Help Analyze my Business please, I don't want to fail

[InsomnicBrain]

Help me analyze my business please

I own an auotmotive & transmission repair business. Could you guys help me analyze my business? At this point right now, I am a little burnt out not knowing which direction my business is going.. I have been in business for 7 months now, ran into a few obstacles, and had some money spending issues (investing money in advertisements in things that didn’t work or hiring people that didn’t help) Going into my 7th month, I have eliminated my money spending issues and got rid of the people I contracted. Pretty much cut a lot of the expenses that were hurting me in the earlier months, seems like it's coming back to haunt me.

My business has been up and down since I started. November and December were pretty bad, in the industry people say these are the worst months leading up to March. At this point I'm a little confused, I have been working day in day out, and the business is constantly on my mind wherever I go. I am constantly freaking out! Here is a timeline of my business from the first month.

August: First month in business I took a loss, $13,000 below break even. I was trying a few different advertisements, lost money on a few jobs that were repaired wrong. I got rid of my main mechanic because of that.

September: Business got better, I hired someone who was going to help with outside sales, he was very expensive and didn't help at all. I would have been -$4000 from breakeven but with him on board I was still at -$12,000.

October: This was the month that showed me the potential of the business. I made a $10,000 profit. At this point I got rid of the contracted person. I am also starting to realize I’m over staffed. I’m starting to cut costs on everything I can.

November: I took a hit, I’m not sure if it was the holidays, bad weather, people in the industry told me its expected during these months but I still freak out. I took a $7000 loss. My technicians think my manager is the problem. I tend to agree and disagree.

December: I also took a hit, loss $5000. Again, I don’t know if the holidays and weather had anything to do with this. I have repaired cars for people and they have not paid me in full, this is starting to become a cashflow problem. I got rid of my manager at the end of the month, he wasn’t very good. I have now become the manager. At this point I feel I have wasted a lot of money on useless advertisements, wasted money on hired employees, and being overstaffed.

January, Business picked up a lot from the past two months. I broke even this month which was a relief. I’m still freaking out about February. The upcoming months always scare me because I don’t know which direction it’s going to go, since my business hasn’t shown any consistency.

I am running on limited funds right now from my SBA loan. I do have a personal loc for reserves but at this point I’m freaked out that my loan money is gone. I do know where it all went but it’s too late to reverse those things. I have only been in business for 7 months, I don’t know where this business is going, im burnt out, i don’t know if this is a failed business? I have been going to a lot of people for help, business counselors, etc. They tell me to cut costs as much as I can. I don’t know if if investing more money from my line of credit is going to put me in more debt or it’s going to get better? I’m stuck with this, I have a loan and a lease?

Pro's: I have a nationwide brand name, we have the best warranty around. People know the name.

Con's: I'm in a plaza with competition that have been in business for 20 years. It hasn't seemed to affect me very much but these guys are looking down on me a hoping I fail.

Anyone have any advice for me. I think I really have been dwelling on the fact that I wasted some of my money on pointless things that are now affecting my cash flow, also that the business is so up and down it affecting me on every level.

Thanks...Robert

[Shadesz]

Only read the title and thought I would wright...

"You can't win, by playing not to loose"

[InsomnicBrain]

Thank you for the quote.

[Nordstrom]

If you had an income of 10.000 one month you MUST to be earning on that sum. Instead of hiring people take help from friends whom can speak about your firm instead. Be on forums for your market(local ones), join religious boards in your area, go to church, synagoge and the muslim thing. You HAVE to cut the costs.

10.000 MUST be a good profit for a newly started company.
+10.000
-rent
-Costs on the repairs

Taking a loan usually leads to a situation where the person believes he took a loan for xx.000 that he must spend on the business. Think about NEVER spending more than you have to. You can most probably get 100% commission workers, who might not be the best but will never cost you a dime.

[InsomnicBrain]

Thanks for the response. Is it a failed business or did I simply just not ask for enough money? 3 out of the 7 months I have broke even?

Thanks...Robert

[Phranksizzle]

Your first year is the hardest. Since you have a lease and a loan I wouldn't go out "just like that"

I don't think you failed, you broke even AND you even made a profit one month! I have been in business exactly as long as you have and I have not made a profit. And I have been on TV MAN!

I would your business is NOT failure. I would look into more cost effective advertising. Google adwords is your friend! Cheap and EASY. Also if you are not on google maps , you should be , its free.

I opened my business up and my highest grossing month has been wayyyyyyyyyyyyyyyy less than 10k. If I had 10k profit I would probably have a heart attack! I honestly see myself about 3 months away from getting anywhere close to that.

Keep fighting the good fight. Oh yeah and sales people, just put them on commission. If not put them on a low salary and high commission.

[InsomnicBrain]

Thanks for the response and very nice to meet another person who is currently doing a start up. What kind of preperations can we do? That's what I'm trying to find out? What is a way taht we can prepare for the worst that doesn't involve just having extra capital to put into the business?

Robert

[bhnyc]

Hey Robert,

After reading your post, there are a few things which I think you could do to help your business. Obviously, you know your situation more intimately than I, but hopefully some of these points are useful:

- From your post, it is not clear whether you actually have experience in the field you have started your business in (automotive & transmission repair). From your description of the type of employees you have been hiring, it sounds like you don’t have extensive experience there. If this is the case, I would suggest you hire an experienced mechanic/ technician (or use one of your existing guys) and ask them to teach you the trade. Also, enroll in a class or do self-study on the topic. It is very difficult to start a small business without being very hands on – not being very hands on also gives your employees too much room to mess up.

- I think you did the right thing by becoming the manager yourself. Once again, being too removed from the hands on work, makes it tough to run a small business of this nature. Obviously, once the business is running profitably and you have a good feel for it, hire a manager so that you can focus on expansion etc.

- You mention that you have a national brand name. I would assume that this means you have bought into a franchise – have you approached the franchisor for advice?

- We all know the old saying: you can’t manage what you don’t measure. You should set a budget, with goals for sales and expenses, taking into account how much cash you have left to burn. Its much easier to succeed if you have a well thought out target for sale and expenses, and can see how achieving these targets can make your business profitable.

- It seems like you have had some customers. Have you considered setting up a referral program, so that satisfied customers can be rewarded for referring their friends? A reward could be something like 20% of their next repair with you. This is useful in that it incentivizes your existing customers to return and also provides an incentive for them to refer you to their friends.

- Also with respect to your existing customers – do you know and keep track of how they heard about you. If not, you should – find out what is working, and do more of that, instead of trying different, expensive advertising methods (especially when cash is tight).

- You mention having other competitors close by. Have you taken a look at how they advertise, how busy they seem? Try and use some of their successful advertising techniques.

- One last point – try do some clever “free” advertising. Why not do something which could help you get free coverage in a local newspaper. One easy thing comes to mind: find a local charity which has a vehicle which needs repair, or vehicles which could need repair in the future. Offer to repair the vehicle for free (either free labor only, or free parts and labor, depending on what you can afford). Then let the local newspapers know about this – you should be able to get free press coverage/ buzz for this good deed.

I hope these are helpful. Good luck, and don’t give up.

[InsomnicBrain]

Thanks for the response. Yes, I am still learning on the job. I'm in a plaza with very well established competitors. How do I overcome this? I have had business but it seems like this particular market might already be tapped. The franchise did put me here and now I'm stuck with it.

I have asked the franchise for help and just tell me to go out and hand out flyers and do outside sales, which I haven't been doing. I track all my leads. Thanks again for the response and advice.

[Aletheides]

You mention advertisements which have been costing you a lot.

Can we talk more about your marketing????

What city are you in?

I have asked the franchise for help and just tell me to go out and hand out flyers and do outside sales, which I haven't been doing.

Why?

[InsomnicBrain]

We'll for the past two months I have been trying something different every month. One of the advertisements were a company that sent advertisements to employees to corporate businessees. I thought that if I could get two or three transmissions jobs out of the thousands of employees, it would pay for it self. That didn't happened so it was a bust. The other advertisements that I have been doing are mailers that you get in the mail that people have to search through to find.

The most recent advertisment I am trying out and believe in very much is direct marketing. The flyers will directly hit my customers house and not be grouped out with a bunch of other stuff. I'm not sure if i should completely switch over right away? I'm in the Seattle market.

The reason i haven't been doing my outside sales is because I'm down a guy and had to become the manager. I am looking into hiring someone.

Thanks...Robert