Thinking of starting a new business - any help / advice??

[gazm]

Hi Everyone,

I've run my own business for the last 4 years but after being shafted by a partner I've had to take a PAYE job. I now that I want to work for myself and have several opportunities in the industry I'm involved with 'Media' but I was thinking (by the way I'm currently back at home in Ireland on holidays at my parents - not that it should have any relevance!) why not start a business that involves something I’m passionate about - cars!

so... I will do the numbers etc but off the top I'm thinking perhaps look to 'acquire' (will get back to that one later) a handful of high end cars (F430, Conti GT, 997, Cayenne Turbo, Gallardo, DB9 and my Cerb for good measure!!) and use a slightly different business model (very very competitive) to hire these cars - by the way I'm based in the Kingston Upon Thames area and would look to focus on the surrounding area as well as London.

I thought I'd through it out to you guys as I know some of you are in this industry - Is it viable and what are the pitfalls?

In terms of funding I'm pretty sure I could find the deposits to lease these cars - is that the way to go?

Being involved in the media business I'm pretty savy in terms of marketing and selling so don't anticipate this being a issue.

I'd appreciate your opinions (feel free to PM me if you want)

Thanks

Gareth

[NorthernBoy]

An obvious pitfall is thecost of maintenance, and depreciation. Peope will rag the tits of cars like this regularly, so you need to both budget for lots of costs, and for lots of downtime, too. The last will be a major issue. If a perosn has booked a Gallardo for their wedding day, you cannot really fob them off with a bentley because the Gallardo was waiting for a new clutch.

Your ability to charge s also restricted, somewhat, by the eistence of Ecurie25 and the like. If you intend to charge over £1,000 a day (and your insurance will eat a chink of that), you need to be aware that a week in one of your cars is the same as a year in a decent car club (which gives you more than a week, and a choice of cars).

I would say that you need to think long and hard about this, and do your sums.

[gazm]

Insurance is the one viarable that I can't nail just yet but I'm planning to be very compeditive price wise as I know there is a lot of competition out there - A bit like my current industry.. I think it's a case of getting the pricing model vrs occupancy right (with the viarable of parts, servicing thrown in to confuse things!)
G

[gazm]

bump...

[V8 EOL - Rich]

Sounds a bit like this? http://www.northernferrarihire.com/

How will you differentiate except on price & location?

[gazm]

V8 EOL - Rich said:

Sounds a bit like this? http://www.northernferrarihire.com/

How will you differentiate except on price & location?

Thanks for the Link Richard - You're spot on in terms of differentiating on price and location. I'm also planning several other USP's (which I don't want to go into just yet for confidentiality reasons) I will sound several people out on here if / when this venture becomes a reality but for the sake of market research what do you think people looking to hire a similar type car will look for first; cost, service, taliored package (eg wedding) or all of the above!!!
cheers
Gareth

[intrigued]

Just don't do it. I have a very painful experience of entering this market and you don't stand a chance.

[NorthernBoy]

I would say cost is most important with first time customers, with service and package getting you word of mouth referrals and repeat business.

You have to charge a lot to make this work, and there are not many people who can afford it.

[Kinky]

Why not take a franchise option to start with with something like Group 20?

This way it's a darn sight cheaper, plus you can gauge the market over a year or so and determine if it's a viable long-term proposition.

K

[gazm]

intrigued said:

Just don't do it. I have a very painful experience of entering this market and you don't stand a chance.

Hi Intrigued - I'm keen to hear your experience, feel free to pm me if you want.
thanks - Gareth

[gazm]

Kinky said:

Why not take a franchise option to start with with something like Group 20?

This way it's a darn sight cheaper, plus you can gauge the market over a year or so and determine if it's a viable long-term proposition.

K

Cheers Kinky - how does the franchise option work?
Gareth

[Tearz]

intrigued said:

Just don't do it. I have a very painful experience of entering this market and you don't stand a chance.

PM me the details - I'd like to hear it. Thanks

[V8 EOL - Rich]

I have often wanted to hire a car for a "extended test drive" kind of thing. It will give you time to actually gauge whether you can live with it every day, whether Jezza is talking bollox and see if all the kids carp will fit in and so on...

IMHO, weddings & two seaters I cant see mixing.

[gazm]

V8 EOL - Rich said:

I have often wanted to hire a car for a "extended test drive" kind of thing. It will give you time to actually gauge whether you can live with it every day, whether Jezza is talking bollox and see if all the kids carp will fit in and so on...

IMHO, weddings & two seaters I cant see mixing.

I kind of agree - I think it very much depends on the size of the wedding party. I have thought of this one and will plan to include 'a wedding package' which should cater for most sizes.

I'm still waiting to hear back from several people re: insurance so if anyone else has any recomendations I'd be keen to hear them.

Cheers
Gareth

[StevieBee]

The trouble with running a business in an area that your are passionate about is that your heart tends to rule your head.

Is this just an excuse to have at your fingertips, a stable of desirable vehicles or is there a real, viable business model. For example, if you did the sums and found that you'd make more money renting out Transit vans (which is more likely to be honest), would you go this route or stick with the fancy fleet?

Business HAS to be about making money first and foremost.

There are plenty of others doing this type of thing anyway. Would not a brokership type business be less risky?

[gazm]

StevieBee said:

The trouble with running a business in an area that your are passionate about is that your heart tends to rule your head.

Is this just an excuse to have at your fingertips, a stable of desirable vehicles or is there a real, viable business model. For example, if you did the sums and found that you'd make more money renting out Transit vans (which is more likely to be honest), would you go this route or stick with the fancy fleet?

Business HAS to be about making money first and foremost.

There are plenty of others doing this type of thing anyway. Would not a brokership type business be less risky?

I can see what you mean about running a business you are passionate about - I was pretty passionate about the last one I ran (in mendia) which I think is a reflection of the type of person I am.
I'd be lying if I said being surrounded by lot sof nice cars does not appeal but anyone would be a mug to think that if they werent being hired out you'd soon run in to trouble. I employed 80 people in my last business and with the exception of a few people I was responsible for making the company work (and ended up carrying a lot of people)
I would like to do something that involved fewer people and made money! I'm not adverse to working hard. The numbers that I have done (albeit they haven't been qualified yet) show that I can make a larger profit on a 5th of the turnover my last company did (and I had to share the profits on that one)

I appreciate your advice and will look into a brokership type of business - although I'm not sure how it works.

Cheers
Gareth

[BJWoods]

gazm said:

StevieBee said:

The trouble with running a business in an area that your are passionate about is that your heart tends to rule your head.

Is this just an excuse to have at your fingertips, a stable of desirable vehicles or is there a real, viable business model. For example, if you did the sums and found that you'd make more money renting out Transit vans (which is more likely to be honest), would you go this route or stick with the fancy fleet?

Business HAS to be about making money first and foremost.

There are plenty of others doing this type of thing anyway. Would not a brokership type business be less risky?

I can see what you mean about running a business you are passionate about - I was pretty passionate about the last one I ran (in mendia) which I think is a reflection of the type of person I am.
I'd be lying if I said being surrounded by lot sof nice cars does not appeal but anyone would be a mug to think that if they werent being hired out you'd soon run in to trouble. I employed 80 people in my last business and with the exception of a few people I was responsible for making the company work (and ended up carrying a lot of people)
I would like to do something that involved fewer people and made money! I'm not adverse to working hard. The numbers that I have done (albeit they haven't been qualified yet) show that I can make a larger profit on a 5th of the turnover my last company did (and I had to share the profits on that one)

I appreciate your advice and will look into a brokership type of business - although I'm not sure how it works.

Cheers
Gareth

by your last post, it would imply that you don't fully 'get' what being a business is about..

As the owner, you don't carry people, you train them, improve them, or they GET out.

if you employed 80 people but, only a few really contributed, ask yourself why that business is no longer a success.?!

the owners are allways responsible for making it work, the few you mentioned, were they business partners, or employees, if employees you need to think you are still responsible, just have delegated certain tasks to them, yet you remain responsible for monitoring their performance..

lots of owners cry out, it was successful, but he salemanger let me down, etc,etc,etc

B

[.Flyer]

I spent 12 months researching and preparing a business offering performance/luxury car hire.

My research was meticulous; I contacted others doing similar in the UK for advice and had lengthy emails with a chap in New York (who started with one 360 and now has 26 performance vehicles in two states). I researched *every* company offering similar that I could find on the internet. I had the hire vehicles selected, had considered maintenance (a nearby race car workshop was going to work on them), had the insurance in place (not easy), the security systems for the vehicles arranged, the potential delivery vehicles test-driven and chosen (even designed the colour and graphics for them), had premises (brand new industrial unit, just needed the lease to be signed - had a battle with the landlord's agent persuading him to allow a performance car hire company to operate from the unit, but did prevail, with conditions).

I had extensive financials; projected cash-flow statements, profit and loss, leasing schedules, etc. I spent quite some time on a utilisation spreadsheet (if car A's daily rate is averaged at £200, what is the likely income on 50%, 60%, 70%, 80%, etc. utilisation?). I built a massive spreadsheet from every potential competitors published rates, for every service (daily hire, weddings, proms, credit hire for insurance claims, etc.). Was ready to join the BVRLA and had the rental agreements chosen.

I built a website with full details of the cars and services and where you could make an online booking and pay the deposit by credit card. Company registered, VAT registered, bank account opened. Even got advertising rates off Ted here.

Oh, I also have a car hire background

But ... at the last minute, my business partner, who was financing the company, backed out for personal reasons. Nothing wrong with the business plan, was just the wrong time for him. I might forgive him one day

So, my advise is make sure you have the finance in place first and make sure you do extensive research and plan for every forseeable eventuality.

Finally, somebody earlier said that a two-seater sports car doesn't work for weddings; it does if you have two cars (groom/bestman or bride/chief bridesmaid) and offer a discount for the two.

Hope that's of some help.

[gazm]

BJWoods said:

gazm said:

StevieBee said:

The trouble with running a business in an area that your are passionate about is that your heart tends to rule your head.

Is this just an excuse to have at your fingertips, a stable of desirable vehicles or is there a real, viable business model. For example, if you did the sums and found that you'd make more money renting out Transit vans (which is more likely to be honest), would you go this route or stick with the fancy fleet?

Business HAS to be about making money first and foremost.

There are plenty of others doing this type of thing anyway. Would not a brokership type business be less risky?

I can see what you mean about running a business you are passionate about - I was pretty passionate about the last one I ran (in mendia) which I think is a reflection of the type of person I am.
I'd be lying if I said being surrounded by lot sof nice cars does not appeal but anyone would be a mug to think that if they werent being hired out you'd soon run in to trouble. I employed 80 people in my last business and with the exception of a few people I was responsible for making the company work (and ended up carrying a lot of people)
I would like to do something that involved fewer people and made money! I'm not adverse to working hard. The numbers that I have done (albeit they haven't been qualified yet) show that I can make a larger profit on a 5th of the turnover my last company did (and I had to share the profits on that one)

I appreciate your advice and will look into a brokership type of business - although I'm not sure how it works.

Cheers
Gareth

by your last post, it would imply that you don't fully 'get' what being a business is about..

As the owner, you don't carry people, you train them, improve them, or they GET out.

if you employed 80 people but, only a few really contributed, ask yourself why that business is no longer a success.?!

the owners are allways responsible for making it work, the few you mentioned, were they business partners, or employees, if employees you need to think you are still responsible, just have delegated certain tasks to them, yet you remain responsible for monitoring their performance..

lots of owners cry out, it was successful, but he salemanger let me down, etc,etc,etc

B

I dont think you 'fully got' what I was implying - the business was a sucess thanks mainly to me (and I'm not being big headed here) unfortunately I didn't account for a dishonest business partner who was also my accountnt that F@cked things in the end. What I was implying was that during the course of running that business (i was responsible for day to day running /staffing as well as managing new business) I ended up doing more than I probably should have - and as a consequence feel that perhaps if I was involved in a smaller business that I had more control over I'd probably make more money.

Managing a company of 80 people for 4 Years was a pretty good learning curve (increasing turnover and profitability each year) I understand what you mean by taking responsibility which ultimately I did (unfortunately on my own ie. none of the other owners did) but wihout wanting to get into a debate about development and nuturing of staff I'd rather get back on topic - If you have any experience or advise relating to the proposed venture please feel free to comment.
Thanks
Gareth

[gazm]

.Flyer said:

I spent 12 months researching and preparing a business offering performance/luxury car hire.

My research was meticulous; I contacted others doing similar in the UK for advice and had lengthy emails with a chap in New York (who started with one 360 and now has 26 performance vehicles in two states). I researched *every* company offering similar that I could find on the internet. I had the hire vehicles selected, had considered maintenance (a nearby race car workshop was going to work on them), had the insurance in place (not easy), the security systems for the vehicles arranged, the potential delivery vehicles test-driven and chosen (even designed the colour and graphics for them), had premises (brand new industrial unit, just needed the lease to be signed - had a battle with the landlord's agent persuading him to allow a performance car hire company to operate from the unit, but did prevail, with conditions).

I had extensive financials; projected cash-flow statements, profit and loss, leasing schedules, etc. I spent quite some time on a utilisation spreadsheet (if car A's daily rate is averaged at £200, what is the likely income on 50%, 60%, 70%, 80%, etc. utilisation?). I built a massive spreadsheet from every potential competitors published rates, for every service (daily hire, weddings, proms, credit hire for insurance claims, etc.). Was ready to join the BVRLA and had the rental agreements chosen.

I built a website with full details of the cars and services and where you could make an online booking and pay the deposit by credit card. Company registered, VAT registered, bank account opened. Even got advertising rates off Ted here.

Oh, I also have a car hire background

But ... at the last minute, my business partner, who was financing the company, backed out for personal reasons. Nothing wrong with the business plan, was just the wrong time for him. I might forgive him one day

So, my advise is make sure you have the finance in place first and make sure you do extensive research and plan for every forseeable eventuality.

Finally, somebody earlier said that a two-seater sports car doesn't work for weddings; it does if you have two cars (groom/bestman or bride/chief bridesmaid) and offer a discount for the two.

Hope that's of some help.

Hi Andrew

Thats a great post thanks!
I understand what you mean about securing finance - I spent nearly a year securing several million when I did the last venture but as I'm technically on holiday this week (at home in Ireland I haven't contacted any of my financial contacts) I think I've got some really good ideas / ways to differeniate from compeditors - I don't want to mention too many on here but with respect to the wedding one you are right (but who says they all need to be 2 seaters ) fortunately I've got a lot of people in my network of friends who are getting married so some market research (not to mention discounted rates will be on the cards)

Sorry it diddn't happen for you - would you not try to pursue another avenue of funding??

Gareth