Costs of setting up mot station/garage

WTTM

xocbc wrote: »

I’ve had a think about this and here is a more comprehensive response. This is from my own experience of managing a small garage that moved to a new premises and decided to move into MOTs at the same time. Without the proper thought it is a very bad idea (as was the case in my experience because the company owner did not really understand the full implications and didn’t prepare properly).

Firstly, you need to draw up the most comprehensive list of expenses that you can think of. This needs to be broken down into setup costs (which will come out of that initial £20k), and ongoing costs (which will need to come out of any income from the MOT ramp).

Setup costs:
· Deposit on lease/rent (likely to be 3 or even 6 months up front)
· Deposit on least/rent of MOT equipment (could be a high % and might be hard to get the finance in current climate)
· Costs of preparing premises for an MOT bay. Very specific requirements here, quite small tolerances in levels etc, you need to read up the regulations very carefully and make sure that the builder understands them. VOSA will not approve the MOT station even if something is 1mm out of level etc. Also signage for MOT and business (can be costly also)
· Costs of preparing drawings/plans for above (and possibly planning permission)
· Computer equipment suitable for and including costs of any items required for electronic MOT testing
· Recruitment costs
· Other equipment costs (compressor, exhaust fume extractor, alarm, any tools that the mechanic doesn’t bring etc)
· Costs of becoming an MOT station – training/certification
· Initial advertising
· Cash register and facility to accept card payment

Regular weekly or monthly outgoings
· Rent
· Business rates (DO NOT forget about this, can be costly)
· Lease/rent/finance on MOT and any other equipment
· Wages (for you and MOT tester)
· Employer’s contribution to NI/Tax etc
· Electricity
· Gas
· Water rates (don’t forget this either!)
· Telephone/internet
· Ongoing advertising (even a small ad each Saturday in the local paper will be expensive)
· General office supplies
· Insurance (public liability, employer’s liability, professional indemnity and general insurance etc)
· Maintenance to equipment/replacement of broken equipment
· Bank charges (including the % taken by card processor)

Out of that initial £20k, you will need to retain a good % for contingency, in case you have an unexpected expense, or in case business is slower than expected.

A tester can only do so many tests per day (can’t remember the figure but its 6 or 8 I think), so in other words, your maximum income for one tester and no repairs will be 6 or 8 times the MOT fee. Do not assume that you will get the maximum amount of MOTs 6 days a week. You might get busy given time, but in the first few months you won’t until people know about you, so you need to assume that your income will be relatively low. Even with 4 a day, that’s approx £200 a day or £1200 a week based on Mon-Sat opening. £1200 a week won’t leave much profit after you pay out all those bills and two wages. A few slow weeks (and you will get those at certain times of the year), and you will be in trouble very quickly. In addition, if you get contract work from a dealership, they won’t pay you £50 per MOT, more like £35-£40.

MOTs were only part of our business and we went into it to provide regular work throughout the year as much of what we did was more seasonal (tuning etc) and it smoothed out some of the troughs in our income. However, the testing alone would have been a waste of time, it was the repairs that generated the income – mark-up on parts and of course the idiotic mark-up that all garages make on labour. We were lucky that we could fit tyres, exhausts and do all mechanical and electrical work so could deal with any failure on-site. That’s what makes the income and makes it worthwhile.

As stated above, if the MOT ramp, brake tester, headlamp aligner etc break down, you have 0 income until it is repaired. If the MOT tester is sick you have 0 income. He/she will need 4 weeks holiday a year, again 0 income during those weeks. It is not viable.

Also worth considering is that most people nowadays book their car in for a service at MOT time, in other words it goes to the dealer or an independant garage and just gets done. If I put my car in for an MOT and it fails on something smallish, I want it repaired there and then and ready for collection that day. I do not want the hassle of taking it somewhere else, repairing it, bringing it back. I suspect most people are the same, it's just too much hassle. I, and I suspect many others, cannot afford to be without my car overnight or for a couple of days, or the time messing around finding somewhere to repair it at short notice and reooking a retest.

I suspect that when you fill in figures against everything listed above, it won't seem to be such a good proposition after all and I’d really urge you to give this some serious thought, because I think you might be wasting £20k that you could make more money from doing something else with it.

Truly excellent post.

terryya

Great post from xocbc.

I've no experience in this at all but think that surely people that want to go to just an MOT test centre will use their local council.

xocbc

terryya wrote: »

Great post from xocbc.

I've no experience in this at all but think that surely people that want to go to just an MOT test centre will use their local council.

Yes, that would be my automatic choice if I wanted an honest MOT with no bias towards any repair revenue they could get out of me.

deardan

I have also been looking in to setting up my own mot testing station and know £20,000 is not a bad start to setting up! you can see your local job centre or business i and they can help to put you in the right direction for i,e grants, staff, premises ect! what i have been doing is trying to find secound hand equipment through local papers ect so i dont have to travel far and i know i can do a very nice job fitted for £10,000! if you charge £25 a mot and do 30 a week thats a £750 turn over (simple maths) that should help you pay your bills then if you get the work off the mot failure's that at £30 per hour labour is a fair price subject to location and the local competition! say you only get 10 hours a week labour for car repairs thats still £300 this sort of business could run well subject to doing your home work! even if you know nothing about it, you can still employ someone to manage,mot and help show you the world of auto repair! just make sure location has foot fall!!! and competition are high priced so you can be the one to dominate the local auto market from mot's, tyres exhaust's, batteries to car valleting and handwashing these are all other products that a good garage would offer and something you should look to aim at! you do not have to stock much as long as your supplier is reliable, drops at least twice a day, or is fairly near to your station! just to help things move along nicely because there's nothing worse than a car stuck in a garage waiting for part! for you the boss or paying customer! All businesses need good marketing for people to know you exist so please remember foot fall!!! your better off paying a bit more rent for a garage on a busy road than a cheaper one tucked away only because the local papers will charge you £90 a week for a 2" x 2" which really should go towards a better location where you can buy good signs and put them on the side off the busy road then loads more poeple will see it! rather than your 2" x 2" paper ad! this is all possible if you really want it then you can have it! its all about researching, planning and being positive about where your gonig and what your doing! good luck with you plan and hope it works out! (ps talk to your job centre ect and see what they say because on the budget the other day there's something like £4,500,000,00 for new business in the uk so with the right business plan you may have some sort off help!) you could even start looking for work before you start up by asking car garage's for letters of intent ect then you can ask for a grant and see what happens if the business has potential they will help! good luck and let me know how you get on! Dan

Inactive

Does the Job Centre give grants for paragraph's?

tonytee

xocbc wrote: »

I’ve had a think about this and here is a more comprehensive response. This is from my own experience of managing a small garage that moved to a new premises and decided to move into MOTs at the same time. Without the proper thought it is a very bad idea (as was the case in my experience because the company owner did not really understand the full implications and didn’t prepare properly).

Firstly, you need to draw up the most comprehensive list of expenses that you can think of. This needs to be broken down into setup costs (which will come out of that initial £20k), and ongoing costs (which will need to come out of any income from the MOT ramp).

Setup costs:
· Deposit on lease/rent (likely to be 3 or even 6 months up front)
· Deposit on least/rent of MOT equipment (could be a high % and might be hard to get the finance in current climate)
· Costs of preparing premises for an MOT bay. Very specific requirements here, quite small tolerances in levels etc, you need to read up the regulations very carefully and make sure that the builder understands them. VOSA will not approve the MOT station even if something is 1mm out of level etc. Also signage for MOT and business (can be costly also). Even getting all the wiring done will be expensive and will of course require the premises to have a suitably rated supply
· Costs of preparing drawings/plans for above (and possibly planning permission)
· Computer equipment suitable for and including costs of any items required for electronic MOT testing
· Recruitment costs
· Other equipment costs (compressor, exhaust fume extractor, alarm, any tools that the mechanic doesn’t bring etc)
· Costs of becoming an MOT station – training/certification
· Initial advertising
· Cash register and facility to accept card payment

Regular weekly or monthly outgoings
· Rent
· Business rates (DO NOT forget about this, can be costly)
· Lease/rent/finance on MOT and any other equipment
· Wages (for you and MOT tester)
· Employer’s contribution to NI/Tax etc
· Electricity
· Gas
· Water rates (don’t forget this either!)
· Telephone/internet
· Ongoing advertising (even a small ad each Saturday in the local paper will be expensive)
· General office supplies
· Insurance (public liability, employer’s liability, professional indemnity, insurance to be able to drive customer's cars and general insurance etc)
· Maintenance to equipment/replacement of broken equipment
· Bank charges (including the % taken by card processor)

Out of that initial £20k, you will need to retain a good % for contingency, in case you have an unexpected expense, or in case business is slower than expected.

A tester can only do so many tests per day (can’t remember the figure but its 6 or 8 I think), so in other words, your maximum income for one tester and no repairs will be 6 or 8 times the MOT fee. Do not assume that you will get the maximum amount of MOTs 6 days a week. You might get busy given time, but in the first few months you won’t until people know about you, so you need to assume that your income will be relatively low. Even with 4 a day, that’s approx £200 a day or £1200 a week based on Mon-Sat opening. £1200 a week won’t leave much profit after you pay out all those bills and two wages. A few slow weeks (and you will get those at certain times of the year), and you will be in trouble very quickly. In addition, if you get contract work from a dealership, they won’t pay you £50 per MOT, more like £35-£40.

MOTs were only part of our business and we went into it to provide regular work throughout the year as much of what we did was more seasonal (tuning etc) and it smoothed out some of the troughs in our income. However, the testing alone would have been a waste of time, it was the repairs that generated the income – mark-up on parts and of course the idiotic mark-up that all garages make on labour. We were lucky that we could fit tyres, exhausts and do all mechanical and electrical work so could deal with any failure on-site. That’s what makes the income and makes it worthwhile.

As stated above, if the MOT ramp, brake tester, headlamp aligner etc break down, you have 0 income until it is repaired. If the MOT tester is sick you have 0 income. He/she will need 4 weeks holiday a year, again 0 income during those weeks. Staff are now entitled to paternity leave as well, so if it's a male mechanic and his partner has a child, 0 income for weeks. It is not viable.

Also worth considering is that most people nowadays book their car in for a service at MOT time, in other words it goes to the dealer or an independant garage and just gets done. If I put my car in for an MOT and it fails on something smallish, I want it repaired there and then and ready for collection that day. I do not want the hassle of taking it somewhere else, repairing it, bringing it back. I suspect most people are the same, it's just too much hassle. I, and I suspect many others, cannot afford to be without my car overnight or for a couple of days, or the time messing around finding somewhere to repair it at short notice and rebooking a retest.

I suspect that when you fill in figures against everything listed above, it won't seem to be such a good proposition after all and I’d really urge you to give this some serious thought, because I think you might be wasting £20k that you could make more money from doing something else with it. Even with a full MOT bay every day, you would have to work very very hard to make very little out of this.

Thanks very much for the informative post, very kind.

vansboy

When I had my yard, I obviously thought of MoT as an extra source of income & as way of saving money, 'cos more often than not, I'd retest a van, prior to sale.

It wasn't cost effective, as the stringent criteria for the facility, meant potentially 'dead' workspace at times, plus it was cheaper to simply let the local existing test centre do the testing, at a discounted price to me. That's something you will attract, though, if you let the trade know you'll undercut the already low prices some places charge.

Hate to think how many MoT leased kits I've paid for over the years, though!!

VB

property.advert

Inactive wrote: »

Does the Job Centre give grants for paragraph's?

:rotfl::rotfl::rotfl::rotfl::rotfl:

LandyAndy

^^^^^^^^^^^^^^^^^^^^^^

jd82

There is an MOT only place near me and he seems to make a decent living. He charges the full £50 and he seems to do around 6-8 MOTs a day.