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!