Tag Archives: subprime auto loans

How Should a Mobile Car Wash Price Car Lot Washing Contracts – Price Per Car Strategies

Okay so, you run a mobile car washing business and you want to increase your revenue generation by adding some car dealership lot washing contracts. That makes sense because the car dealerships have lots of cars, and they must be cleaned to sell; no one wants to buy a dirty car right? Sure, so your next question is what price point can you charge and still make money. Not long ago, I was asked about this by an already successful car washing entrepreneur;

“I noticed on one of your posts [articles] you suggested $.85 for twice a week. Wow, can it be done for that without have the contract for detailing as well?”

He was referring of course to the synergy gained by detailing for auto dealerships and also maintaining the washing contracts as a bundled service, which is the favored strategy for mobile auto detailers and mobile car washing companies. But what if you only had the lot washing contract and not the detailing contract; does it still make any sense?

Well, yes, in fact, we had many accounts which were only wash accounts at between.65 and $.85 per car, where we did not have the detailing contract yet, for the auto dealership. For instance at the Sacramento Auto Mall, all the car lots are set on the street that looks like a giant circle, and we would have the crews going different directions on that street, and we would never quit. By the time we got done with one side of the street, it was time to start over, they just watched every day all day long.

Some of the other dealerships wanted us to be off of the lot by 10 AM so they could sell cars, which makes it tough in the winter because of the ice formation when you put water on the cars in many areas.

The detailing contracts for auto dealerships are very good when the economy is good, but you must understand that auto dealerships are very slow to pay and you don’t want to become a bank where you are doing services for them and they are paying you for three months. That just costs you a lot of cash flow and all that labor until you get your money.

Remember in a service business “cash flow” is king, everything else is just talk. You’re better off to go find something else to wash rather than letting some company string you out on payments and receivables. And remember that God made dirt on the first day, and that gets all over everything so you should be able to find something to wash other than just car lots.

It appears the mobile car washing entrepreneur agrees and is thinking here too. We used to consider car lots as busy work, keeping our crews busy and thus making money, but it was hardly our best profit center. Please consider all this.



Source by Lance Winslow

The Pros and Cons of Auto Detailing Clay

When detailing clays first came into the scene they were heralded as the answer to people’s detailing their cars as safely as possible, that is, without damaging their car’s paint work and removing the toughest stains that people used to have to seek the so called professional to deal with. Suddenly, it wasn’t such hard work anymore to remove nasty gunk that stuck to cars, just an application and a mere swipe no elbow grease, no possibility of having to scratch our car’s paint work and your car would have that show room brilliance again.

Clay bars have the combined effect of mild abrasives and powerful powdered detergent to effectively clean any car of almost anything. They have become the thing to have for people who are fussy about their cars. They can remove stains as stubborn as grease and tree sap; even tar that attaches itself onto the exterior. The great bonus is that they work just as well on other materials like glass and plastic removing the need to have different products for different parts of a car’s body. You can cut out most of all the other cleaning products you would need to keep the shine on your car, which means with detailing clays you get the effects that far outdo premium polishes and waxes for cars. The only other product you will need though is a lubricant, Clay bars tend to streak if too little lubricant is used and or stick to the surface. This sticking leaves a film of residue which looks chalky and unattractive on the a surface that should be shinny. If improperly used, clays pick up grease during the cleaning process and you don’t want that as you could easily transfer this grease to the entire car. No matter how good a particular brand of clay is said to be it will not remove oxidized paint nor will it fill in blemishes. The best thing to do for a car that has mild oxidization is to remove the oxidized paint by washing and polishing the car first. Most detailing clay kits have pre-wax cleaners that fill up minor scratches and can be used to pre-wash oxidized paint work

Auto clay bars remove mostly anything but not necessarily everything. There are some types of dusts that don’t come off as easily with clay bar. Moreover they should never be dropped on a dirty floor as that might just render them unusable that’s only because they are sensitive to dirt and because dust will still to your clay that is why most are sold with hardened plastic containers that you should really always use to store your clay bars if you mean to get the mileage you want to from them. There aren’t many cons at using clay bars, that’s why most car detailing shops always use them as the best method of cleaning the car exteriors, it’s a good thing that ordinary person can now buy their own clay an cut costs by detailing their own vehicles.



Source by Greg Chadwick

Pre-Manufactured Slot Car Track Retaining Walls

Much has been written about the compatibility of various brands and types of slot cars working other brands and types of tracks. It is fairly well known, for example, that almost any analog slot car can work well on a Carrera analog track because Carrera has the widest and deepest slot of any of the major manufacturers. Conversely, many Carrera cars will not work well, or at all, on many other brands of track because the guide is too wide or deep to fit in something like a Scalextric track. While articles have been written about the cars compatibility, little has been written about track retaining walls or barriers. This study will look in depth at tracks, retaining walls, and barriers from Carrera, Ninco, and Scalextric, and also show how well they do, or don’t, work when mixing brands.

Firstly, let’s start with Scalextric track and barriers, as they are quite likely the most commonly used brand of commercially manufactured slot car systems. Scalextric makes a very nice looking barrier, made of a soft, pliable plastic that holds its form well, and can absorb impacts of slot car crashes without physical damage. These barriers can attach to Scalextric Sport track in a couple of ways- with small black clips that attach directly to the bottom of the track, or inserted into grooves and channels specifically for these barriers on the accessory shoulder pieces. While the barriers do fit well and fairly stiffly into the black clips, the clips do not remain attached firmly to the track without the use of adhesives or other methods of affixing them in a more permanent fashion to the track. Also with a severe impact, either the barrier, or at times the entire shoulder section may dislodge from the track. Aesthetically the barriers are very pleasing, and they do little damage to the cars while slowing or stopping them. However, they often need to be put back into place after incidents.

Carrera at one time provided two different types of barriers- one was a soft, pliable rubber that would slide into clips and affix to the track, and was available in black or red. These are no longer manufactured. The current Carrera barrier system consists of a red and white striped “candy cane” piece of 3mil PVC that slides into tightly fitting vinyl clips that attach to the bottom of the track. The red and white striping matches the pattern found on the border and shoulder pieces of Carrera track, and does look appropriate on sharp turns, though much less so on straight sections where a barrier may be warranted, such as a bridge. Also, the PVC tends to become brittle over time, and will crack and break with successive impacts. It also has very little pliability, and will pick up paint off of wayward cars. This tends to add a realistic look to the barrier, but the cars will show signs of wear. This system does remain firmly affixed to the track even with severe impacts. The strips of PVC can also be easily cut to custom lengths, and one piece can be as long as 4 feet, allowing for a continuous look and feel on a long turn. It is also quite easy to create your own custom barrier walls by printing directly to sheets of PVC and cutting it into strips of the correct height. This can allow for the creation of realistic and fairly durable trackside advertising.

Though not as widespread as Carrera and Scalextric, Ninco makes outstanding track and barrier products that are almost universally acknowledged as the best quality mass manufactured systems. The track has almost the same width and depth as the Carrera, while having the flexibility and aesthetics of the Scalextric. The barriers include low walls, stone looking walls, and even a wall with a high fence. The Ninco barriers are of a similar material to the Scalextric ones, and absorb impact without “trading paint”

Now, suppose you have one brand of track, but you would like to use another brand for a wall or barrier. Fortunately, this is not nearly as complex or difficult a compatibility issue as it is with the cars. The height of the Carrera PVC strips is exactly the same as the height between the top and bottom rails of the Scalextric barrier railings, and it is quite easy to remove the Carrera candy-cane strips and replace them with Scalextric guardrails. The Carrera fastening system to the Carrera track is very secure, and the railings stay in place as well or better using the Carrera clips on Carrera track as they do using Scalextric clips on Scalextric track. Lengths may be a minor problem, but the material trims easily with a utility knife. Unfortunately, if you wish to use the Carrera “candy cane” on the Scalextric track, the only way to do it well is with an adhesive, laying the Carrera strips over the Scalextric guard rails. Hot glue works well for this, and can be removed fairly easily as well.

The Ninco barriers and walls are a one piece system, with the clips being a part of the wall or barrier section. These attach with ease to not only the Ninco track, but also the Carrera and Scalextric. In fact, the Ninco products seem to mount even more snugly with the Scalextric track than on their native track. On the Carrera track, the height of the track is just slightly taller than the space between the top and bottom of the Ninco clips. However, it can be made to fit by trimming the edge of the Carrera track very slightly, almost unnoticeably along the bottom. Again, the Carrera candy cane can be affixed to the Ninco barriers through the use of adhesives.

Pictures of these various combinations, adaptations, and creations can be seen on our website, http://www.races2u.com/photos/tracks.



Source by Warren Peck

Drag Racing – The Perfect Launch

Drag racing, a contest between two cars beginning from a complete stop over a distance of a 1/4 mile (1320 feet) depends heavily on first 60 feet of the race, or the launch. The technique used for launching varies greatly depending on the how the car is equipped. The type of transmission, which wheels are being driven, tires, power, suspension and track preparation all play key roles in how to go about getting the best launch possible from the car.

Improvements on the time it takes for the car to travel the first 60 feet down the track have significant implications on the final ET (estimated time). As a general rule, improvements in the 60 foot time, are magnified by 2x on your final ET. For example, a Dodge Viper GTS that runs a 12.2 @ 120 MPH in the 1/4 mile with a 60 foot time of 2.0 can make significant improvements to it’s 1/4 mile times by obtaining a better launch. If the Dodge Viper GTS is able cut .2 (two tenths) of a second off it it’s 60 foot time, by covering the first 60 feet in 1.8 seconds, it’s final ET for the 1/4 mile would be around 11.8 @ 119 – 121MPH. More examples can be found by searching through the thousands of 60 foot records in the http://www.dragtimes.com drag racing database.

The best possible launch is obtained by obtaining the optimal balance of applying the most amount of power to the ground with the least amount of wheel spin. If too much power is applied during the launch and the tires spin, the resulting 60 foot time will be poor. The same goes for not applying enough power, thereby causing the car’s engine to bog, and having the car limp off the line slowly.

When launching a car with an automatic transmission, a technique called power braking is used. After properly staging the car at the drag strip’s staging lane, tightly hold down the brake with one foot, while slowly applying the accelerator peddle with the other foot. The car’s engine RPM (revolutions per minute) should slowly increase to a point where the car will either start to move or start spinning the tires. Hold down both the brake and accelerator peddles just below the point where the car is starting to move or spinning the tires. When the christmas tree lights reach the last amber light before the green, lift off of the brake and slowly push the gas peddle all the way down. The correct RPM to launch at will be different every car depending on all of the variables mentioned earlier. Start conservative with the first launch and keep increasing the RPM at which the car is launched at during the subsequent runs. If the car starts spinning the tires after the launch, lower the launch RPM and try again.

When launching a car with a manual transmission come to a complete stop after the car is properly staged. Press the clutch in all the way with one foot while pressing the accelerator peddle down with the other foot, raising the engine RPM to a constant moderate level for the first launch. Lift up on the clutch peddle to the point where the car is just about to start moving and hold both peddles still. When the christmas tree lights reach the last amber before the green, slowly release the clutch while quickly applying the accelerator peddle enough to launch the car quickly, but not too much to induce a large amount of wheel spin. Start conservative with the first launch and keep increasing the RPM at which the car is launched at during the subsequent runs. If the car starts spinning the tires too much after the launch, lower the launch RPM and try again.

To obtain better launches and bring down 60 foot times even more, the use of drag radial or full slick tires can be used on more powerful cars that have trouble launching at any RPM on regular street tires. Drag radials and full slicks usually require a burnout to heat up the tires and clean them from debris for optimum performance. A burnout is a rapid spinning of the car’s tires while the car stays relatively still.

All wheel drive cars (AWD) are typically the easiest to launch because the engine’s power is distributed to 4 wheels instead of two. Rear wheel drive (RWD) cars typically launch better than front wheel drive (FWD) due to the transfer of weight to the rear tires during the launch, causing an increase in traction. If the car has aftermarket adjustable suspension, adjustments can be made specific for drag racing to increase the weight transfer to the driving wheels.

The track’s launch pad preparation also plays an important role in how well and how hard cars can launch. The launch area is usually prepped with traction compounds to add to the stickiness of the track. A well prepped track will definitely help drop 60 foot times and result in lower 1/4 mile times.

During the breaks and cool down periods between drag racing runs, make detailed notes about how you launched on the back of each timeslip. These notes can help you diagnose launching issues, fine-tune subsequent launches and show improvements in the search for The Perfect Launch.



Source by Brooks Weisblat

The Function and Usage of Gearboxes

A gearbox (also called transmission) provides speed and torque conversions from a rotating power source to another device using gear ratios. It can be used in various situations such as fixed machines, pedal bicycles, and anywhere else rotational speed and torque needs to be adapted. But the most common place is in motor vehicles, where the gearbox adapts the output of the internal combustion engine to the drive wheels. Because these engines need to be operated at a relatively high rotational speed, they can not be used in many operations such as starting or stopping.

As gearboxes are so widely used in motor vehicles, it is obvious that they must be largely used in cars. With the development of our economy, more and more cars are consumed, as a result, gearboxes are playing more important role in our daily life. Although many people have cars, few of them have the knowledge of how a car works, let alone the relationship between different mechanical components. Since car gearboxes are the fundamental parts for its working process, it is a wise decision for car owners to learn something about gearboxes.

In cars, the gearbox will generally be connected to the crankshaft of the engine. And the output of the transmission is transmitted via driveshaft to one or more differentials, which in turn drive the wheels. The gearbox converts engine speed into torque which will push the car forward. It is the main job of the gearbox. There is some difference between manual cars and automatic cars. For example, in a manual car, when the driver depresses the clutch, the gear will be disengaged from its original position so that it can slide up and down the gearbox, while automatic gearboxes are the opposite.

As the main task of the gearbox is to convert engine speed to torque so as to push the car forward, it is indispensable for your car. Your car will not be going anywhere if it lacks the gearbox. As a result, you should pay more attention to the gearboxes. Since we are talking about gearboxes, it is necessary to mention the gear ratios. Commonly, a gearbox will have multiple gear ratios, with the ability to switch between them as speed varies. And this switch may be done manually or automatically.

There is no doubt that gearboxes can be used in many other places except in cars. But no matter where they are used, these transmissions share an important feature, i.e. the gear ratio cannot be changed during the usage. It is because the gear ratio is fixed at the time the transmission is set.

All in all, there is more knowledge about gearboxes and their functions. It is advisable that you should have some basic knowledge of gearboxes. Maybe it will be helpful in your future life.



Source by Lou Lingling

Make Money By Selling Your Junk Car

Do you have a car that is just sitting on your lawn, or in your driveway, and doesn’t get used? Perhaps you have a wrecked vehicle or an old car that doesn’t run anymore, and you don’t have the cash to fix it. It probably isn’t even worth fixing it. Did you know that you could just call number, and then magically a tow truck will come pick it up, and pay you cash? I’m not kidding! Sounds too good to be true, but it is very true. There are actually companies in your local area, that will literally pay you green paper for you to let them tow your junk away.

You can get rid of that ugly hunk of metal and replace it with cold, hard, cash! The neighbors will be happy, you will be happy, the environment will be happy, and the tow company will be happy. It’s a win, win, win, win! All you have to do is hop on the internet, and Google search to find a local company to come remove your junk car.

Your probably wondering what hoops you will need to jump through in order for someone to come do this service for you. Well it is actually extremely easy. There are only a couple things that you need to do to get this service.

#1. You need to have a junk car, or a car that you no longer want to own.

#2. You need to have the title of the car.

#3 You need to actually pick up the phone and call to give them your address. You can also visit their website and fill out a form if you don’t want to call. Most of the companies give you online quotes now.

It is really that easy. Right now today you could be a few hours away from having extra money in your pocket.

So clear off your lawn or driveway. It’s time to free up some room, and get rid of that eye soar that you have been holding onto for so long. Plus it’s so easy, why wouldn’t you do it? It will take the tow truck about 5 minutes tops to hook it up, pay you cash, and be outta your sight. So enjoy your new junk free life and fatter wallet. It really is almost too easy to get rid of your junk car now a days. So give it a shot because you have nothing to lose…except for that junk that is collecting dust and rust.



Source by Joel T Hahn

Car Washing: Spic and Span – Inside and Out

Regularly washing the exterior of your car will not only make it stand out as shiny and sleek, but it will also help ensure its longevity. A clean car protects against dirt, salt and other contaminants picked up from the road every day. Anyone who lives in an area with harsh winters can attest what the crud can do to a car’s body- rust! Washing your car several times per month, or even once a week, can keep your car’s body in tip-top shape. Here are some tips for washing your car inside and out.

While a warm, bright sunny day may make your car scream, “Wash me!” contrary to popular belief that really is not the best time to wash your car. Why not, you ask? If a car is not kept cool while suds up, the water can evaporate rather quickly, leaving soap spots. So, your best bet is to wash the car on a cloudy day, or at least in the shade on a sunny day.

Before you start washing your car, you will want to gather all the necessary supplies. You’ll need access to water- usually through a garden hose or pressure washer, a bucket, soap, sponges or soft cloths, scrub brush, glass cleaner, paper towels (or newspapers) and any other cleaning materials you may wish to use. For example, polish, bug cleaner for headlines and windshields, tire cleaner or degreaser, etc. Once you have everything together, fill up the bucket with soap and water, making it really sudsy. Be sure to use a soap that is made to wash cars- shampoo and dish soap really won’t do the job.

Begin with the wheels. It is important to have clean wheels because they are in constant contact with the road, and can be prone to corrosion caused by brake dust. You are riding on your tires, and your safety depends on them. Be sure they are clean! You’ll want to use lots of soapy water and a scrub brush to get them clean. You may also need to use a degreaser. You may need to use some good ‘ole elbow grease to get down deep in the tread to get all the dirt and debris. Once clean, rinse them good. Then, you can also use polish your tires and wheel covers to give a finishing touch.

Next, start on the car itself. Start by hosing down the car to get the surface wet. Then, start with small sections at a time so you can pay close attention to detail. For example, you may want to start on the back left, and clean that area from top to bottom. Then, rinse and move toward the center of your car, working your way all the way around. For the car’s body, you’ll want to use something soft so that the paint job can be protected. This can be a range of materials from large sponges, soft chenille pads, wash mitts and even a sea sponge. During this process, you may alternate from the soft sponge to a scrub brush for the grill area to remove bugs. After you are done with all sides, give the car a final rinse.

Next, although the windshield and windows are all probably shining from the good washing, you may want to take another step to make them shine even more and use a glass polish to clean them. Paper towels work fine, but for a more polished look, try ‘recycling’ your newspapers as a window cleaning rag. They work wonderfully, and leave no lint behind like some paper towels do!

Next, you can wax/polish your car. This will rally help protect your car from the elements like dirt, road salt, pollutions and other debris. You can actually wash your car with a pre-wax treatment to prepare for this step. Apply the wax to one panel section at a time using a dry cloth. After the wax dries, you can buff it with a towel. One coat is enough to make it shine- but heck, you can add another coat or two of you want to make it really shine! The wax job can last about two months.

While the interior really doesn’t help maintain the car itself, it’s just nice to have a clean car inside out. After you are done washing and waxing, start by vacuuming the floors, mats and seats. You may need to use the attachments to be able to get in all the nooks and crannies. (Crumbs are everywhere!) If you have rubber mats, those can be washed along with the exterior and laid out to dry. Replace them after the car is cleaned inside. Next, wipe down all the interior surfaces with a damp cloth. Then, just like you did the outside windows, do the same for the inside. Some people like to use a polish to make the dashboard shine. Just don’t polish the steering wheel! It’ll make it slippery.



Source by Michael Walker

Caring For Your Car’s Clutch

Have you ever wondered exactly what happens when you push down the clutch pedal? Without the clutch you would not be able to disengage the power of the engine or change gears! So how does it all work? A clutch is used to connect two moving shafts that are moving at different speeds. This allows us to disengage engine power without stalling the car or to be able to drive off smoothly allowing the engine’s power to transmit to the road gradually.

What is the clutch made up of? There are several major components starting with the flywheel which is connected to the engine, followed by the clutch plate which is connected to the transmission. Next is the pressure plate which holds the friction between the clutch plate and the flywheel. This part of the clutch takes an incredible amount of force & pressure. Next are the studs & the diaphragm spring. As the middle of the diaphragm spring is pushed in, a series of pins near the outside of the spring causes it to pull the pressure plate away from the clutch disc. This releases the clutch from the spinning engine. The next component is the throw-out bearing which is also known as a ‘clutch bearing’. It aids the smoothness of the transition and noise reduction. Next you have the clutch housing and release fork. The release fork’s job is to put force onto the pressure plate causing the pressure plate fingers to release. The bell housing contains all of the clutch components. The final part of the jigsaw puzzle is the gear box.

How can you look after your clutch? Don’t ride your clutch. We are all guilty of sitting in traffic jams or waiting for the lights to change, by holding the car steady on the clutch rather than the brakes. This can take years of life from the clutch! Intense heat builds of within the clutch and this can lead to the clutch burning out. Simply by holding the car on the foot brake or handbrake will dramatically reduce clutch wear. When you have fully released the clutch move your foot off the pedal as having the clutch slightly depressed will also increase wear to the clutch.

What are the signs of clutch wear? A slipping clutch can mean a new clutch is required. A simple way to see if your clutch is slipping is to find a reasonable hill or incline. Get your vehicle to a reasonable speed around 30-45 should be fine then select a high gear 4th or 5th and push the accelerator to the floor (if it is safe and legal to do so). If the vehicle’s rev counter suddenly raises with no equal sign of acceleration this can be a sign of clutch wear. Some vehicles do have the facility to adjust the clutch cable which can extend the life of the clutch.

Another sign of clutch wear is clutch judder. You would feel this feedback through the clutch pedal. If you feel a judder or thump during the gear change this may be an indication. This is generally felt at slower speeds or changing gear in the lower gears. The usual cause of this is that the clutch plate has moved slightly and become misaligned. This can also happen if the clutch plate or other parts have been renewed and not aligned correctly. The worst outcome from this would be that the flywheel has become damaged, and if this is the case specialist advice will be required, as the flywheel would generally mean the clutch assembly would also require changing!

Yet another sign of clutch wear is any unusual noises. Most noises on older cars are only to be expected; you would expect to hear some creaks and groans and whines after a few years. A bit like the wife (only joking)!! One noise that would be cause for concern would be if the whining noise also had a crunching sound within it. If you hear this type of sound then it is definitely worth getting your car repaired as soon as possible. This could be a sign of the clutch bearing beginning to wear. This component would need to be replaced as soon as possible. If it were left it would cause further damage and would cost a lot more money to rectify.

What else has a clutch? Well some people with automatic cars maybe surprised to find out that automatic cars also have clutches and some even have two? Lots of power tools are equipped with clutches as well. Drills are usually fitted with clutches so the user can disengage the drive faster. This allows the user to have far more control of the equipment. As you can imagine the safety benefits make the clutch a necessity. The strangest thing that I have come across that requires a clutch is a Yo Yo!



Source by Harry Coombes

Advantages and Disadvantages of Various Car Shelters

There are different type of car shelters and garages that you can use for protecting your car. Among these car shelters that are common in many places includes portable and instant shelters. There are also different types of garages that are also used for sheltering cars. They include temporary and instant garages. There are advantages and disadvantages of each car shelter and garage.

Portable shelters are among the most common car shelters. They are also referred to as temporary shelters, thanks to the fact that they are easier to move from place to place. The main advantage of these shelters over other shelters is that, they are easier and cheap to construct. Among the materials needed in order for one to construct these shelters includes tents and steel frames, which are readily available in many stores. They are also convenient for they can be moved from one place to the other, just like their name suggests. Nevertheless, portable shelters too have their own shortcomings. Among them is that they fail to protect the car completely. Therefore, cars that are stored under portable shelters are subject to being damaged and destroyed. The other disadvantage that is linked to portable car shelters is that they can easily be ruined by heavy rains and strong winds.

Instant shelters are much similar to portable shelters, only that the former doesn’t need to be a lot of construction work in order to put them up. The main benefits that are attributed to these shelters are that they are efficient and cost effective, for they require less construction work as compared to other shelters. They are also portable thus being easier to move from place to place. Just like other types of shelters that are used for sheltering cars, they also have their own demerits. Among them is that they are less stable, therefore can collapse anytime there is a heavy wind and downpour. They also fail to offer maximum security to vehicles and trucks that are stored under them. Therefore, the vehicles that are sheltered in these shelters are vulnerable to robbery and destruction.

Temporary garages are also used for the purposes of sheltering cars. The benefits of these garages are that, they are easier to put up as compared to permanent garages. They also provide an alternative place for storing cars when a mechanical garage is needed temporarily. However, they also have their own disadvantages with the first one being that they are expensive to construct. In addition to being expensive to construct, they also require a lot of expertise in order to erect them.

Car canopies are also used for sheltering cars and other vehicles. The main advantage is that they provide an ideal way of protecting cars from a wide array of damages. Secondly, they are ideal for preventing vehicle theft and vandalism alongside reducing the costs of car maintenance. The shortcomings are that, they are too expensive to erect, thus hindering many people from using them to shelter their cars and vehicles. They also require a lot of human expertise for one to completely succeed in putting them up.



Source by Olive A Garcia

Starting a Taxi Business in Uganda? There Is More Than Meets the Eye

A typical investor in the taxi business in Uganda is going to encounter two key issues even before they start making their first shilling. I explain these issues below.

When I first bought a used taxi from my grandparents, I took it for repair to a mechanic in the Wandegeya suburb. He “over hauled” it and told me it was in perfect condition. One week later, the differential had developed a few problems. Next the crank shaft had a few issues. I eventually over came these issues but then came the witchcraft story.

A typical Ugandan reader is probably surprised that I haven’t raised the issue of business and witchcraft before. It seems many Ugandans firmly believe that going to the witch doctor and giving your last white goat(and with no spot of black) is going to turn your business into an overnight success even if you cannot differentiate(no pun intended) between cash as profit(which you can use as dividends) and cash from sales(which you should not use until all expenses are settled).

So the witchcraft story is this; I hired my cousin John [not real name for obvious reasons] to work as the taxi’s first conductor. He according to the family rumour mill “bewitched” the taxi because:

*Day 1. The suspension broke.

*Day 3: The crank shaft developed further problems.

*Day 5. The differential was shaking again.

*Day 7: The taxi knocked someone crossing the road at Ndeeba.

In the 1 month that the taxi was in business, I made only Shs 7,000! Oh, I used that to bail out the driver at the police station. I am not one to consider the validity of the witchcraft story but that brings me to the taxi business and factors to consider if you are to invest in it.

First the CONS (of course)

1. Mechanics without ethics

There is a possibility that when I took the taxi for refurbishment, the mechanic to whom I entrusted the repair provided me with a pro-forma invoice for parts he didn’t install, obtained them second hand or third hand or even that he didn’t carry out all the necessary repairs. How could I verify that with no knowledge of the intricacies of a car, let alone a second hand taxi from Bungokho?

You can of course get round this issue by instead taking your Toyota Hiace (the predominant model used for taxi business in Uganda) to Toyota Uganda’s repair workshop. Don’t expect of course to pay Shs. 7,000 for repair. They use computerised diagnostics and their mechanics use a logging system to bill you by the hour. Oh and of course they use new and genuine parts so forget that used crank shaft your mechanic Kakooza will find you from Kisekka market. As per the Toyota Uganda website, you can expect to start paying for servicing for a Toyota Hiace Model from Shs. 183,900.

2. Difficulty of revenue verification

Unless you are driving the taxi yourself or install cameras just like the London Buses or National Express buses in the UK, it is virtually impossible to ascertain passenger numbers on any given route at any given time. I know many a business owner will circumvent the issue by not paying the driver/conductor wages an instead demanding a fixed daily/weekly sum say 6 days a week with Sunday being the “driver’s day”. The driver’s day being the day he doesn’t pay you as all revenue will go to wards earning their keep. This may work to an extent until the driver/conductor tells you:

“Mukama wange, Walk to work etuletedde bizibu” [My Lord, we were unable to make sufficient money today owing to the “Walk to work” demonstrations].

He then proceeds to hand you half the agreed fee. How do you verify that driver’s story?

Oh there will be numerous of those stories. Next time it will be that Uganda Taxi Operators and Drivers Association (UTODA) is fleecing them and they have fought back, then another day; Traffic Police “search and stop” operations have resulted in massive delays followed the next day by a strike by drivers. Of course you as their “Lord” cannot be inhumane and continue to demand the fixed sum can you?

Like I have hinted, if you are seriously considering investing in this sector, perhaps you can find a supplier for on board cameras. However for simplicity and line with the norm in Uganda, I will therefore propose that the potential investor stick to the common practice of agreeing with the driver a fixed “contractor” rate for a given route. I would however recommend that this rate be verified through corroborating with different drivers of the route the taxi will ply.

3. Starting capital and cost of financing

Owing to a vehicle being considered to be a key asset in Uganda,it is pretty common for this investment to be financed by a commercial bank loan or lease financing from companies such as DFCU Leasing Limited. In addition many car dealers are happy to provide loan financing. You can get a decent used taxi (complete with stripes and fixed seats) for about Shs 17m going by my research information from autotrader.ug.

Now the key issue in respect of cost of financing. Following the recent increase(November 2011) by Bank of Uganda of the Bank Rate to 29%, I can expect that the commercial banks will increase their lending rates to an average of 31%. The Bank rate is the rate at which commercial banks can borrow from the Central Bank as a lender of last resort. The significant cost of financing will as we shall see later on will have a significant impact on expected return on capital.

4. Long period over which to realise profitability and to recover your investment

I now set out my analysis of the estimated profitability for this business.

I have estimated that the investor is purchasing a taxi to ply any one of Kampala and its suburb routes. I am using the most common model which is the “contractor model”. The model being that the driver provides the investor with a fixed agreed daily sum for 5- 6 days a week with the 7th day for the driver/conductor to earn their keep.

In this model, the driver/conductor therefore incur all day to day expenses that is; fuel, daily and monthly UTODA fees, loading fees,KCC fees, stage fees et al. The owner will however incur costs of repairs and maintenance as well as insurance costs.

Summary of profit position:

Revenue per month: Shs 750,000 (estimated at Shs 30,000 per day for 25 days)

Repairs and maintenance per month: 183, 900 (estimated from Toyota Uganda workshop information)

Financing costs: 439,167. (estimated on interest rate of 31% on a 17m car. The rate is estimated on Nov 2011 Bank of Uganda Bank rate plus a 2% margin)

Insurance(3rd party): 4,167

Monthly net profit: 122,767

Annual profit(A): 1,473,200

Capital cost(1994 Toyota Hiace, used)(B): 17,000,000

Return on capital(B/A): 11.54 years!

As can be seen from the above analysis, forget your money in this sector. You can of course now at this stage if you like go visit the witch doctor who will perhaps use his spells so that customers prefer your taxi to all others and he will also magically my analysis above to give a return in perhaps 1 month. [Please note that the last statement is made in jest and I wouldn’t expect a serious investor to consider witchcraft for business success].

5. Saturation of the market and related moves.

There are too many taxis in Kampala or almost anywhere else in Uganda. It seems every where you turn there is a taxi and so I don’t even need to go into the details of this but it is certainly worth noting the trend for this sector. As there are too many taxis in Uganda, judging by several reports from UTODA, eventually the politics surrounding this industry will be played out and then the several government initiatives to try to de-congest the new and old taxi parks in down town Kampala; and instead move taxis to out of town satellite taxi parks like Ndeeba will become a reality. Alternatively we may finally see a move to commuter buses instead of taxis as promised by former Mayor Nasser “Seya” Sebagala.

And Now the PROS

1. Fair return on capital, assuming no financing.

The main advantage for this sector therefore is for the investor who is going to invest without incurring the cost of borrowing. I set out below the projected return on capital without the cost of financing:

Revenue per month: Shs 750,000 (estimated at Shs 30,000 per day for 25 days)

Monthly Repairs and maintenance: Shs 183, 900 (estimated from Toyota Uganda workshop information)

Insurance(3rd party): 4,167

Monthly net profit: 561,933

Annual profit: 6,743,200

Capital cost(1994 Toyota Hiace, used): 17,000,000

Return on capital: 2.52 years

As can be seen from above, the return on capital without cost of financing reduces to a 2.52 years from the onerous 11 years in the first analysis.

2. Security for further financing

Assuming you have not borrowed to purchase the taxi then a further advantage is that in Uganda, vehicles are preferred assets to use as collateral for borrowing owing to the fluidity of the used car market.

3. Alternative one off uses

The advantage of the taxi of course is that you can use it for one off uses like private charters or for example for private uses of advantage to the investor for example; taking the children to school, for funerals or; like me in Uganda who in 2005 mustered the courage to take the taxi on a test drive in the night by going to visit that “Mzungu” girl I wanted to impress.

I think John’s witchcraft was already at work because when I returned home from visiting the girl, I crashed into the neighbour’s wall as I tried to reverse the taxi so as to make the tight turn into the home gate. I insist it was the witchcraft at work and of course not the fact that I had no experience whatsoever in driving a long vehicle!

SUMMARISING AND THE FINAL WORD

First the numbers.

On the basis of my analysis:

*Capital investment(A): Shs 17,000,000

*Revenue per year: 9,000,000

*Profit per year (revenue excluding all expenses and interest) (B) is Shs 1,473,200

*Return on capital(years to get capital back) (A/B) is 11.54 years.

*If you however don’t incur the cost of financing then this return period is estimated at 2.54 years.

Now the basics you must get right before investing:

*Research on a fair contractor rate. As the preferred model in Uganda is to hire out your taxi to the driver/conductor, it is worth spending time speaking to various drivers and perhaps even UTODA to establish a fair price for your route and ensuring you get the agreed rate without any “mukama wange” stories.

*Consider cheaper financing options. Too often we ignore the advantage of pooling funds say from family members and friends. This can provide equity financing(interest free credit) rather than the crippling commercial bank loans.

*A decent and trustworthy mechanic is a must. Best of luck!

FINAL WORD

By principle I am wary of business models where you are unable to understand or verify the intricacies of the revenue recognition and can hardly verify the costs to establish efficiencies and so on that basis, for me this would be a “no-no” sector.

It however has the key advantage of simplicity of revenue stream and perhaps that is why this has resulted in the over investment in this sector including by [financially] illiterate people.

If you are therefore drawn to the simplicity of this type of investment plus the advantage that the vehicle is security for further borrowing then by all means invest in it and then all you have to ensure is that you do not hear tales from Kakooza of the “differential is shaking.”



Source by D E Wasake