There are a number of different types of automotive repair businesses that professionals just like you might consider starting. Options range from general automotive repair and maintenance facilities, to those that service more niche automotive repair needs such as exotic cars, auto body restoration, and full service collision repairs.
Whichever subset of the auto repair industry you plan to enter, here are 6 great tips to consider before making any long term investments in your business:
1. Specialized or General Repairs?
This is a highly individual question that must be asked based on:
- The shop owner’s professional experience.
- The overall automotive repair/auto body repair needs of the service area.
- The competition for any given in-demand automotive repair niche in the area.
A general repair shop that services all makes and models can be successful almost anywhere, but if there’s a lot of competition it can be hard to make headway. If, on the other hand, you niche down and offer to repair/restore classic or exotic cars, customers will often willingly ship their vehicles to you from far away if your reputation precedes you and/or you’re willing to hustle and market your business hard.
It’s really important to understand exactly who you’ll be servicing before moving ahead with any plan. The competition may be stiff in any given area for, let’s say a Volkswagen repair specialty shop, yet fifty or a hundred miles down the road you might find a burning demand for such a shop. Location, location, location!
2. To Franchise or Not?
There’s a lot to consider here. Franchises offer a ready-made business opportunity with proven processes, marketing, and often support for automotive business startups. They also take a good chunk of the loot at the end of the month.
It’s important to weigh your experience and knowledge of running an actual business, not just working in the automotive repair industry, before settling on whether to go the franchise route. Many fledgling business owners start out working with a franchise to get their feet wet and to establish a client base, then strike out on their own after they’ve gained the knowledge needed to succeed in this multi-million dollar industry.
3. Know Your Startup Costs
The costs associated with starting an automotive repair or body shop can run well up over $100,000 in your first year, with just the basics running at around $47,000 before you even get the doors opened. Aside from lack of business and service knowledge/ability, poor money management and financial planning are the main reason 90% of businesses fail inside the first eighteen months.
Many of your costs beyond shop rental, equipment, insurance, salaries, and any specialty equipment you might need (depending on your business model) will vary depending on whether you have an established reputation in the community you service (ie., marketing advantage). You need to know what your costs will be to open the shop, and nail down some really solid projections for what your month-to-month and yearly costs will be for at least the first two years (ie., an accurate business plan).
If you are short of cash for your startup capital, consider to seek investments from your friends and family first, then your credit cards and lending institutions second. Bank loans are great, but as getting approval is a challenging feat, you might want to look for alternative ways, such as same day loans, online loans, peer-to-peer lending, etc. Be warned, though – if you’re looking for the same day loan for your auto repair shop, first things first, you should shop around and read reviews before you decide on anything.
4. Get an Automotive Service Excellence (ASE) Certification
Having an ASE certification posted on the wall of your shop will go a long way toward building trust with customers, and perhaps more important, your liability insurers. A lack of an ASE certification can also impact your ability to find financing from a bank or experienced private investor.
To qualify for ASE testing, you must have a combined two years of education and/or work experience, with a minimum of one year’s experience working directly as an automotive repair professional. Though keep in mind, each category of specialization has their own criteria to be met. Re-certification is required every five calendar years.
5. Marketing is Essential to Business Success
Just as you need to know who you’ll be servicing, how much the business will cost you to open and run, and to have the proper certifications and insurance in place; you need to understand that marketing should be the utmost concern when starting a business in the automotive repair field.
Word-of-mouth is obviously the best way to market any automotive repair service business. However, if you don’t have a following from your previous work experience, you’ll be relying on old school methods like taking out ads in local publications, radio spots, and newer marketing angles like Google Adwords campaigns targeting local search terms related to auto repairs and/or auto body restoration in your locale.
6. Employees are the foundation of your business
From the front desk staff that will be serving the public, to your licensed automotive specialists that will be assessing damage, making repairs, and helping to maintain your customer’s vehicles. Unless you plan to be the only one working at your shop, you have to hand pick the best professionals available and be prepared to pay a competitive rate to keep them around.
The majority of customers seeking auto repair and maintenance services are looking to build a relationship with the mechanics who work on their cars. There are a lot of dodgy professionals out there, and when considering modern repair costs, clients need to see a familiar face when they come to your shop and feel like they can trust them with all their service needs.
At the end of the day, it’s up to you the founder, to set your new automotive repair business up for success. This is a highly competitive industry, with numerous challenges such as expensive equipment needs, to constantly changing technology, and high customer and employee turnover rates.
To summarize, in order to be competitive, new automotive shop owners need to:
- Gear their business model towards the needs of their customers, not just their automotive repair experience and/or preferences.
- Understand the advantages various franchise opportunities might offer over opening a private shop.
- Have a firm understanding of all startup and ongoing costs over the first two years of business operations.
- Make sure they get ASE certified to show customers they’re serious about service excellence.
- Understand that marketing will make or break the business, regardless of how skilled they and their employees are.
- Realize that employees are the bread and butter of your business – without them, no business stands a chance to succeed.