Running a business, any business is difficult. But if you have the passion for it, then you’ll find a way on how to do it. One of the biggest challenges in starting an auto body shop business is to find a way to fund it.
Take a look at your savings? Do you think you have enough to start an auto body shop? What if it doesn’t immediately pick up? Do you just give up on your dream or find other ways to keep the business afloat?
Don’t let your dream be crushed simply because you don’t have enough to fund it. We won’t let you because today, we will share with you different ways on how you can find funding for your auto body shop.
Know Your Startup Cost
Before you find a way to fund your auto body shop, the first thing that you have to do is to figure out just how much your startup cost is. How much money do you really need for your auto body shop?
To calculate just how much you need, you have to take account the different equipment and tools that you’ll need to operate. There are lots available in the market and as a startup, it is best to get the basics then upgrade as the demand calls for or as your business grows. Here are a few of the basic tools and equipment that you have to have for your auto body shop:
- Hand tools
- Air compressor
- Hydraulic lifts
- Wheel balancers
- Diagnostic machines
- Paint guns
- Pneumatic tools
Apart from tools and equipment, you’ll also have to pay for your business license, insurance, certifications, employee salary, mortgage fees or shop rental. The prices will vary due to different factors. However, you have to be specific with the amount or at least give a very close estimate.
How To Fund Your Auto Body Shop
Once you already know how much your startup cost will be, you’re now ready to figure out how to pay for it all. It’s good if you have a fat bank account but if your savings are currently low, don’t worry, there are other ways to fund your business.
As we’ve mentioned, if you have enough money in your savings to startup your business, then do it. In that way, you won’t be indebted to the lender or to anyone. You’d also have less stress as you don’t have to pay for your monthly or weekly dues to the lender. Additionally, you also save on the fees and interests that come with your loan. However, there is also a downside to this. In case your business fails, you’d also be losing all your savings.
Family And Friends
If you can’t finance the business on your own, you can try to ask for help from family or friends. You can ask them to invest some of their extra money in your business. To improve your chances, make sure you create and present your business plan clearly and concisely as you can.
When you ask for their help, you can either have it as a loan from your family or friend that you could pay back after some time. This time interval should be set and the fees and interests of your loan should also be paid.
You can also take as your partner in the business. With the amount that they lend you, you can give them ownership in your business in return. With this, you won’t pay them back immediately but they will get their money over time as you share with them the profits of your business. They’d be investors in your business and that could also mean that they could have a bit of control over the business too.
A business loan could be difficult to get especially if you are just starting. Lenders who have the best terms and lowest rates often want to work with those who already have established businesses.
Instead of a business loan, you could opt to take a personal loan if your credit score is good. This will help you greatly with your startup cost. The requirements for a personal loan won’t require any business credit history. It is up to your personal credit score and income.
If you go for this route, just make sure that the lender doesn’t prohibit you from using the funds to pay for the startup cost or other expenses in your business. It is uncommon for personal loans to have such restrictions but it is best to check and be sure.
Line Of Credit
This is another way to finance your business and is great because you can get the cash easily without waiting for the lenders to approve each of the withdrawals. You just have to have the line of credit approved. To be approved, lenders would usually consider your personal credit score plus the business performance.
After being approved, you can get as many withdrawals as you want until you reach the limit. Once you repay the borrowed funds plus the other fees and interests, the funds from the credit line will be replenished and you can use them again.
Rollovers As Business Startups
Did you know that you can also use your retirement funds to fund your business. However, early withdrawal will cost you penalties and taxes. Who wants that? The good thing is that you can avoid that through the process of rollovers as business startups.
To do this, you’d have to create a C-corporation. There is also a new retirement plan that would be created for that C-corp. Then, the funds that you have in your existing retirement plan will be rolled over to the new plan. This can give you the capital to start your business.