What's your percent of Rent to Gross Profit?

[LeMarque]

I'm planning on opening a detail business and am hoping some of the pro's on the forum would share some info.

I realize that there will be those with comparatively small operations to those with large and well established businesses. I'm interested in hearing from any and all.

I'm trying to get a feel for the cost of doing business and this is the first of a few posts concerning overhead that I will be making.

I'm not asking about marketing.

So, if your business grosses say, 300K and your yearly rent is 30K, that would make your percent of gross for rent 10%

What are you pro's paying as a percent of gross?

[apg39]

Mines just under 15%.

[Bunky]

Is the ratio to gross profit a key business metric? I think a better question is what is the overall gross profit where you factor in materials cost and expenses, salary you expect, etc.

[BobbyG]

You profit is determined after ALL your expenses are deducted and rent is only one of them.

Each deduction will represent a certain percentage and I'm sure you're trying to gauge whether or not what your planning to pay seems comparable to others here.

Geographical location will also play a major factor in this charge so keep that in mind as well..

[Bunky]

You profit is determined after ALL your expenses are deducted and rent is only one of them.



I think many people in the service trades try to live off the profit but in fact they should run the business with salary carried as a cost. The profit should be used to improve the business (purchase new equipment, etc) not required to sustain it.

[LeMarque]

Is the ratio to gross profit a key business metric? I think a better question is what is the overall gross profit where you factor in materials cost and expenses, salary you expect, etc.

Thanks for the reply.

As I mentioned in my OP,

I'm trying to get a feel for the cost of doing business and this is the first of a few posts concerning overhead that I will be making. I am particularly interested in the cost of materials. Which I think is worth another thread.

And yes, in many businesses, rent as a percent of gross is a key business metric; as I understand it.

As for utilities, taxes, insurance and the like, I have run auto repair businesses in the past and have a good feel for those costs.

My circumstances are such that in my area, commercial properties that are zoned for this type of business are few and far between - read, hardly any available - and those that are are either in the industrial area ( salvage yards and the like) or the few others that any potential customers would feel comfortable visiting, are demanding what I consider to be high rent.

Once again, I will be posting other related topics not only so that I can, hopefully, get responses to satisfy my comfort level; but that it may help others considering entering the business.

[LeMarque]

Mines just under 15%.


Thanks!

Now if only a few others would fess up. :)

I hope this question doesn't seem to be asking for private information.

[kimtyson]

Seems kind of private to me. That may be the hesitation for answers.

[LeMarque]

You profit is determined after ALL your expenses are deducted and rent is only one of them.

This I realize


Each deduction will represent a certain percentage and I'm sure you're trying to gauge whether or not what your planning to pay seems comparable to others here.

Exactly!

Geographical location will also play a major factor in this charge so keep that in mind as well..

You hit the nail on the head. I live in a tourist town and rents are higher and frankly so are my rates. They'll have to be.



So what is your percent <ducking>

[LeMarque]

Seems kind of private to me. That may be the hesitation for answers.

Yeah, I thought it might sound that way.

But there's no way to extrapolate someones income/gross unless they post what they're actually paying for rent; which I did not ask.

[Buckskincolt]

I'm not a professional so I can't answer you question. I do have a thought or two that I will throw out.
If it were me and the properties you are looking to rent a few and far between ( read like very expensive ) And I was building a start up business I'd think I'd be looking hard at mobil detailing. You could buy a trailer with awesome graphics for two months rent or so then buy all the equipment you will need anyway and start there. Marketing will be the same and you go to the customer rather than they go to you.
There are draw backs to this but seems the cost savings would offset them with a start up operation. In your OP you want to know what % others are paying, how do you build a business model when you have 0.00 profit now? Your rent no mater what % will be all your profit and a burdensome expense until you get going and get some customers. Most savvy business people say it takes 3 years to build a business to profitability, so I would look to keep my overhead as low as possible and build a solid client base before moving up! Just my 2 cents.

[aerogt01]

I am mobile out of my own DD.

I don't pay rent.

[LeMarque]

.... , so I would look to keep my overhead as low as possible and build a solid client base before moving up! Just my 2 cents.

I can rent what used to be a 10 thousand sq. ft. body shop for 6K right next to a high end auto repair facility that's willing to 'feed' me 3 cars a day. Oh so tempting. I could turn the other 8000 sq. ft. into a dance hall ;)

[LeMarque]

I am mobile out of my own DD.

I don't pay rent.

In one regard I may be lucky. I was in the repair business for years and know quite a few folks in town.

There also happens to be more than the usual number of exotics and even a world class Pebble Beach like event here. And I know some of these people.

So when I do make the move I will first have taken a weeks worth of training (to get my 'detailing phd.' so to speak) and the kind of clientele I'm after, Mobile won't work. These folks won't mind leaving their classic for a week or more.

Which is not to say that I won't be offering my version of an express detail.

[Flash Gordon]

You could reduce your rent sufficentally if you found another automotive related bussiness that would be willing to rent you some space

Around here on average a decent shop will run you $1,500 in rent alone