How To Start Your Own BHPH Store

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How To Start Your Own BHPH Store

Postby combs.3602 » Tue Mar 24, 2015 9:45 pm

Hi guys - I have posted my business model in the past, but we have a few new members that are hungry to start their own stores. :) Lets all contribute to this thread to help them out. Please use your names and locations for reference. :) I started my business over 40 years ago when you could buy a car for $500 and get that much down. It was a lot less challenging. Today the average cost of my car is around 5k ; when you consider the least expensive cars are around $2500 and the more expensive ones are $7500. As I said , we used to be able to cover a large part of our expenses with the down payment, but now the down is only a fraction. My recommendation for a new start up would be to rent a small very inexpensive store, buy the cutest cars you could buy for under 2k, sell them for $500 down @ 24-29% with payments of $250 month. Operate the store yourself ; don't hire anyone , keep your expenses very low. The key will be keeping all of your cash to replace your inventory. You will be hoping to sell 10-15 cars per month. With that in mind , lets do a rough 12 month budget estimate - 120 cars @ 240k - store rent and utilities(1k rent,$500 utilities , use your cell phone for business )=$18k - Garage Liability Insurance 24k - Detail materials, etc...(do your own) 6k - Advertising 12k - Repos (do your own) 6k - Sales tax (average @ 6%) average markup of $2500 =32k -Miscellaneous expense 12k - Salary $18k(or whatever you can afford) - Total estimated expenses for 1 year - 128k - Total estimated Gross profit - 300k - Total estimated loss - 100k ( based on national BHPH repo rate of 34%) Total Estimated Net Profit before Tax = 62k - Income tax @ 45% = 28k. Total Income is hard to guestimate; not knowing when repos will occur but it should be around =240k without losses. Keep in mind that you would recover more than 95% of your repos to inventory, which becomes a good source of replacement inventory as well as an asset. You can take on an outside 'Mouse House' (finance company) for the times you are cash strapped if you desire, but I don't recommend it. This is a very rough estimate using the low cash approach. If you have access to outside money - Bank , etc...There are other methods available to you . There are many ways to start and run a successful BHPH , this is one of the methods I believe will start you on the road to success. as I stated at the onset, I hope we will have others join in with their methods of practice. Hope this helps :) Dennis Combs combscarcorral.com Boise/Nampa,Idaho P.S - Hope this math adds up - Its late in the afternoon here, Ha! :D
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Re: How To Start Your Own BHPH Store

Postby AustinSiler.8404 » Fri Mar 27, 2015 3:35 pm

Dennis,

Thank you very much for the advice. I am looking to start my own store and need all the help I can get. Would you guys advise me going to the NABD conference in May? Would it be worth the investment?
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Re: How To Start Your Own BHPH Store

Postby penmar.4965 » Thu Sep 10, 2015 12:49 am

Each business and every state is different. I have always believed that it takes $300,000 to become cash positive. You have to put almost all of the money back into the business for the first year. You can get away with less if you can juggle numbers but $300K is the number. I have been with many dealerships that know what the cost is and they have did well. You must always keep plugging away at the bottom line. Never forget that the customers are what makes your business profitable. When you look at advertising expenses you have to consider taking care of your current customers. We always did a customer appreciation day every 3-4 months. We PAID off a customers car at that time, played Bingo and gave away money and prizes. We did not even talk about a sale until the party was over, but we always sold 1-4 cars that day to more than cover the cost of the event. I am not in the business right now, but I am always available for consult or just to chat. Hope everyone is getting all of their money and profit that they deserve.
Mark
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