About 20% of businesses fail within the first two years of opening. Most businesses (65%) close within the first 10 years.
Those are alarming statistics if you’re planning to open an auto repair service business. You’re about to invest a lot of money getting it off the ground.
Put your mind at ease and keep reading. We’re showing you every step to take to open a car repair shop.
- Type of Auto Repair Shop
The key question to start with is what kind of auto repair shop you want to open. There are auto glass repairers, auto body shops, painters, diagnostic, and auto repair shops.
Once you have an idea, conduct market research. See what the competition is like in your area for different types of auto repair shops. Think of ways that you can set your shop apart from the others.
Find out if there are licensing requirements to open a shop in your state and municipality.
Note who your target customer is. Research what kind of car they drive and why they would go to your shop.
- Franchise or Independent
Decide if the auto repair shop is an independent shop or a franchise.
With a franchise, you get a complete business system, so you can focus on working with customers. Franchises give you a well-known brand like Midas or Meineke.
One of the biggest drawbacks of owning a franchise is that you don’t have a lot of control over your shop. You commit to using the franchise’s systems, from marketing to customer service software.
You also have to pay franchise fees each month that go towards corporate marketing.
As an independent shop, you make every decision for your business. You’re also responsible for marketing the business. That’s going to cost more money because you’re building a brand from scratch.
- Create a Business Plan
The next step is to create a business plan for your auto repair service.
The business plan is where you make the most important decisions about the structure of your business. You’ll set your pricing model, whether that’s a flat fee or hourly rate.
You might decide to add other services, such as a subscription for preventative maintenance work.
Decide what kind of warranty you want to offer customers. It’s standard to warranty the work for a limited amount of time and the parts.
The business plan also covers the initial marketing plan. If you’re an independent business, you have to create a business name, logo, and marketing assets.
Franchises usually have a marketing structure to work with. You’d work with the home office on public relations and marketing in the local area.
This is also the time to decide on vendors and partners. These are the people who will supply your shop with spare parts. Be sure to work with vendors who provide reasonable terms.
The business plan is a financial plan, too. Estimate how much it costs to start the auto repair service and run it each month.
Decide if you should finance the business or if you plan to use your personal funds.
- Set Up Your Car Repair Business
Register the business with your state, tax authorities, and set up the legal entity.
Connect with an accountant right away to set up bookkeeping processes. They’ll help you choose accounting software and create a chart of accounts to organize expenses and income.
You’ll need a certificate of occupancy for the business, local permits, and possibly a building inspection.
- Find and Furnish Your Location
A location that’s centrally located and easy to get to stands a better chance of being successful than one that is hard access.
These locations also cost more. You’ll need to find a business location that balances location with cost. Work with a commercial real estate agent to find the perfect place.
As you get settled into the business location, purchase communications systems, like a business phone line and WiFi.
Software to help you run the business is an essential tool. You want an all-in-one solution that handles inventory, job updates, invoicing, estimates, and inspections. Look at tekmetric.com for an example.
- Purchase Business Insurance
Business insurance is essential because you mitigate potential risks from lawsuits and unforeseen events. Definitely sign up for a general liability policy, but don’t stop there.
General liability doesn’t cover everything you need. A business that has employees needs worker’s compensation insurance.
You’ll need to get errors and omissions insurance, property insurance, and garage keepers insurance.
- Hire Employees
You have to hire the right employees the first time. Employee turnover is costly to your business.
Don’t start to post job ads until you know exactly what you want out of an employee. What kind of certifications should they have? What are their personality traits? What hours do you want them to work?
You’ll also need to determine the pay structure for your employees, whether that’s an hourly or flat rate.
- Open Your Shop
It’s time to have a grand opening for your auto repair service business. Get connected to your local chamber of commerce and start networking.
Use a combination of traditional and online marketing methods. Be sure to focus on search engine optimization so your business gets found in search results.
Tips to Start an Auto Repair Service Business
Starting an auto repair service business doesn’t have to be difficult. Just follow the steps in this article.
Remember that it takes careful planning. You’ll need to make a series of important decisions early on, so do your research. Those decisions impact the direction of your business.
Do you want more tips to help you manage the business side of your auto repair shop? Check out the other articles on the blog today!