So, you want to open an auto repair shop? But how to start an auto repair shop? How much does it cost to start an auto repair shop?
Do you want to know these answers? Then this article is for you.
With the increasing number of automobiles, there is a need for more auto repair shops. And one of the best things about this business is that it is highly profitable. To open a business, you will need business planning, finance, accounting, legal work, and many other things. Then, you just need to follow these ten steps.
How To Start An Auto Repair Shop?
The first thing that you will need is a garage where you will execute your work. So, you have put everything on the table. Then let’s start.
Auto Repair Business Plan
To start any business, you need a business plan. For a car repair shop, here is a basic business plan.
Mechanical Services
So, what services are you going to give your clients? First, you need to understand what specialty you have in repairing. There are body repair, engine repairing, and transmission. If you think that you will not give any special services, then fine. You can provide general repairings like oil changes or point inspections and simple maintenance. So, describe the services you will offer.
Location
See for a car repair service where you can make the maximum profit. Location is one of the most important things. If you open your garage on a busy road, then nobody will stop by your garage. And if you open your garage in a quiet place, you will not get a client as well. So, you need to choose the location of your garage properly.
Upfront Cost
Calculating your business costs at the initial stage is important to know to make your financial chart. The chart will tell you the costs. So you can fix the prices for your services. And you can calculate the profit.
| ASE Certificate | ~$100 |
| Business License | ~$100 |
| Diagnostic Equipment | ~$10,000 |
| Hydraulic Lift | ~$5,000 |
| Mechanical and Specialty Tool Set | ~$15,000 |
| Rent | Avg. $2000 (Depending on the space and area) |
| Insurance | ~$5,000 |
Funding Sources
As you have measured all the financial costs, it is time to fix all the funding sources. Are you going to take a loan or ask the investors? Every business needs capital. You also need to understand that your business will not give a profit in the first stage. It will take time.
Competitors And Target Customers
When you fix the location of your garage, you need to do good research on the area. You need the answers of the market, your competitors, and who will be your target customers. If your research is well enough, then your business will flourish for sure. These details will also help you to make new strategies for your business.
Legal Entity
When you are ready with your business plan, it is time to finalize the legalities. You need to make your repair shop a legal entity. As you know, there are different types of companies. All have some advantages and disadvantages. You can make your company an LLC, a Corporation, or a sole proprietorship. Here is the difference between an LLC and a Corporation.
| Limited Liability Company (LLC) | Corporation |
| Individual Owner | Shareholders |
| Corporation or partnership tax | Separate tax |
| Fewer formalities | Meetings are frequent |
Financial Security
So, what are the costs that you have to pay with time? First of all, there is a location or garage rent that you need to pay from time to time. There are also employee salaries, equipment, insurance, and others. So, you will need a source of finance that will not cut off. There are SBA (Small Business Administration) loans that you can take for your business. But you need to make sure that you will be able to pay the money back.
Licenses And Permits
For a mechanical shop, you will need some specific permits, and for any business, you will also need a business license. You need to make sure that you have proper permits and licenses for your business. No one wants any governmental issues while their business is running smoothly.
Business Bank Account
When you are running a business, make sure that your business properties are separated from your personal properties. So, get a business credit card and a bank account for your business transactions. This way, you can protect your personal assets like your car, home, and other valuable things.
Business Insurance
I think you want your business to be protected. So, the first thing is to get insurance so that your business will be safe from any unforeseen incidents, natural hazards, or other accidents. The common insurance that you can get for your small is General Liability Insurance. If you are not sure about your employees, then you can also get Workers’ Compensation Coverage.
Hiring Right Employees
See, employees are the pillar of a business or a company. You need your workers to do the best work than other auto repair shops. So, hire the best of the best mechanics who will take your garage to the next level. You will also need one or two front office workers who will attract and engage customers.
Define Your Brand
Now that you are ready with your business, it is time for the best marketing strategy to build a brand. You can do that by writing catchy lines, creating attractive logos and images, and giving services the best way possible. To create a brand, you can follow these basic steps in a unique way.
- IncreaseAwareness
- Build Your Brand
- Offer Custom Services
- Spread Brouchers
- Give Excellent Services
- Social Media Marketing
Frequently Asked Questions (FAQs):-
Here are some interesting questions and answers.
Ans: Most garage owners started their careers as a mechanic. If you want to start an auto repair shop, you can make $30,000 to $50,000 per annum if you know how to deal with cars. And a large business can earn upto $100,000 per year.
Ans: Not every business runs successfully, but what are the main reasons an auto repair shop fails? There are reasons like-
⦿ Improper Employees
⦿ Poor Planning
⦿ Financial Difficulties
⦿ Wrong Location
⦿ Number of Competitors
⦿ Unsustainable Turnover
Ans: Most business analysts say that a 100% markup will make an average of 55% profit. So you need to understand that a markup part is important for an auto repair business. If you want to achieve atleast 30 to 35%, you need to work hard. Most repair businesses fail if they have less than 15%.
Final Words
Now that you know the answer to how to start an auto repair shop, it is time for a great marketing strategy. If you are able to give good services and spread the word through the customers, then there is no way other businesses can beat you. And with time, you can take other locations as well. You also can search more online.
If you find this article interesting, then do not forget to give your valuable feedback.
Thank You.
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