So I'm thinking of opening a tire business.

Being business minded, and never satisfied working for someone else, so in conversation the other day, it was entertained that I try and open a business.

I know there are lots of EPA regulations and permits, equipment to buy, inventory to keep etc. I get all that, but who's to say that you can't start out with a two or three bay garage, one two post lift, one balancer, one mounting machine, and a very limited inventory, perhaps not much of one at all.

Do this by appointment early on, working around my current day job. Open up for the waitress whose shift ends at 10, but can't get into a tire store during their regular hours. Work a full day on Saturday for those people who can't get there by 12.

Is it possible to do this on such a small scale initially? Maybe let the customers pick their tires, order them and they come back and see me in a few day when their tires are delivered.

Does anyone have any experiences or know a guy who worked with a guy whose cousin did this?

As long as you can get your gross income to exceed your total over head, including your start-up SBL payments, you will stay in business. BTW, first rule of self-employment: pay yourself first, and include that in your overhead.

Question: Is there a fair amount of amature racing in your area? If so, you might consider catering to that crowd, who ARE willing to pay a little more for really good "custom" service and speacialized attention.

The local tire "superstore" doesn't have a lift or air beyond the tire machine. Floor jack and electric impact guns.

In reply to WildScotsRacing:

There will be no loan. I am very debt averse and refuse to take on the risk of borrowing money.

And no, every single racing venue is over an hour away from me. The nearest drag strip is an hour, and every autocross venue is 90 minutes from here. I did think about that, as well as becoming a tire rack authorized installer, although I'm sure you need to be somewhat established for that.

Find someone looking to retire & sell out, work for them for a period of time before transitioning into ownership, lay out the deal so you pay them over time vs. taking out a loan.

In reply to petegossett:

I always value your input Pete, but even paying them over time is still considered debt to me. Even though it isn't to a bank, and the guarantee is by handshake, it still walks all over me owing money to anyone. Plus, it'd be hard to work at a tire shop and earn what I do now. Small town, and the places here don't pay squat. I realize that the experience being on the labor side is really valuable, but at this point this only a thought exercise.

Look into American Tire Distrutors and/or Tire Pros.
Inventory delivered to your store typically next day.

There is a guy in my home town that did just this. Has a small shop, limited inventory, takes appointments mainly. He's actually doing quite well with it and does some suspension work as well.

It's Mikes Tires Sales in Kawkawlin, MI. Idk him personally but you can check out his set up on Facebook.

Corner balancing.

Most of tire money is actually in rebate money from hitting certain volume target levels from manufacturers and distribution channel partners.

Be aware of the liability you incur repairing other people's cars.

In reply to ultraclyde:

I've been thinking about that. I'm sure there is a whole other set of liabilities, insurance etc for doing actual repairs, vs installing new tires. There is one shop here that ALL they do is tires. No oil changes, no brakes, no alignments, just tires.

But they sell a ton of tires too.

Can you mount a tire balancer and changer in a van? Or truck?

Then you can travel and do changes for people at their convenience. Just an idea.

Robbie wrote: Can you mount a tire balancer and changer in a van? Or truck? Then you can travel and do changes for people at their convenience. Just an idea.

My dad had some new steer tires put on his straight truck about a year ago by a guy that came on site and had all the equipment on his truck. I got the impression that it was a run down pick up and the tire changing process was more caveman than, say, hydraulic... but still, I'm sure it can be done.

Robbie wrote: Can you mount a tire balancer and changer in a van? Or truck? Then you can travel and do changes for people at their convenience. Just an idea.

Ideas are welcome! I've heard of people mounting bubble balancers in the back of a van before. It's an intriguing idea for sure.

Maybe do walk ins on evenings? There's a guy near me who runs a little 2 bay general repair shop that's stays open until 8 (prominently advertised on the side of the building), his lot is always jam packed full of people's old beaters.

Robbie's tire van idea is one I have had too, like work exclusively out of a smallish box truck with a changer, spin balancer, compressor, and generator. Full service tire shop. new/used tires, repairs, full sets installed while your car is parked at the workplace, etc. Have a large inventory of used tires on hand at the base, maybe some common size maypop brands, order nice stuff as needed. Run noon-midnight or something like that. Capitalize on the "I blew a tire and need the car tomorrow" and "I'm too busy to take it to the shop" situations.

I wonder what it takes to become a 'preferred installer' for Tire Rack. That way, your customer picks the tires they want, Tire Rack sends them to you and you installed them on the wheels. Seems like a good way to avoid having to maintain an inventory.

Sales of used tires over 5-10% will kick a risk out of standard market insurance raters.

Standard market gives broader coverage at lower rate (usually) when compared to surplus-lines markets.

Find a local independent agent with multiple commercial markets and go sit with them for an hour. Bring your home & auto Dec pages and get a check-up there, too.

(I broke my weekend "fight club=work/insurance" #1 rule)

BoostedBrandon wrote: In reply to petegossett: I always value your input Pete, but even paying them over time is still considered debt to me. Even though it isn't to a bank, and the guarantee is by handshake, it still walks all over me owing money to anyone. Plus, it'd be hard to work at a tire shop and earn what I do now. Small town, and the places here don't pay squat. I realize that the experience being on the labor side is really valuable, but at this point this only a thought exercise.

This is a mindset that is going to require a serious re-think, IMO. In order to be able to serve your walk-up customers without having tires drop-shipped every order (i.e. make them go away and come back in a few days, which is sure to just send them to the next shop down the road), you are going to have to carry inventory. Optimistically, let's say that you can meet 90% of demand in ten OE sizes. Let's also say that you offer 3 choices in each size (good/better/best). One set of each product/size combination, and you are already looking at 30 sets of tires. For the sake of argument, we'll assume that the average wholesale cost of every combination works out to be around $150 - that's $600 per set * 30 sets = $18k of inventory just carrying one set of each size/product combo. For those busy Saturdays, you are going to want to carry much more than one set of each size/product combo.

In addition to that, you're going to need to be able to float along while credit card issuing banks take their time paying you. In short, I just don't see how you operate any business carrying inventory without financing your accounts receivable at a minimum to cover short-term expenses. That's not to mention the capital expenditure for equipment and potentially a building - the only way I see doing this without debt is to start off independently wealthy, and isn't the point to get there?

Debt is a part of running a business, and the smart use of it is going to accelerate your path to success.

szeis4cookie wrote: Debt is a part of running a business, and the smart use of it is going to accelerate your path to success.

I agree. Debt is a tool.

Opening a business is a risk. You're not going to be able to get around that even without debt.

Someone else mentioned working in an established tire shop and that's the best route. You need experience about what costs are faced and what to expect on a day by day basis on the backend and frontend. Good luck convincing your competition to let them let you learn from them so you can open up a competitor though.

Make a business plan and see where everything lands.

As much as I like the smell of new tires, the point raised by sisforcookies resonates here for me. It's too big to do strictly part time, too much inventory, too many customers just want it NOW and they want it CHEAP. Not enough enthusiasts willing to shop around and wait a few days.

What about finding that guy who's established but instead of being his employee you approach it as a partnership. He works days and you take over the shop on nights and weekends. For an agreed on "buy-in" you get an established facility and inventory and he gets more traffic driven by a reputation of being available more of the time.

In reply to BoostedBrandon:

I STRONGLY believe debt aversion has killed more businesses than anything else (including my own).

It's the wrong kind of thinking for business.

You really need to be in the business of identifying opportunities, not avoiding risk.

I have had many cash businesses, and done OK. But I will never approach business again that way. I am currently starting another business, and positioning myself for success, not positioning myself to avoid risk.

Willingness to take on risk sometimes creates a barrier to entry which keeps keeps other competitors out. The cost of capital is just another business expense, like the cost of a tool.

I could say a lot more, but won't unless asked.

Regarding your part time idea- I'm not a fan.

The first time your customers realize they can't get good immediate service when they have a blowout or discover an exposed cord, they will go elsewhere and never come back.

Re: debt.

Yes, it is a business tool. Yes it can help. No it is not always the right tool. It is OK to start with your current money (often called bootstrapping) to prove a market or model. Debt on a proven idea is usually smart. Debt on an unproven idea is REALLY risky.

Re: part time/inventory. I also can go either way on this. You DO NOT need everyone to be your customer. You DO need to pick who you want your customers to be. If you want to cater to enthusiasts on weekends, then yes, part time and no inventory until am order is made could be a way to reduce risk.

I used to race lemons with a guy who owned a couple big o tire stores. He started by getting a big loan to buy a struggling franchise, and he turned it around. Quickly proved his model, bought a couple more and started doing towing as well. He's kicking a$$ now. But the real work was finding the opportunity (like svrex said), the combo of struggling franchisee who wanted out and a bank to finance the whole deal. Note that a franchise, especially an established one, is seen as about the lowest level of business risk a bank can get, so it will be easiest to get a loan for.

Here's the way a business works: you get out of it what you put into it. If you work it like a 40 hour job, your business will be come like a 40hr job anywhere else. If your just slinging tires in the weekend it becomes a hobby, and no one makes money doing that!

My wife's uncle bought an OK Tire store in Piedmont, Alabama in the 1950's. He sold it to his son 15 years ago. Competitive business and a lot of work x 6 days a week. I agree buying from a guy looks to retire is best - they have all the existing business to keep running.