I have been interested in vintage campervans for some time now, and in the last year I have started fitting out vans for friends.
I have been focusing mainly on friends and family, but I have started to build a small customer base in my local area. Is this too small a base to begin with, or should I take a plunge?
I am unsure where to start, as I have never written a business plan, started a business or borrowed money for one – and I haven’t got the faintest idea about advertising to get customers.
Have you got any advice on turning my campervan sideline and passion into a profitable business, please?
Campervans are something I am passionate about, and I don’t want to fall out of love with them by running a business full-time!
Could I turn my side project of fitting vintage campervans into a profitable business? Dave Fishwick replies
Dave Fishwick, This Is Money’s business doctor, replies: I say to people, take the job or start a business you would do if you did not need the money. If you can find that job and make money from it, then you have indeed succeeded.
I have been dealing in commercial vehicles for over thirty years, and it is a great business to be involved in. However, you will go through some tough times, and you will need some spare money to carry you through the difficult periods.
I remember the very first camper I ever sold, many decades ago. The vehicle was a very old Ford Transit van that had been converted into a camper van.
The customers who bought it were a very young couple who had saved up to buy a camper and wanted to drive it all across Europe, the excitement on their faces about this upcoming adventure was wonderful, and I can still see them in my mind, setting off in this two-tone green transit camper on their adventure.
It would help if you considered that the money you currently get for converting a van into camper after the cost of materials, and maybe a bit extra on your electricity bill, is pure profit.
Once you formally start a business, on the other hand, it then becomes gross profit, which will be whittled down by the various costs involved in running a business, particularly one with premises.
Rent, business rates, commercial electricity and gas – which is usually more expensive than domestic – insurance, marketing, accounting costs and, of course, the various taxes levied on businesses.
Then if you employ staff, add on their wages and national insurance and pension contributions. Overall, your fixed costs can quickly add up to thousands of pounds per week.
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Initial investment costs could include vehicles, equipment purchases, research and development prices, building improvements, signage and initial marketing.
None of this means it is not impossible to make a net profit from a new venture – many businesses across the country do just fine. However, if it’s your first venture, the costs involved can shock you and cause cash flow problems in the early days if you’re unprepared or work doesn’t come in as quickly as you anticipate.
As you allude to in your question, it could make the novelty wear off your hobby quite quickly, and by the sounds of it, there’s only you doing the work. If you injure yourself or damage your hands, for example, it could cause a massive problem if everything relies on your labour.
This type of commercial vehicle building is seasonal, and whereas now you may choose to wait for fine weather to start a job, your landlord, the taxman, local authorities, staff, and various others, with their hands held out, won’t wait for the sun to shine!
To your question about where to start, it sounds like you already have started and in a very sensible way, too—keeping your overhead costs to a minimum, spreading out the prices and investment into tools and equipment and eliminating the need for a marketing budget by growing organically by word of mouth.
If you do have another source of income and this is a profitable sideline, it may be that you are already in the best place you could be at the moment, especially while we are all in these very uncertain economic times.
If, however, you can build up a cash buffer and get to a stage where you’re just as keen to continue to grow this business, and you feel that not expanding is seriously restricting it, then you’ll know that the time is right to make your next move, onwards and upwards!
Whichever way you choose to go forward, I wish you the best of luck.