How to Start an Auto Repair Shop Business
Opening your own auto repair shop is a fantastic opportunity that provides a lot of room for growth and security. However, getting started can be tricky, especially if you haven’t been a part of starting a business before. Fortunately, when it comes to how to start an auto repair shop business, the process doesn’t have to be difficult, and with these six tips, you can start taking steps in the right direction today.
1. Make a Plan
It’s never a good idea to jump into a business without a solid plan, and when it comes to learning how to start an auto repair shop business, the same logic is true. Before going ahead with anything else, it is important that you sit down and concoct a plan that can serve as a foundation to build off of.
A few of the most important things to consider when formulating a plan include:
- Start-Up Costs
- Target Market
- Pricing
- Business Name
First off, the cost of starting an auto repair shop can vary, but you will need to factor in the costs of things such as:
- A Business Licence
- Certifications
- Insurance
- Hydraulic Lifts
- Diagnostic Equipment
- Tools
- Shop Rental Fees
When it comes to learning how to start an auto repair shop business, you can’t begin without the appropriate licensing and certifications, and this can also vary depending on the specializations and types of work you are planning to provide. For instance, an auto body shop specializing in bodywork will have different requirements than a shop that focuses on electrical repair, brake repair, or transmission repair. All of these costs, including the costs of specific equipment and rental fees, will need to be considered when creating the perfect business plan.
Along with this, once you get on your feet, there will also be ongoing expenses that you will need to plan for, including rent, insurance, and the cost of labor, which can vary depending on how many engineers and mechanics you hire onto your team.
You will also need to consider who your target market is, which can tie into the certifications and equipment that you will need. For example, a car body painter will be targeting a market that isn’t just anyone looking for a standard oil change. Additionally, if you choose a niche, such as specializing in work on repairable salvage jeeps for sale, your target market will be smaller. However, depending on your location and if there are any other specialty Jeep services near you, this could allow you to capitalize on a very specific set of clientele.
Regardless of your specialties or target market, it is important to consider the fees that you will charge, usually either flat, hourly, or based on parts and labor. However, in order to determine the best pricing practices for your shop, you will first need to consider the above areas, as well as if you are going to be hiring additional staff that will need to be paid.
2. Register as a Legal Entity and Register for Taxes
When it comes to how to start an auto repair shop business, these details may be the least fun, but they are some of the most important. You will need to establish a legal business entity such as a corporation or LLC that can protect you in the event that your shop is sued. This will mean that you personally cannot be held liable, and instead, the business entity is.
Once you decide on the type of business entity you want to register as, you can begin the steps to register for taxes including both federal and state taxes. For this, you will need an EIN which you can acquire through the IRS website for free. You can also mail or fax in a request. It is worth mentioning that some states can have varying specifics when it comes to business taxes, and if you are ever unsure about what you need to file or set up, you should always use a tax professional instead of trying to guess, as this could lead to a lot of problems down the road.
3. Connections
Once you have all of the legal steps taken care of, you may want to consider making local connections. Connecting with a local auto parts store can be a good way to source parts without needing to order them from far away. This can allow you to get things like local car electronics — if you offer electrical repair — tires, oils, lubes, and other necessities, sometimes at a discount if you buy in bulk or set up an agreement with the shop.
In some cases, local auto parts stores may also be able to order specific parts, like a brake controller or voltage regulator, if you need one for a customer but don’t have one in stock. This can allow you to offer special services that might not be needed often, without worrying about long ordering times from outside sources.
By connecting with a local auto parts store, you may also be able to increase the number of customers you receive, especially if you advertise in the store and are recommended by them to their customers. This can be a great way to increase recognition and draw in more customers without having to invest in a lot of expensive marketing.
Additionally, some auto shops have even started making connections with 3D printing companies to have tools or even some car parts 3D printed. While this is still very new, if you have a 3D printing company near you, it may be worth connecting with them to see if they have anything to offer that could benefit your shop.
4. Dealership Partnerships
Another thing that you can consider when thinking about how to start an auto repair shop business is partnering with a local used car dealership to help increase your client base. Although some dealerships prefer to offer services at their own locations, others will partner with local auto shops and refer car buyers there for tune-ups and other services. While this can be a valuable way to drive up business, it will be up to you to prove to the dealership that the partnership is worthwhile and benefits them. After all, they really have nothing to lose by not partnering with you, so you will need to come up with a reason why this partnership is beneficial for both of you.
For example, if you have a motorcycling dealership closest to you, and wish to partner with them, you might reach out with an offer that stipulates that you will source parts from them and not any competitors. This allows them the benefit of being able to sell parts and make a profit without having to do much additional work. While this may seem more skewed in the dealerships’ favor, by increasing your customer base, you can help build customer loyalty, which can then lead to you being recommended to more people via word of mouth. This can only benefit your reputation and help you grow in the long term, which is one of the most important things to consider when it comes to learning how to start an auto repair shop business.
5. Consider Your Specilizations
When thinking about starting an auto repair shop business, what you specialize in will matter a great deal. While everyone with a car will eventually need an oil change, having additional focuses on specific areas can help bring in additional customers who need unique services that other shops may not offer. For example, an auto shop that specializes in engine repair will require you to either know or hire mechanics who know everything about engine repair. Not every mechanic knows this, and it can be a very niche field, especially in some locations that may not have other auto shops that offer this service.
Another thing that you can specialize in is electrical systems, which involve a lot of detail-oriented work and it can be very time-consuming. However, if you build a reputation locally for being the best place to take vehicles for electrical repair, this can be a very stable and successful service to offer.
Additionally, tire services, transmission work, brakes, and motorcycle repair are other specializations that you may want to consider, and they can all have benefits depending on what your local area is currently lacking.
When thinking about whether or not you want to offer specialty work, consider the other auto shops in your area and scope out the services they offer. You may find that some are lacking in specific types of work that you can offer in their place. However, if five other shops in your local area specialize in a service, you may want to consider something different, as trying to compete with the established businesses may prove difficult in the long term.
6. Keep Innovation in Mind
When thinking about how to start an auto repair shop business, innovation is something to consider and it can help ensure that your business doesn’t get left behind before it can even get off the ground. When setting up your business, consider things like online appointment booking, which can give customers the ability to view openings, input their information and the services they need, and receive a quote on how much a particular service will cost. You may also want to set up a booking confirmation and reminder service that can keep you connected with customers on the go.
Along with this, many auto shops today have apps which they also use to stay connected with customers. When learning how to start an auto repair shop business, you may want to consider if offering an app would be beneficial. Apps can have many pros, although in smaller, more rural areas they may not get as much use as they would in a larger metropolitan area. However, if you do choose to use an app, you may want to offer special discounts to customers who download it, making it something that customers will actually feel motivated to get. You could even set up the app to give reminders to customers when it’s time for a tune-up or oil change. This will help keep customers coming back, and because it will constantly be on their phones, they will be more likely to return to your business and even recommend it to friends and family.
Additionally, social media marketing can also be an innovation worth pursuing, and it can also help keep you in contact with customers. This year alone there were over 295 million social media users in the United States, and to leave this market untapped can be a major oversight. By posting frequently about your services, specials, and car care tips, you can keep people engaged and help keep your shop relevant both online and off.
Innovations like this can help set your shop up for the 21st century and garner you more tech-savvy customers who enjoy being able to handle everything online.
Creating a Business That Will Last
When it comes to learning how to start an auto repair shop business, there are a lot of things to consider. However, with the proper planning, you can create a business plan that will work best for you and for the area that you are in. When creating your business plan, keep these six things in mind, and don’t jump into anything without giving every aspect of it serious thought. If you are planning on starting your business with a partner, you should both spend time working out each and every little detail to ensure that you have everything in line before getting started.
With that said, it is possible to start a successful auto repair shop business if you’re willing to put in the hard work and dedication.
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