. And keep the car hobby to myself. I am tried of waiting for the customer to bring me a check or parts so I can keep working on there project. I have two cars left that belong to someone else then its no to everyone else.

You said right there Rodger!!! My brother inlaw said it best the other day, he was on one of his sons hard about school and getting good grades and such and his ex-wife said he should not be so hard on him and he told her " my sons will be members at the country club not work there" he is the manager at a private club and makes very good money, but the members are the ones giving that cash to him! If you have pasion and you love what you do you will never work a day in your life, but that doesn't mean you will get rich. I have had my owe place and you can make a living but now I work for the largest paint company in the world and I get to do what I love on the side. Plus I get a good price on the paint!!!

17 years ago when it came time for my college decision there were two things I was "passionate" about. Architecture and cars. Both involved designing and creating someones dream. But one required a degree and the other could be played as a "hobby". So thats the direction I went.
My day job pays the bills and allowed me to build cars for myself over the years. After a few were built and sold, I began to get a rep for building "cool cars". More and more people would ask me to build them one and i refused quite a bit before I decided to do one. I established a business name, applied for a state license and opened a checking account in the businesses name. One turned into two, then three and so on untill I slowly outgrew the small 2 car garage I was working in. After a few cars I found that I had established a fine collection of tools and equipment. Today we are 4 strong, have a nice shop and are ALL part-timers. We all still have day jobs and work nights and weekends building our clients dreams. I am greatfull for the 3 guys I have and that they are just as eager to come to work as I am. This IMO allows us to be more passionate than ever because its almost a daily stress reliever. I have been very fortunete to have some loyal customers as well as new ones all by way of mouth. I rarely advertise yet maintain a comfortable work load. Honesty is one of the best policies. I dont promise the world and dont over book if I cant keep up. No hook line and sinker deals here. :cheers:

To make more money you need to do more work, to get more work comes with pay out for more exposure, more work comes with hiring more guys, which comes with more added bills. Its all about passion, if your in it for the funds only then you might as well open up a collision shop. If you have a great reputation and can charge a little more than your competitor most likely your not bringing in more income. A more reputable shop will have larger overhead, higher skilled employees which means higher payroll and more taxes due to the added income. It follows same suit for pretty much any company that does labor contracting.
A consumer most likely will always question the hours and always assume that it shouldn't take that long. If by chance you give the client a bid up front based on the work to be done, you would be pricing it so high to cover your butt just to make sure you don't lose and the consumer will think your out of line.
Your profit is based on payroll only. As Rodger stated earlier, production parts, t-shirts, etc will bring in your additional income but you need that "status" for people to buy your products.
Although Im in the construction industry, an example of a 70.00 rate with the average employee at 27.00 after all expense contributions have been paid the profit would be roughly 18/19% which is 12/14per man hour. This is based on corporate WI. and a very large overhead. When you achieve the 28% tax bracket on income it gets worse.
Keep in mind no matter how many employees you have, they will make mistakes now and then. You can not bill the customer for redo (ethically) and in the end, it's your company, your reputation and your mistake.

NVR --

Another good post... on "bidness".

Reading all these good posts on here dredges up some good memories. I've owned and operated 3 of my own businesses - and sit on the board or am an investor in others. So I'm only tossing in my usual .00000003 worth of opinion - and none of our opinions is worth much except to take the info and digest it. In the end - everyone can open a business and some will stay in business and make a living for many years - some will fail within a year - one out of 10 might be considered 'successful'. Some of the best businesses are the ones that can be replicated (franchised)... hot rod building is NOT one of those. Some businesses can find a way to build more things faster and cheaper... hot rod building is NOT one of those. So for me - to hear the guys that speak to the passion side of the business... that is the clearest message and probably the best advice that can be offered. If you can get out of bed every day - and go do something that you love to do - to whatever "level" that is... and pay your bills... and be proud... then that's probably something you should be happy to attain.

I liken this to Steve Rupps comments about a camera purchase... when he said -- "the best camera is the one you have with you". How simple - and how true... owning the best camera is worthless if it's at home when you want to take a shot... in that case the best camera might be your cell phone.

So here's the advice I'm going to put forth.

Go ahead and give your ideas a try. Start a shop or start a project - and see where it goes. What the hell do you have to lose... if it works out.. Great! If not - you've learned something... But you're never going to have the perfect opportunity - or the perfect time - or enough money etc. So might as well just get down and dirty and get acting on your dreams. Just don't hawk your house - your wife - or anything else that affects OTHERS... It's like gambling - you've also got to be smart enough to know when to fold if things don't go as planned (which they NEVER will in business!). Start it out any way that works for YOU. But start - otherwise you're never going to know.

Here Here Greg, well put. You cant vision income upfront. Its a gamble on a yearly basis. As long as you have work and love your job in the end thats all that counts. I started from scratch 20 yrs ago bought 2 other construction companies along the way to collaborate with mine and venturing into a distribution company of construction products within the next two weeks. Is it serious profit, NO, but I enjoy it. Once your company has its limits you either need to be comfortable with it or look into adding on to it. (labor with product) The biggest thing I've learned in business is not to carry all the reigns. Business owners have a tendency to be controlling and with that said you will end up doing all the work yourself and have no free time to enjoy life.

A lot of great advice so I'm only going to add that, at least in Rodgers case, he also has Workers Comp to deal with which many don't realize is a HUGE pain!

I used to own a factory that employed around 250 people. The WC premiums were INSANE!! Add having to deal with false claims, etc. and your margin shrinks to almost nothing!

One step at a time OP....as mentioned before, build the best car you can on your dime and then work from their. If you wanna get rich this ain't the business to do it.

John

Are rates went up in July 09 tremendously. Enough to put some small business out of work. For you California boys here what you may be in for.
http://www.sacbee.com/capitolandcali...y/1711617.html

Whats the labor rate for a Hot Rod Shop ? A collision shop is around 48.00 per hour here in the midwest for body labor .

Labor Rate depends on Experience the shop has, Location, and Machinery used to perform given task.

Most West Coast shops are 65.00 - 105.00 per hour.

I had a customer come get a quote from us on chopping the top on his pick up. He asked what our labor rate was, I said 65.00. He said well These guys are 45 per hour. Well when the Job was done I saw the car in bare metal and done, I asked what his total bill was and inquired about the quality, not quite up to what would have left my shop. He said man those guys charged me 5000 bucks, They has like 125 hours in the top. I said funny we did a truck like that last week in 80 hours. He did the math and asked why so different, well we have tools to shape our sheetmetal they use a tree stump. ( Really they have a tree stump and a small bench mount shrinker / strecher). The prices were the same but it took them longer to do the same task, but there quality was a little less due to lack of skill & proper equipment.

Talent will get you along ways, But Talent no tools will only get you so far. Talent with proper tools will you a proper job, Talent with a top notch tooling will get you a top notch product in less time.

Could a talented guy build a really nice home with a hand saw and claw hammer, sure. It might take longer, Could he build a better house with power tools, in some instances yes, but I guarantee it would be quicker.


Oh and my Workers Comp insurance just jumped 40 Percent this year.... YIPPIEE. I have never had one claim in 9 years.

Rodger

Id like to know who's only charging 48.00 an hour for collision work. I just had my daughters Mazda 6S she trashed in the first snow fall we had a couple of weeks ago. Labor rate was 60.00 at ABRA in the Milwaukee area and they did a "fair" job. Collision shop repair trade practices are regulated by Chapter 132 here in WI. administered by the Bureau of Consumer Protection. Hot Rod shops do not have to follow those guidelines.

Prior to my ongoing build I checked around and found the rates to be 50-100 per hour. Sorry I wont pay 100 an hour because its a pretty looking facility.

You Guys are a great wealth of knowledge! Thanks for all the great advice! I am planning on keeping my day job, lol, but this is a real passion of mine and I would love to help others in making their dreams come true. That and I would love to build/work on, a lot more cars than I can afford to own or house.
I think we're going to take HRBS's advice and just start off with a "house" hot rod and see where it goes. The nice thing is that even though I'm not independently wealthy, I only need the shop the pay for its self.
If you know of any reputable shops in the Portland, OR area, I would love to build a relationship with them.
What type of laws and restrictions do you guys have to deal with?

Thomas

Dave, Most areas are in the 42.00 to 50.00 an hour range for collision repair. Most shops are locked in to what agreements they have with ins companys that they do work for under a contract (DRP Direct Repair Program). Most ins companys go by the prevailing rate for that area. It's a big long discussion that would take up way to much space on Lateral -G. Most ins companys will say that they do not tell shops what to charge BUUUUT they will tell you that there is a shop down the block that will do it for only X amount labor rate and they don't charge us for all the extras that you have on your estimate. You get where I'm going with it.