Sideline Partially Successful Sideline – Beater Car Sale – With Numbers and a Pitfall

Summary: Hey I’m Timmy – my friends call me “Timmy the Greaser”. I like messing with old cars. Have been this way for years. I’m a senior in high school, pretty decent grades to get into a number of schools, and have no idea if I’m going to college, community college, or just getting off the world for a year or two. Regardless, I decided to start a Sideline by buying and selling beater cars. Ok – so a beater car is a really bad looking car, but the engine is in good shape — its been poorly treated. I can find beaters on Craigslist and other free places, check their compression, and then have a couple of friends clean up the inside and outside. Then I turn around and sell a beater car for twice as much as I bought it – knowing the customer is getting a good car because the engine is in good shape. Makes me happy. And this idea worked.

What went Right: Within a month of starting my business I was making over $300 net in about 4 hours of my time, fixing up 2 beater cars a week. I used labor substitution to the max: one 12 year old [for $1/five listings] to find possible cars to buy and send them to a 14 year old who used a script and called the owners to ask 5 main questions about the car’s condition. I paid the second kid $3 per call, with notes on a card about the conversation. Then I had a 17 year old beater buddy go out and do compression checks on the car’s engine and check for frame damage, rust, oil leaks, tires, suspension, etc for $10 a trip. Any car that passed all those tests I would go buy cash and drive to my friend’s parents garage where he could detail the outside with a buffing wheel and rubbing compound, while another buddy detailed the car interior at the same time. I paid each of them $25 per car. Even oxidized paint jobs could often be brought back to a nice finish and a few replacements in the interior like mats, and sometimes seat covers made all the difference. So let’s say I purchased a beater for $400, and had my team do all the fixes. Total cost of the fixes = $5 [listings] + $15 [calls] + 20 [check] + $50 [detail] + $50 [materials] = $135 expenses + $500 cost = $635 total cost. I could turn around and sell the car for $1100 and make a net profit of $465 in about 4 hours of my time, or $115/hour. If I sold 2 beaters a week it took me 8 hours to make about $900.

What went wrong: – everything was going great until a friend told me I

was breaking the law, if I sell more than 6 cars a month. I was hoping to sell maybe 8 cars every month, and certainly pay taxes on the profit, as well as have a business license. I’m depressed. I’m actually afraid to go ask about getting a Dealer’s license thinking it’s so complicated and pricy, that I will be even more depressed. I wasn’t hurting anyone. In that event, I have to get a dealer’s license, which is costly and screws up the fun and profitability. How to salvage this business – no pun intended!