How To Prepare Your Shop For The Next Opportunity - Engine Builder Magazine

How To Prepare Your Shop For The Next Opportunity

There are also times when your equipment breaks down — with no warning
— and business is at a standstill until it can be replaced or fixed.
Having cash available is essential to keeping your business moving
forward during both types of situations.

However, it can be difficult keeping extra cash on hand to put toward
these situations. Many shop owners leave enough to pay a regular cycle
of bills, payroll, inventory and rent, while the ­remainder may become
a “dividend” to the household. This is often the reality of running
your own business that is the sole means of income for your household.
While usually doable, this can leave you in a bind when the unexpected
arises.

Knowledge is Power

To make the most of your shop, you should know the different ­financing
options available, which ones make the most sense for your needs and if
you’re likely to qualify for them. To start, it’s ­important to have a
firm grasp of both your personal and business credit profiles before
finding yourself in need of a loan. You may be unaware that a bank
won’t typically make a loan if your personal credit score isn’t above a
certain threshold (a ballpark ­figure of 680).

Below we’ve broken down available ­financing options based on your
qualifications and needs. And, for additional insight, check out On
Deck’s website (www.ondeckcapital.com), which has free tools to gain ­further insight into both your credit profiles and your lending options.

Bank Financing: If your project is a full end-to-end
renovation, the opening of an entirely new location or starting a new
business, then a traditional long-term loan is your best fit. In
addition to ­assembling the items below, the approval process for a
traditional bank loan takes a significant amount of time — anywhere
from three to six months.

1. Complete financial records (balance sheet, cash flow/income statements).

2. Business plan and pro forma ­financial statements.

3. Complete tax forms for household and business dating back two to three years.

4. Very consistent, positive cash flow and other necessary diligence.

5. And, finally, time — long-term loans often take
months (and delays often come from getting your hands on the right
information).

Examples: Bank Loans, SBA Loans

Short-term Business Loan: Here we mean real loans —
not merchant cash advances — that enable you to extend payments over
six, nine, 12 or 18 months at total costs that are similar to long-term
financing. The benefits are threefold:

1. It’s based on your business performance and not just personal credit;

2. It requires information that’s readily available
from your electronic records (bank account, credit card transactions,
etc.), and;

3. The term is designed to allow you to spread out the
payment, but also have it paid down before your next opportunity
surfaces (you don’t want debt stacking up on your business). Short-term
business loans are typically less than $100,000, so new locations and
major “soup to nuts” renovations won’t fit the bill. These loans can
typically be funded in as fast as seven business days.

Example: On Deck

Using Personal Credit or Assets: More often than not,
most of your business credit is based on your personal credit. The
benefit is that applying for a commercial card or line of credit is
easy. However, there are two main drawbacks:

1. If you’ve already drawn on your personal credit, your score may have
been impacted (this is not a reflection of you, but rather of the
system), and;

2. Loan programs based on personal credit are designed
for household use…so, while your project or repair may require $40,000,
you might only get $4,000. You could borrow against your home; however,
this is a difficult and time-consuming option that poses potential risk
to the household.

Examples: Credit Cards, Home Equity, Lending Club, Prosper.

Going forward, always remember that when tackling your next opportunity
or emergency, preparation is half the battle. Knowing exactly where you
stand credit-wise, as well as what your financing options are, will
help your business through its next transition.

Mitch Jacobs is founder of On Deck (www.ondeckcapital.com).
Through Jacobs’ work, On Deck is doing what banks have been unable to
accomplish for years – effectively evaluating the credit worthiness of
small ­businesses and providing them access to capital. Jacobs received
the Ernst & Young Entrepreneur of the Year 2010 Award in the
Emerging Business Category for the New York Metro area. Contact On Deck
at (888) 269-4246.

You May Also Like

HP Academy Teaches EFI Online

The HP Academy was started to fulfill the need for some sort of formal training for EFI tuning. Two New Zealanders, Andre Simon and Ben Silcock, founded HPA in 2010.

With the ongoing COVID-19 situation, classrooms, as we know them, are not in session. You can’t physically distance in a small class in real life, but you can online. Virtual learning is now the new norm across the country. The racing industry is getting a leg up thanks to one school that is dedicated to online education. 

Utilizing Instagram

“When we started, we had no business at all… that’s when I started using Instagram,” Yaghoubian says. “Back then I didn’t know a lot about social media, but it works for business really well, and especially the automotive industry on Instagram.”

Higher Revving Education

We’ve all seen the ads in magazines and online for schools, classes and seminars on tuning an ever-increasing number of engines and even transmissions in today’s cars and trucks. The better ones will include the use of a chassis dyno to show real-time results of the step-by-step methods they teach.

Chassis vs Engine Dyno

We spoke with a couple shops that utilize both dyno types to get their take on the advantages, disadvantages and reasons to have one over the other or both.

Tradeshow Season

While the rest of the world tends to slow down in the fourth quarter, our industry is starting to rev up. That’s because it’s tradeshow season, and the excitement for next year is always palpable!

Other Posts

OE Parts vs. the Aftermarket

Many of your customers believe that OEM parts are better than aftermarket parts. We wanted to dispel some of the myths once and for all. Without getting into the mud about which brands are better. It is important to note that not all parts are created equal, and this includes both aftermarket and OE replacement parts.

Setting Up an Instagram Account

The old saying goes, “A picture is worth 1,000 words.” Well, in the world of social media, that same picture is not just worth 1,000 words, but could also be worth thousands of dollars in new business for your engine shop. By now you’ve likely seen our features on setting up and utilizing Facebook for your business. Next on our ‘to-do list’ is an introduction to Instagram for those of you who haven’t started utilizing this social media platform.

The Potential in Differential

Is growth part of your business strategy? It comes in a lot of different forms, but when it’s adding a new service offering or product for your customers, it can be nerve-racking at the very least. The additional investment in tools, equipment, training or people weighed against the unknown outcome leaves you holding all the risk, unless there is something that’s a perfect fit.

How To Put Your Facebook Page To Work

A couple months ago, we walked you through the setup of a Facebook business page. Hopefully you’ve gone ahead and created that page and took some time over the last couple months to play around with ways to engage with an audience. If not, go back and check out the February issue. It’s worth your while to do so!