This is a guest post.
Establishing an auto repair shop isn’t a simple goal compared to some other types of repair businesses. That’s the reason we’ve prepared this guide for you!
We’ll tell you the important things to know about how to start an auto repair shop. Rest assured, we came up with the best tips.
The information contained in this guide will make the startup process easier and faster because you’ll be smarter in decision-making at every stage.
What You Should Know Before Setting Up an Auto Repair Shop
Mechanics and technicians try to make every feature and system in each vehicle brought to their shops working as well as new. Even if you can’t achieve 100% performance, it should be satisfactory enough to please the customer.
An Overview of the Present Automotive Repair and Maintenance Services Industry
This is, currently, one of the most competitive industries.
According to Statista, the United States has the biggest auto industry in North America followed by Canada. The automotive repair and maintenance services area experienced a steady growth in demand, which led to its continued expansion from 2016 to 2019 at the rate of 0.4%, quoted in an industry research report by IBIS World. This means that the number of automotive repair shop owners and mechanics kept appreciating.
The number of auto repair shops in Canada was over 26,700 by the middle of 2020. This figure has been predicted to pass the 29,000-mark by 2024. According to a study by the University of British Columbia, revenue from auto repair was expected to achieve continuous appreciation from 2019 to 2024. This was before the COVID-19 pandemic came to affect the flow negatively.
There are external competitors such as the automotive repair and maintenance services in the United States. US companies account for about 16% of the global market. There are more than 162,000 workshops in the country.
What Certifications Do You Need to Start Operations?
Certification is first on the list of how to start an auto repair shop.
Depending on where you live, the certification requirements vary. For mechanics and technicians in Canada, a Red Seal Certification is acceptable anywhere (all provinces) in the country. It’s of national standard.
You can use your certification as a marketing tool to win the hearts of prospective customers. Frame and place it on your office wall for easy visibility. The certificate can also be utilized to convince the following people or establishments:
- Banks when seeking loans
- Insurance companies when looking to get insured
- Potential investors when trying to raise capital/funds
What Are the Major Types of Garages in the Auto Repair and Maintenance Services Industry?
The four current major types of garages are independent workshops, garages that work with franchisors, specialized workshops approved by manufacturers and mobile repair shops.
How to Start Your Own Auto Repair Shop (Best Tips!)
1. Select a Great Location
Choosing a suitable area to operate in should be considered as a major key to being a successful auto mechanic.
You should find out as much as you can about the industry before setting up shop. Research how competitive the market is in your locality or target location.
2. To Specialize or Not to Specialize?
You can specialize in repairing a particular vehicle brand. For example, specializing in Ford automobiles is a good idea for auto repair brand specialization due to its high sales. Other notable brands include Chevrolet, GMC, Honda, Hyundai, Kia, Nissan, Ram, and Toyota.
You can also choose to specialize in a particular type of foreign car (foreign specialty auto repair shops)—for example, European-made cars, US-made cars, etc.
Base your specialty on the location of your business so that you can be at an advantage. It’s easy to get a market for a general auto repair shop. However, you can decide to tap into a niche that will give you a competitive advantage.
Consider specializing in the repair of custom vehicles or those with aftermarket upgrades (e.g., hot rods). There’s also repair area specialization such as wheel and alignment services, tire rotations, electronic and electrical system repair, etc.
What Are the Pros and Cons of Each Area of Specialization?
3. Work with a Franchisor, Be Independent or Other Options?
It can be tempting to operate as an independent garage. Nonetheless, the operating costs may lead you to work with a franchisor that will help settle some of the operating expenses and hassles.
The significant advantage of running an independent garage is that you can make decisions as you please. On the other hand, buying into a franchise means you have to do as the franchisor says. Still, being a franchisee lets you have the following and more:
- Obtain an easy lease
- Get training
- Use the name and brand of the franchisor
- Get a fully equipped shop
- Enjoy ongoing support
- Operate in a good location
- Benefit from the franchisor’s market share
You should weigh the merits and demerits of the options available to you based on your financial situation. They (including mobile auto workshops and specialized workshops) all have their pros and cons.
For example, your target customer base will be limited when you specialize. There are very limited services for mobile auto repairs that the mechanics/technicians can render to customers because heavy stationary equipment situated permanently in the workshop cannot be moved around to meet the customers at their preferred or “break down” location.
Your accountant and lawyer will help you make an informed decision on which of these options to choose or switch to. A bad decision can make or mar your business in the long run.
4. Draft a Business Plan
The list of how to start an auto repair shop would be incomplete without the mention of a business plan.
In drafting a business plan, you’d need to know the business model to adopt and understand the startup costs of an auto repair business. Think of a unique selling point (USP) for your business that will set you apart from other competitors.
The business plan should be written in such a way that it will be suitable for potential investors, banks, and insurance companies to approve whatever you need from them. For example, capital, funding, liability insurance (from insurers), etc. The draft should contain the following:
- Overview of the project
- Projection of possible expenditure for a definite period
- Projection of business profitability
- Business model
- Required financing
- Services to be provided
- Required staff
- Managers and shareholders
A great business plan can be written with the aid of business plan writing software or an expert writer. The two options are advantageous to the business owner—for example, templates for the software and industry experience for the writer.
The costs of starting an auto repair shop vary. Nonetheless, you can use the references in the list below to have a general idea of what to expect:
- Startup costs can run into tens of thousands of dollars.
- Other expenses like insurance, equipment purchase, rental fees, and so on may make the costs add up to around $50,000 dollars.
- The costs may pass the $100,000 dollar mark depending on the size of the business and/or the equipment needed.
To make sure your business plan is going on the right and safe path, it’s advisable to get professional, legal advice from a legal adviser (if affordable). This will help you through the process of obtaining permits or getting licensed, and it can be really tedious trying to meet the conditions for it. Ensure that you settle every other legal matter.
5. Be Well-Equipped
Get all the necessary equipment and tools for the repair and maintenance services you’ll be offering to your customers. If you’re specializing in an area, it would be important for your workshop to be fully equipped. Your workers should be well-trained in using all the equipment.
Depending on your specialization, you may need all or a combination of safety equipment, hand tools, diagnostic equipment such as OB2 scan tools, or TPMS service tools.
On the business side of things, you’ll need automotive software for scheduling/booking, client management and a point of sale (POS), etc.
6. Employ Qualified Workers
Whether you’re a workshop owner or auto repairer, you should consider hiring adequate hands to deal with the flow of customers into your workshop. You may have to expand your business at some point because of this.
The right number of mechanics, technicians, and other non-repair staff are needed. Examples of non-repair staff are receptionists, secretaries, janitors, customer care representatives, supervisors, etc.
Ensure that your workers are well-trained and/or qualified for their roles. This is so that you don’t lose good customers to bad workmanship, a dirty work environment, poor communication skills, and so on.
Many people think of workmanship as the most essential criterion for selecting a vehicle service center. Other essential criteria include attitude, diligence, honesty, good communicative skills, etc.
You can decide to employ skilled immigrant workers if there’s a shortage of professionals in your area. Training your staff (from time to time) is a good idea if you can afford to do so.
Be careful not to think you can take on many roles on your own. That’s a bad idea. You can’t handle administrative roles, repairs, financial management, supervision, marketing, and so on by yourself.
Some duties that can be outsourced include marketing, periodic cleaning, accounting/bookkeeping, computer engineering, etc. We’ll discuss more on marketing in the next subheading.
7. Hire a Specialist in Marketing
The modern business world requires you to do some marketing online if you want to thrive in this competitive industry. With that in mind, you should get a marketing specialist that can handle both online and offline campaigns. There are prospective customers to be gotten through print and digital marketing strategies – for example, social media marketing, content marketing, search engine marketing (SEM), and so on, which are under the broad scope of digital marketing.
You definitely can’t be an auto mechanic or technician and handle additional tasks such as marketing on your own. You’re going to burn out with all that stress. Hiring a reputable marketer is the best option. Consider the alternative to outsource the marketing role as stated in the previous subheading.
Wrapping it Up
It’s easy to have the auto repair dream, but it isn’t a simple setup process. You’ll need to be committed, diligent and patient. Realizing that dream will take a lot of your energy, time and money.
When it comes to how to start an auto repair shop, the most important thing to remember is to have the mindset that there are no shortcuts to being successful in the highly competitive auto repair industry. Just do everything right.
We know you can’t wait to get your hands dirty with road vehicles and make clean money while doing so. Clean money partly means being honest in your dealings with customers. Never forget that.
Tim Miller is from Denver, Colorado. He has been working as an automotive mechanic and blogger for over 10 years writing articles to share his experiences and expertise. He is the founder and chief editor of obdadvisor.com.