Focus on your requirements and avoid overspending when mapping out your dream business- a Mechanic Shop
Everyone has a car that sooner or later needs to be repaired and serviced. Therefore, mechanic services of different kinds are always in demand, and good auto repair shops are fully booked. So, if you think about opening your own independent shop, that would be a life-changing experience for you. In this article, you will find out what you need to start your business in the automotive industry and how to do it right.
Table of Contents
Determine Requirements of Your Future Auto Repair Shop
Before you write your business plan, you should do a simple exercise to decide what company you want to build and what business assets you can afford at the beginning of your entrepreneur’s journey. All you have to do is to answer the questions below:
- Can you repair cars on your own? If yes, what make of car would you like to repair?
If you are an experienced mechanic, you will be able to take and complete jobs yourself. This means that you won’t have to hire full-time techs at the start so your shop will be cheaper to run.
In addition, it is important to understand that auto shops can either fix almost any vehicle or specialize only in a certain make of car. On the one hand, the more services you offer, the more customers you have. But on the other hand, the amount of money you have to invest in equipment and rent increases. It is also worth bearing in mind that when starting it is better to specialize in not more than two car makes. Although this will narrow your target audience, you will be able to win your first loyal customers and build long-term relationships with them.
- What type of auto repair business would it be- a Mechanic Shop?
There is a wide choice for business owners here: auto repair shops, truck shops, tire fitting, anti-corrosion and detailing services, car washes, and mobile mechanic services. Automotive repair shops can also be divided into general auto repair and authorized facilities of a particular brand.
- What location can you afford- a Mechanic Shop?
Small town? City? Metropolitan area? If you aim for stationary repair, would it be a garage at home or an initial building? Will you buy it or rent it? As for mobile services, where will you keep all your tools and equipment?
- What level would you like to start your business at?
You can either start very small, buy an existing car repair shop, or think about franchising. The first way is the most complicated but you can immediately build all the business processes for yourself and focus on business growth. In the second case, you will get an already built customer base and a solid team (if you can convince employees to stay). The franchise option allows you to start working under a well-known brand that customers trust and on an already proven business model.
- How are you going to keep records?
In a notebook, an excel spreadsheet, or a special program? Don’t waste your time with old-fashioned methods and start using modern all-in-one business management software right away. This will enable you to save much time on processing jobs, scheduling appointments, keeping a database of customers and suppliers, as well as financial and inventory management (Orderry software for auto repair shops offers this functionality on a subscription basis at affordable prices). Additionally, you will always know what is going on with your business thanks to informative reports and data analysis.
After completing this step, it’s time to think about what it will cost you to open a mechanic shop from a personal perspective.
What Skills Does a Repair Shop Owner Need to Run a Profitable Business?
If you want to save on management salary for an executive, you have to learn how to be a successful entrepreneur and a leader for your team. Besides deep knowledge in automotive repair, having organizational skills and management experience would help you a lot when running your own business. You have also to love numbers and be able to calculate your daily, weekly, monthly, and yearly “must take”, as well as taxes and expenses.
Negotiation skills are also important to win more attractive deals for your car repair shop and deal with your clientele so that they won’t leave bad customer reviews of your newly-opened business. You’ll need to learn how to boost morale in your team so that they are motivated to provide the best customer service.
As technology gets more advanced every day, you’ll need to invest in additional education and professional training for both yourself and your employees.
Average Cost to Start an Automotive Repair Shop
You should honestly evaluate your financial capabilities before opening a mechanic shop from scratch as it will take some time before your business starts operating at full capacity and provide you with good income. Starting up such an enterprise as an auto repair shop may cost you a decent amount of money if you consider the license and business insurance, certifications, building purchase or rental fees, essential tools, and machines. In case you don’t have it right now, you should research the possibilities of a small business line of credit.
Now, let’s have a look at some of the basic costs you need to consider before becoming your own boss.
Estimated Budget For Equipment
You have to be serious about this type of business asset as it would be essential to the quality of your work. Let’s have a look at rough numbers:
- personal assets like a box of tools would be $5,000 to $10,000;
- diagnostic machines start from $5,000;
- a vehicle lift starts from $3,700, maybe you will need more than one.
A common piece of advice found across mechanics’ forums is that you should never buy or lease new equipment when you are just starting out. And that makes sense as the brand-new “toys” may not pay off as soon as you hope.
How Much Do You Need For a Good Location?
When looking for the perfect facility, you should pay attention to the following characteristics:
- Check the size of the building requirements in your state so you have enough place for employees and equipment
- It should be quite far from residential areas and public places
- Electricity, water supply, and sewage
- Natural and artificial lighting with explosion-proof execution
- Ventilation and heating
- The rooms are finished with oil and petrol resistant materials: oil paint, ceramic tiles
And of course, your future location should provide your business with a constant flow of customers. It is better to look for a place near gas stations, garage parking lots, roads, and highways. The average automotive repair shop square foot cost is $86 but it varies in different states. If you want to build your own garage, the steel building cost estimate would be from $12-$25 per sq ft.
If you plan to hire employees, you should calculate a salary budget for at least six months. Keep in mind that the mechanics’ labor rates are $25 to $100 per hour depending on their qualifications and experience. You will also need to employ someone office staff for answering the phone and controlling the appointments.
Insurance Costs- a Mechanic Shop
To get proper insurance for your business you should assess your risks first. A basic set would include commercial property insurance and workers’ compensation insurance. Be ready to pay around $4,000 yearly.
How Profitable Are Car Repair Shops?
If you run a one-man shop servicing enough customers per month, your yearly income could be up to $50,000. When growing your business and building a team of professionals, you can increase your profit to $100,000 and more per year. To do so, you should constantly improve your auto body shop marketing so your business attracts more and more potential customers.
In the long run, upselling and cross-selling techniques would be useful to increase your average work order and sale thus the overall business profitability. You should also work on customer retention to build repeat business. Right at the beginning, think about interesting offers and loyalty programs to encourage people to come back to your shop.
Doing a great job on fixing a broken or serviceable car will be rewarding and profitable. Independent shops with high-quality standards are in demand and make a good income every year. Before starting your own one, be sure to calculate how much investment you will need and what your ongoing expenses will be. There are plenty of possibilities out there to run your business efficiently right from the start, the main requirement is just smart planning as well as a reasonable assessment of what you have and what you can afford.