Yet another person looking to become a trader!

[marc_p 6]

Hi Guys,

 I'm under no illusion that you are all probably sick to death of people like me with their newbie questions but hoping someone may be able to answer a quick couple of questions I may have.

 A quick back story on me, I have never worked professionally in the motor trade and have been stuck in a suit and tie selling IT solutions for the past 10 years, which has just ever increasingly drained the life from me! That being said I am passionate about my cars, I'm very handy with the wrench (from the basic servicing to building my old Toyota into a 700whp monster),  a dab hand at detailing and great at finding the bargains. Although never officially a trader I do get through my cars (I want to try them all) and always make money on them at sale time, I decided in November to try my hand at just buying a couple of cars to sell and see how I fared, well I went from a £550 investment to a £3500 return in 6 weeks over just 2 cars, safe to say I know what I want to do.

 So, I've been researching intensively, writing up my business plan and preparing to sell a couple of my cars to raise the startup capital, I should raise around £40k for startup, this will allow me to cover all business rents and bills plus all personal expenses (mortgage, day to day spending, etc) for around 6 months so I can focus on getting the business up and running without the need to remove any profits from it for at least 6-9 months.

 I will be focusing around BMW's from 1990-2010 as I know the market for these very well, I can do all the prep work and servicing myself and I don't want to dilute my knowledge or lose focus at the moment.

So the questions!!:

 - Should I create a separate business entity that will bill the main business for the servicing, prep work, etc? I will also want to be doing general BMW servicing as a side business just to generate some brand awareness if nothing else. If yes, what would be the benefits of this? Can you use these costs to reduce your VAT liability?

- Location wise, I am 'oop north' so I am thankful for lower rent costs but I do want an indoor building which will house around 6 cars and don't want cars to sit outside as I'll be prepping the cars to a very high standard and aiming them at the top end of the market, so I want people to view them in a very well lit indoor environment that flatters their condition. I aim to move to a large premises after 12 months but want to start things a bit smaller and slower as I will make mistakes that I need to learn from. But moving on from that, I am currently about 20 minutes from the A1M, do you think it's worth spending a little more (about £200pm) to be closer to the A1M?

 

Anyway, I hope I haven't come across too naive and I thank you in advance for any answers, also, apologies for any spelling/grammar mistakes, It's been a long day and I'm ready to crash!

Thanks

Marc

[justina3 518]

I will answer you vat question the rest I cringed as I don’t BMW’s or the customers they bring, anyway there is no real way of reducing your vat if one business claims it the other company incurs it if you own both businesses it’s six of one and half a dozen of another. 
 

finally what starts of as a passion for most of us very quickly turns into ground hog day, I know prefer to walk as much as I can as I am fed up with cars. 
 

[marc_p 6]

4 minutes ago, justina3 said:

I will answer you vat question the rest I cringed as I don’t BMW’s or the customers they bring, anyway there is no real way of reducing your vat if one business claims it the other company incurs it if you own both businesses it’s six of one and half a dozen of another. 
 

finally what starts of as a passion for most of us very quickly turns into ground hog day, I know prefer to walk as much as I can as I am fed up with cars. 
 

Yes, the BMW crowd can be a fickle bunch! Hopefully I'll be avoiding a lot of the more irritating buyers as my focus will be around the older and more enthusiast owned cars E36/E46 M3s, E39 M5s, Alpina's, etc where condition is a much larger factor than price.

Thanks for your answer anyway! Although I will add that the servicing business would likely be under the VAT threshold and will not be VAT registered.

[justina3 518]

Sounds like you have a plan, I Suggest you have a look at how the second hand car margin scheme works and what your entitled to claim and what your not and go from there. 
 

[trade vet 702]

Sounds promising.How far up north are you from Newcastle as we have some good premises which we could make availible to the right guy.

[Mark101 536]

15 hours ago, marc_p said:

apologies for any spelling/grammar mistakes, It's been a long day and I'm ready to crash!

Thanks

Marc

You spelt your name wrong 

Welcome to the forum by the way and good luck.

[Casper 272]

Welcome Marc good luck you sound like you have your head screwed on the right way I wish you all the best and there plenty help here from a lot of knowledgeable people what one doesn't know someone will .. 

also there is a lot of car sales places run worshops and invoice there car sales business separately .

Edited January 9, 2020 by Casper

[BHM 994]

1 hour ago, trade vet said:

Sounds promising.How far up north are you from Newcastle as we have some good premises which we could make availible to the right guy.

Come on! You’d make them available to anyone.

[trade vet 702]

1 minute ago, BHM said:

Come on! You’d make them available to anyone.

No I would not.We presently have them up for sale for over top book but would prefer to keep them.The only car dealers we have had enquire so far have been the usual  ‘jumpy jacks’ who talk a good game but have little funding.

[marc_p 6]

 

5 hours ago, justina3 said:

Sounds like you have a plan, I Suggest you have a look at how the second hand car margin scheme works and what your entitled to claim and what your not and go from there. 
 

Yeah, it's probably best me going to sit down with an accountant over the next couple of weeks and get into the details.

 

2 hours ago, trade vet said:

Sounds promising.How far up north are you from Newcastle as we have some good premises which we could make availible to the right guy.

Unfortunately not quite that far north, I'm near Harrogate, but thanks anyway

 

2 hours ago, Mark101 said:

You spelt your name wrong 

Welcome to the forum by the way and good luck.

Haha, you have no idea how many times I get that, tempted to just change it to Marcus

 

1 hour ago, Casper said:

Welcome Marc good luck you sound like you have your head screwed on the right way I wish you all the best and there plenty help here from a lot of knowledgeable people what one doesn't know someone will .. 

also there is a lot of car sales places run worshops and invoice there car sales business separately .

Thanks Casper, appreciate the kind words, I very much like to over plan to minimise my risks as much as possible. I'm not blind to the risks though and have to accept that it may not work out but I'd rather try and fail than not try at all. It all started from my love of working on cars and doing light restoration work, however I really don't like working on other peoples cars, so I came to the conclusion that I'm best buying a car, doing the work I enjoy and then selling it. 

[Casper 272]

23 minutes ago, marc_p said:

 

Yeah, it's probably best me going to sit down with an accountant over the next couple of weeks and get into the details.

 

Unfortunately not quite that far north, I'm near Harrogate, but thanks anyway

 

Haha, you have no idea how many times I get that, tempted to just change it to Marcus

 

Thanks Casper, appreciate the kind words, I very much like to over plan to minimise my risks as much as possible. I'm not blind to the risks though and have to accept that it may not work out but I'd rather try and fail than not try at all. It all started from my love of working on cars and doing light restoration work, however I really don't like working on other peoples cars, so I came to the conclusion that I'm best buying a car, doing the work I enjoy and then selling it. 

I totally agree if not you will always ask what if 

[Rory RSC 596]

You know what you are wanting to do so just do it. Work hard and you will be alright.

Also you have the gift of schpeel / gab / sales talk so thats one of the most important things.   

[David Horgan 564]

Hi Marc 

Go for it my friend , sounds like you have the correct attitude and more important in this industry some mechanical knowledge too .

Not going into debt and using your own resources  is also a massive plus to success as well .

All the best marc 

[marc_p 6]

Hi Guys,

 Thought I'd put a little update on this, I finally handed in my notice at work to go full time (last day is tomorrow), I wanted to start earlier but obviously that whole COVID thing got in the way. Managed to get myself a small 5 car unit, it's a cheap and a great starter unit, plus it's next to a bunch of other automotive companies including a friend of mine who has a much larger and more impressive unit and has said I can have his office and trade out of his unit if I want (he's a detailer so has no use for an office).

Regarding how the car selling has been going, I'm still sticking to my BMWs but so far (touch wood) all have been attracting wonderful buyers with only the X5s occasionally getting the 'what's you best price mate' calls, which I usually just respond with the asking price. I'm still at the lower end (circa £5k cars), but all the cars sold so far have all gone to the first person who viewed them and all within 5 days of advertising them with healthy margins to boot (averaging around £1k per car).

 I have learnt a few things so far, mainly is that the car auctions seem a bit of a joke, I went to a couple with the intention of just sitting back and watching how it all operated, but I was quite shocked to see what price the cars were going for, I think I'd struggle to make anything on an auction car!! So I've stuck with just using ebay and hunting out the cars that I know I can turn into wonderful looking examples with a few hours work. I did also get one off Facebook Marketplace that was so cheap I thought it was worth a punt (2008 318d, 102k miles, £1300), but I'm still chasing issues around the car, it's also reminded me why I stay away from 4cyl BMWs and just stick with my straight 6's (and occasional V8's).

Next step is to get myself FCA approved as I want to move to the £15-20k market, but this will be harder without being able to offer finance. Also trying to get myself a bounce back loan for more stock, I thought I'd wait when it was originally announced as I didn't need the money right then, but it seems to be severely back logged now!

Cheers

Marc

[It's me 615]

don't do it

 

 

 

 

 

 

 

 

 

 

too late 

[marc_p 6]

6 minutes ago, It's me said:

don't do it

 

 

 

 

 

 

 

 

 

 

too late 

Haha, yeah, weird mix of emotions going on right now, both excited and terrified at the same time, but what I do know for sure if that I haven't felt this happy for a long time!! Even if it doesn't work out, I'll be glad that I at least tried.

Another point I thought I'd add is that even though I haven't been posting here, I have been reading everyone's posts and finding this forum such a wealth of information!! (will need to get myself into the private forum now though), but that being said, I noticed that a few people say to not trade the cars that you like, whereas I think (for me at least) that is what has helped me massively as I've been selling cars that I'm genuinely enthusiastic about and I believe that really comes across to the buyers and helps with the sale, which will probably mean I'll be stuck with this 318d for a lifetime as I find it a hateful little thing

[Dave2302 387]

I hate anything with a 4 Cylinder

I wish you the best of luck in these challenging times, but yeah, you gotta go with what you want to do, and so far you seem to have found a nice little niche

[trade vet 702]

10 hours ago, marc_p said:

Haha, yeah, weird mix of emotions going on right now, both excited and terrified at the same time, but what I do know for sure if that I haven't felt this happy for a long time!! Even if it doesn't work out, I'll be glad that I at least tried.

Another point I thought I'd add is that even though I haven't been posting here, I have been reading everyone's posts and finding this forum such a wealth of information!! (will need to get myself into the private forum now though), but that being said, I noticed that a few people say to not trade the cars that you like, whereas I think (for me at least) that is what has helped me massively as I've been selling cars that I'm genuinely enthusiastic about and I believe that really comes across to the buyers and helps with the sale, which will probably mean I'll be stuck with this 318d for a lifetime as I find it a hateful little thing

It’s about finding a ‘niche’ and you appear to have done that.So I would say stick to what you are doing.However a note of caution before you expand your business,you might want to factor in these unpresidented times.Trading through the pandemic has been lucrative for a lot of smaller traders and doorsteppers who were undoubtedly helped by a lot of franchised dealers and larger pitches being forced to close up.So don’t get carried away and there will be plenty of banana skins for you to slip on during your first year of trading.

Good luck,I think buying,selling,fixing and servicing BMW’s might work but you will need a lot of tech equipment.

Keep in touch.

[Dave2302 387]

Good point TV ...................

Regarding Tech Kit, Snap On Solus Ultra Pro, that is very good for Diagnosis and Data these days, and if you need to do programming INPA / ISTA / EDIABAS plus all the other bitties of s/w is very good and cheap enough ...........

Word of caution, don't try and install that INPA / ISTA shit yourself, I tried 2 different sellers discs, never could get the bastard to communicate and work right, in the end I paid one of 'em to do remote install via Team Viewer

I might upgrade now to Icom sometime soon, I'm actually using the ISTA today, it's good but a bit archaic these days...........

Edit :-  Actually I'm not using the fuckin thing because once again the pile of crap won't actually connect to the bloody car, time for the bin me thinks

I expect you've already got some or all that anyways

HTH

Edited October 2, 2020 by Dave2302

[have a word with the wife 299]

23 hours ago, marc_p said:

Hi Guys,

 Thought I'd put a little update on this, I finally handed in my notice at work to go full time (last day is tomorrow), I wanted to start earlier but obviously that whole COVID thing got in the way. Managed to get myself a small 5 car unit, it's a cheap and a great starter unit, plus it's next to a bunch of other automotive companies including a friend of mine who has a much larger and more impressive unit and has said I can have his office and trade out of his unit if I want (he's a detailer so has no use for an office).

Regarding how the car selling has been going, I'm still sticking to my BMWs but so far (touch wood) all have been attracting wonderful buyers with only the X5s occasionally getting the 'what's you best price mate' calls, which I usually just respond with the asking price. I'm still at the lower end (circa £5k cars), but all the cars sold so far have all gone to the first person who viewed them and all within 5 days of advertising them with healthy margins to boot (averaging around £1k per car).

 I have learnt a few things so far, mainly is that the car auctions seem a bit of a joke, I went to a couple with the intention of just sitting back and watching how it all operated, but I was quite shocked to see what price the cars were going for, I think I'd struggle to make anything on an auction car!! So I've stuck with just using ebay and hunting out the cars that I know I can turn into wonderful looking examples with a few hours work. I did also get one off Facebook Marketplace that was so cheap I thought it was worth a punt (2008 318d, 102k miles, £1300), but I'm still chasing issues around the car, it's also reminded me why I stay away from 4cyl BMWs and just stick with my straight 6's (and occasional V8's).

Next step is to get myself FCA approved as I want to move to the £15-20k market, but this will be harder without being able to offer finance. Also trying to get myself a bounce back loan for more stock, I thought I'd wait when it was originally announced as I didn't need the money right then, but it seems to be severely back logged now!

Cheers

Marc

Re bounce back loan, were you trading before the 1st of March 2020 ? Was your business  affected by corona ? Bb loan is 25% of last years turnover, sorry but if it was that easy everyone and his son would be registering themselves as self  employed  and getting cheap loans, also, there is no back log.

Good luck with your new venture.

[Boycie 30]

20 hours ago, have a word with the wife said:

Re bounce back loan, were you trading before the 1st of March 2020 ? Was your business  affected by corona ? Bb loan is 25% of last years turnover, sorry but if it was that easy everyone and his son would be registering themselves as self  employed  and getting cheap loans, also, there is no back log.

Good luck with your new venture.

Self employment income support scheme is different to the bounce back loans.  You can claim a percentage of your profit.

The bounce back loans are meant to be 25% of the previous years turnover, but no-one is checking.

If your company was registered 28th Feb 2020, you would be eligible, but how would they calculate what 25% of your turnover was?

There are plenty of people out there who have set up a business that has never really traded and they have been granted the full £50k

I know someone who has claimed £150k as he had 3 separate businesses.  Why wouldn't he?

We will all pay for it down the line....

[have a word with the wife 299]

14 minutes ago, Boycie said:

Self employment income support scheme is different to the bounce back loans.  You can claim a percentage of your profit.

The bounce back loans are meant to be 25% of the previous years turnover, but no-one is checking.

If your company was registered 28th Feb 2020, you would be eligible, but how would they calculate what 25% of your turnover was?

There are plenty of people out there who have set up a business that has never really traded and they have been granted the full £50k

I know someone who has claimed £150k as he had 3 separate businesses.  Why wouldn't he?

We will all pay for it down the line....

To keep it simple, I am just stating that marc is not entitled to a bbl as he states he has just entered self employment 

[David Horgan 564]

On 9/30/2020 at 10:27 PM, marc_p said:

Next step is to get myself FCA approved as I want to move to the £15-20k market, but this will be harder without being able to offer finance

Just remember Finance will not sell itself , its not the magic tree to expensive cars , A lot of work and expense plus a world of knowledge is required to work the finance money tree .

Just getting the rates to sell out will be your biggest problem , low rates come to those who sell more cars , to sell more cars and prove finance sales you need the low rates in the first place round a bouts plus dizzy pills to work that out catch 22 all the way .

taken me a while eg years lol to sort it out  , but when you get there and learn to sell it it can be a great source of income and fast sales , just a slow job sorting it out and moving finance firms . 

Tip get your self a broker first . 

[marc_p 6]

Thanks for all the replies guys, much appreciated!!! Thought I’d add a few responses to the points listed:

- In regards to the BBL, thankfully, I’m actually entitled to one as (per my 1st post) I started in January, and it did affect me as I halted everything for a couple of months, when it comes to turnover I have to submit what would be my estimated turnover for year one (which I’m doing at £100k).

- On the equipment front, I use INPA as I’m sticking to my legacy ‘E’ generation cars, I also use Carly for quick and easy fault finding, but have to use my INPA for more advanced calibration and fault clearing (for instance, nothing but INPA will clear a BMW airbag light once you’ve fixed it). If you’re having issues, drop me a PM and I’m happy to help. Out of interest, when you says it’s not connecting, do you mean that it’s not showing ignition on INPA? Usually the main cause of that is the wrong COM port being used (it has to be COM1), I actually had it recently as I mistakenly used my other OBD2 cable that was on COM 2 or 3(they look identical) and after 30 mins of swearing I realised my mistake.

- On the finance front, I’m not expecting much and I won’t be offering PCP as I don’t want to move into newer stuff, but I’d like to stock an older E46 M3/E39 M5 and really good examples are in the £15-20k region. 

 

[Dave2302 387]

Regards the INPA ISTA, thanks but as i said I've tried it on every Com Port going, still no dice

Personally I reckon it might actually be the K + D Can Lead itself, but fed up wi' it now, I am getting a totally new SSD done by a guy I trust and have used before, he has been doing all my Merc SDS drives for years, started doing BMW in more recent years, he says use Icom so that's what I'll buy, looking right now

Edited October 5, 2020 by Dave2302