Life/Business Plan

[bert]

I have been planning for some time about going self employed full time.

I currently work a normal office Job in sales but run my own small business making uprated/modified components for some old cars ranging from adjustable TCA's, Tie Bars, Panhard Rods and recently started making some custom bike carb inlet manifolds for VW's as well as car body restorations/modifications.

Now thats run in my spare time and is actually quite profitable compared to the amount of hours I have to do it for. Infact this year I have not had an empty order book which makes me very happy.

Now I plan to begin to move to running my own business more full time but before I do that I want to make sure that I have enough qualifications to go forward.

I can Mig and Tig weld but I want to make sure that I definitely have the right skills so does anyone have any ideas of courses that I can do at evening schools? I live in Chippenham so have wiltsire college on my door step and castle combe. They dont have any new prospectus available so have to wait until August for the new courses to be announced.

Any private courses that may be useful?

Any advice on the right size building and costs involved in renting?

Id need space for a decent workbench and tools/machinery as well as 1 to 2 cars inside. I dont think I will need a ramp as I would use a spit for any big resto work but it may be usefull for the future.

Sorry for the long message but I really want my future business to be a sucess rather than a 12 month flop

 

[tigler]

Trying to give advice on how to set up and run a business is like trying to recommend how long a piece of string should be.
I will offer what I know.
Establish how much you need to earn, actually in your pocket. Then extrapolate what the business needs to turn over to provide the nett profit to give you those earnings. Nett profit is of course profit after all costs and expenses have been deducted. Then decide if that turnover is actually achievable.
Build into that, a level of retained profit as a reserve, that is, don't spend all the profits.
The best way to start a business is with some working capital, do you have any you can put in ?
Don't set up as a Ltd company and be a director. That puts you into a world of excrement. And also, not many people realise, makes your personal details, name, address, age, telephone number etc, public information, permanently !
It also requires you to provide all sorts of financial information to busy body government officials and obliges you to make annual audits.
Be a sole trader, then you can almost do as you please and are not obliged to make annual audits of finances. You can be VAT registered as a sole trader. I advise 2 sole trading states, one for dealing with suppliers etc, one for dealing with customers.
Have a bank account for each and charge between the two accordingly. EG, make your product as one trader and sell it to the other to sell retail. Only the public one needs to be er, public knowledge.

Have as little to do with banks as possible, and if at all possible NEVER borrow money from them ! Once in their clutches there is no escape !

Get a good finance software package and do your own books, accountants are leaches and oxygen thieves. It may seem difficult but trust me, with good software it's a doddle and you save £££££££'s and lots of grief.


Make do with as little space as possible, rent and rates are the biggest bleed on your finances. Check any prospective landlord out very thoroughly, most of them are utter bar stewards to varying degree's !

Do your product costings very carefully, too much optimism or lack of accuracy can break you.

You are obviously making stuff for cars, sell it with a warning that it's intended only for off road or competition use. That covers you in the event of a problem.

All the above is learned from experience of being in business for 25 years.

Thats it from me, all the best

 

[Drains]

I advise 2 sole trading states, one for dealing with suppliers etc, one for dealing with customers.

Get a good finance software package and do your own books, accountants are leaches and oxygen thieves. It may seem difficult but trust me, with good software it's a doddle and you save £££££££'s and lots of grief.

Tigler, how do you make it work having two sole trading states, and what's the basis of the advice (i'm not doubting you for a minute - I'm very interested to know how and why!)

And can you advise a decent software package?

FYI, I am a sole trader and do my own books; always interested in improving my situation though!

 

[bert]

interesting about the sole trader bit I will look into that.

I already do my own books and made a simplish excel spread sheet that works out costs and sales so I can keep track of everything as I already complete a Tax return for it all.

The business will need to turn over about 60k per year to keep me earning what I do but I fully understand that is unlikely to happen in the first few years so beans and bread for the kids meals.

I understand what you mean about space, I was thinking about 1000 sq feet as that should give enough space for a decent size bench/tools & machines.

1 long term full car resto and space for smaller quick projects like replacing Sills/Arches/MOT welding etc to keep the turnover going.

Do you think id need to have welding qualifications or would a portfolio of my work be OK?

 

[tigler]

An individual can have as many sole trader states as they want. EG, you could have one to sell one product mail order, another to sell a different product in a shop, etc.
The benefit in the case of the OP would be sharing risk in case the worst happened and confidentiality. If, for example he got into problems with paying suppliers, the consequences wouldn't affect the retail side. If he also paid rent and rates from the retail side they wouldn't know of issues elsewhere. Likewise the bank accounts for each.
Also, suppliers don't get to find out what you are making or selling.
So, a problem with one won't take you out entirely.
I have kept it a little vague as I need to be careful what could be deduced from the above, if you know what I mean ?!
Ironically, I have our very first business accountant to thank for this, except we were a Ltd company, well, companies

Software wise, it's been some time since I closed the business down, so things will have moved on considerably, back then it was Sage for traders and small companies.
No doubt someone on here will have more upto date expereince.

It was my experience that where most small businesses were weak was financial control.
We made the mistake of leaving it all to the accountant and it was a bad move except for the first firm we used. We moved area's though and it turned into a nightmare !
The only thing I would ever use an accountant for again would be official auditing for a Ltd company, there is no option there but to use an accountant.
In that case I would just give them the print out's to reconcile against receipts and invoices, bank account etc.
I would never sub out ledger work again, or rely on their advice.

 

[tigler]

1 long term full car resto and space for smaller quick projects like replacing Sills/Arches/MOT welding etc to keep the turnover going.

Do you think id need to have welding qualifications or would a portfolio of my work be OK?

I wouldn't consider myself qualified to give advice on welding quality but you would get a good appraisal of your work from the pro welder members here by putting some pix up

If you have long experience and a good track record you should be ok IMHO.

 

[stuvy]

as tigler mentioned off road or competition use then you can avoid having to go down the CE route as it can get very pricey. You have to ask yourself would you put it on your own car with your kids in the back? if not take a step back and think about it long term.

I have swings and roundabouts of being busy and being seriously bored doing nothing i end up helping a mate out doing tree surgery(luckily i trained as this when i left school)

The other thing you havent stated is insurance. Do you have any? or any up to date quotes?

Lastly best of luck with it mate, once you take the brave leap youl love it!

 

[Paul.]

A sole trader can have as many names as he / she wants, even for the same business, but using different trading names for different facets of your business will offer no protection at all if things go wrong, as a sole trader YOU are the business, and are personally responsible for any debts or other liabilities that may arise, so having multiple trading names and bank accounts is just an unnecessary complication for a one man band, you find one trading name owing money and you will be made to repay it from any or all business and personal accounts, any other personal assets are at risk too, your house , car, telly, dog, whatever.
The only way to ring fence your business is to set it up as a limited company.
Business link and the HMRC websites offer a lot of advice, and I've always found the HMRC helplines to be er, helpful.
Insurance is a must and can be difficult to find for welders, simply business are quite affordable.

 

[gavuk]

You can always pop over ,talk to my mrs she can talk you through your options mate , I'll put some feelers out for workshops out your way as I have some mates near you

 

[bert]

Tigpaul, thanks for that I will have a read on the HMRC Site

cheers Gav, i will probably talk to her at some time Going full time on it is not going to happen soon though as I want to get all my required tools/equipment whilst still in FT employment so maybe some time near the end of 2013 I would go pretty much full time.

I found a place in corsham that was about 3k per year but with a minimum of 3 years rent to be paid. Its good to see whats about in the surrounding area. Ideally I want something pretty close so im not spending a load on fuel getting there and back.

I should really be making a list of must haves to have in place and proritise them and work down the list.

I 100% trust my products and most of them have been developed for use on my own track car and I make sure everything is over engineered. There must be almost 100 cars out there with my parts on them and not one failure even on the race/rally cars.

Any other qualifications people think i should need? Is it worth getting coded for Mig and Tig?

 

[atomant48]

Any other qualifications people think i should need? Is it worth getting coded for Mig and Tig?

I think you have to consider the 2 sides to what you are doing. If i were looking for someone to help out/take on one of my restorations (say - replace the crossmember and spring hanger mounts on my MG after i had done the sills myself) then i would be looking to talk to them, get a feel for who they were and then decide or not that i trusted their work. Welding 'chits' probably wouldnt concern me. But for the fabrication side of what you are doing, if you are ever thinking of marketing (say through Moss or similar?) then would that require some form of certification? Notwithstanding the comments above about race use etc.

Other consideration with business-running is cashflow: You MUST insist on prompt/pre payment for any expenses you have, otherwise you will run out of money. Simples.

You dont sound far from me so i hope you do get up and running!!

 

[seanc]

I have no knowledge of the business side of things but as far as qualifications are concerned, If I was looking to get work done i would be more interested in seeing the quality of work done previously than a welding certificate !
As far as size of workspace is concerned what i would do is get some pegs and string go to an open area and peg out the size you think you will need, It will give you a much better idea than just picking a number off the top of your head ! im not sure of prices around your area but average around here on an industrial estate is between 5-7 £ per sq metre a year. Although alot of units are popping up on farms etc. now which could be a much cheaper option for you.

 

[snowcat]

Codings are something completely different, used for insurance purposes on critical structures and like, theres plenty on this site, but the long and the short is there not really suitable for what you need...competance and quality work will be the most important factors

On the business side of things totally agree with TIG Paul, playing hide and seek with sectors of your business will offer you no protection financially as a sole trader, You can take drawings and have certain assets away from the business, but none o it would offer full protection if things go wrong.

Cash flow is key in any business and how you manage that is up to you, HP or overdrafts or flexible trade accounts can be tools to use if managed correctly. your also need to insure you have available cash to pay HMRC in January and your VAT quarterly.

Initially getting a business going is a relatively easy task, growing and expanding is harder but necessary , A stagnating business eventually dies.

 

[Shox Dr]

At one time, as a sole trader I was turning over 300k a yr, I used TAS Books a really good prog. They were purchased by Sage, because they wanted a bit of coding, and killed off TAS.

My House/s have always been in my wifes name, I have no assets as such. I've always had an Account, at first because I couldn't be arsed, and latter because the £400 per year they cost me, was a drop to what they saved. If I earnt any more or my profit rose then I would have gone Ltd, to save TAX. Accounts bill would have then gone up to £8-900. But then again they would have saved...

 

[bert]

OK so apart from the running of the business side its looking like I wont really need and welding certs but perhaps attending some "restoration" courses migh be appropriate.

I have some extensive pics of all the cars I have restored so probably worthwhile making up some portfolios of the builds that people can look at as well as make a nice looking website with some pics.

I always have some difficulty in pricing jobs on cars I have not done before but for the business to be remotely profitable id need to me making at least £1000 to £1500 a week. So that works out at minimum of £25 per hour, does that sound about right for proper restoration work?

 

[brightspark]

OK so apart from the running of the business side its looking like I wont really need and welding certs but perhaps attending some "restoration" courses migh be appropriate.

I have some extensive pics of all the cars I have restored so probably worthwhile making up some portfolios of the builds that people can look at as well as make a nice looking website with some pics.

I always have some difficulty in pricing jobs on cars I have not done before but for the business to be remotely profitable id need to me making at least £1000 to £1500 a week. So that works out at minimum of £25 per hour, does that sound about right for proper restoration work?

work out what all your weekly overheads will be 1st . thats dead money that has to be found then work your hourly rate out after that . some months will be good some wont . so dont spend all at once your earnings . keep some in reserve for slack times

 

[Shox Dr]

£25ph would be fine if you worked on jobs every minute of the day, but you don't there is a lot more to what you do, all the none profit jobs, invoicing, bookkeeping, ordering, banking, cleaning up, costing jobs, People coming round etc etc etc

All these cost you money and time. Time you are not earning. So that time needs to be factored in to your "hourly" rate.


I think you'll need to be charging a lot more than 25quid an hour.

 

[bert]

Id allowed £10k per year for Rent/Rates/Electric/repairs/insurance

assuming I could find somewhere for about £3k rent a year.

All estimated really with best guesses, im going to need to do some research into overheads properly to make sure im not leaving myself open to some large costs I have missed.

 

[bert]

Thak you everyone for the info, im on a steep learning curve

the hourly rate was cut down from a daily rate on based on a 8 hour working day.

i know some resto places charge by the foot rather than an hourly rate.

Not that I would do that but even spannering charges £45+ so i know im going to need to be in that range if nor more.

I just checked on a unit I loke the look of and the rent is £8k per year and rates of £5.5k for 1300 sq feet.

Looks like I need to do some more homework on costings as already they are higher than I was expecting.

 

[andy82]

Bert i don't know if this applies to England, but Scotland get 100% Rate relief (No Rates) for properties up to £10,000.

Properties here go for about £3000-£4000 for 1000 sq ft, For new businesses i would expect landlords to offer 1-2 year lease with a deposit that equals 2 months rent and 2 months rent in advance.