Here are six tips for opening an auto repair shop, helping technicians build a solid foundation for success in this competitive industry.
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A lot of car repair technicians dream about opening their own workshops and one day be their own bosses. However, most employees who repair cars for a living don’t have the first clue about running their own business. Their technical knowledge doesn’t teach them about marketing, accounting, finance, and other important aspects of business management.
Basically, you could be the best repair technician in the world. But without a little business acumen, you won’t be able to make your auto repair shop a success. Thankfully, with the right tips and tricks, you can move from working in someone else’s repair shop to running your own.
✔ Before you start: Check these auto repair shop name ideas to create a memorable name that stands out.
Ready to be your own boss? Here are six tips that will help make your transition into owning an auto repair business a little bit easier.
Since you already earn your living as a technician, it’s best to carefully consider whether opening a car repair business is the right move for you. A lot of people make hasty decisions thinking that owning a business would give them more time. After all, they’ll get to set their own hours, and they won’t have to answer to anyone. Sounds great, right?
Tap the breaks and take a quick reality check: running a successful business can lead to independence and financial freedom, but not immediately. At first, running a successful boss can be a 24-hour commitment. Plus, you’re still answerable to government inspectors and your customers. You also need to realize that your job role is going to change. This means if you love repairing cars and don’t like crunching numbers and filling out paperwork, then you might not love your role as an automotive repair shop owner.
✔ Learn what qualities you may be lacking to become a successful car shop owner:
One of your biggest startup costs will probably be buying one or more vehicle lifts. It might be tempting to buy several; after all, if you have more lifts, you can serve more vehicles at the same time, and ultimately, make more money. And you should buy the right number of lifts for your space, your team size, and the needs of your customer base.
But don’t sacrifice quality for the sake of quantity when it comes to your lifts. Since vehicle lifts are a significant investment, it’s advisable to buy something that’s versatile and has a high load capacity. That way, you’ll be able to work on everything from small cars to large SUVs. Mobile column lifts are great for new garages, they are portable and they have great weight lifting capacity. They usually come with special adapters that allow you to lift everything from hatchbacks to full-sized trucks.
✔ Check out these resources before you buy an equipment for your car repair shop:
This one applies to all new businesses. New business owners often overestimate their profits when drawing up their initial business plan. This can be a huge mistake; it can leave you underprepared during the initial tough days. Overestimation is probably the most common reason most businesses close within the first eighteen months. You should have enough funds set aside for expenses and marketing to last the first six months and not be dependent on how much the shop earns.
As part of this process, make sure that you set your prices carefully. While you don’t want to overestimate your profits, you don’t want to set your prices so low that can’t make a profit. Plus, if your prices are too low, customers might think you’re low quality. In contrast, pricing too high might make customers find your competition. Do a little market research, and then find the balance that will earn you profit but give your customers a good value.
✔ Don’t know where to start with your costs and profits estimates? Use our break-even calculator!
If have no idea about accounting, taxes, regulations, and marketing, then it’s best to get educated. Take a course and learn about how to run a business. You don’t need to go to an expensive business school. There are plenty of cheap and even free online courses that can teach you the basic stuff.
For example, you’ll want to know how to set up your pricing strategies so you make a solid profit, keep your books up-to-date, manage business taxes, and generally manage your finances. You’ll also need to know the basics of employment regulations, like getting (and maintaining) an employer identification number, keeping up with unemployment insurance coverage and workers’ compensation, and more.
Later in this guide, we’ll also walk you through the basics of starting a business, from getting registered and getting licensure to opening a business bank account (and more).
While it doesn’t need to be fancy, you need a relaxing customer lounge. Get couches, arm chairs, or beanbags and ensure there’s good air conditioning. A vending machine can also be a way to earn some extra money while your customers are waiting for their cars to get repaired. And of course, WiFi is an essential amenity.
These perks might seem like unnecessary startup costs, but they can pay off in the long run, too. Customer lounges are also a great place to upsell services. For example, you can highlight service packages, seasonal sales, and other add-ons in your lounge area; it’s uninterrupted, free advertising.
✔ More about reducing customer stress in the service line here:
Finding the right team for your auto shop is one of the most important — and most difficult — parts of opening your business. Skilled technicians are in high demand, and many areas are facing a shortage of qualified labor. That means you can’t wait until your grand opening to start recruiting. Begin the hiring process at least two to three months before you plan to open your doors. This can help give you enough time to post job listings, conduct interviews, verify certifications, and onboard your new hires properly.
Don’t just focus on experience — look for technicians who are reliable, good with customers, and interested in growing with your business. Be prepared to offer competitive compensation and benefits, especially if you’re in a crowded market. Many successful shop owners also use incentive programs like performance bonuses or flat-rate pay to reward productivity. It’s just as important to hire a great front desk person — someone who can manage customer interactions, book appointments, and keep things running smoothly.
Once your team is in place, take time to define clear roles, set expectations, and develop shop policies and procedures. Even in a small team, structure and communication can make the difference between chaos and long-term success. A strong culture of professionalism and respect will help you retain talent and build a reputation your customers can trust.
It is possible to run your own auto repair shop on your own, especially if you’re just starting out and serving in a small garage setting. But even if you’ll be the only one offering auto repair services, you don’t necessarily have to do everything alone. It might be worth considering hiring a freelancer or independent contractor to handle tasks you don’t want to do or don’t have time to tackle on your own.
For example, bookkeeping is a big task that most repair technicians don’t enjoy. While it might seem counterintuitive to pay another small business to do this task for you, it can actually save you time and money in the long run. They handle your financial reports, giving you extra hours to dedicate to running your repair garage.
✔ Never hired an employee? This Brief Guide to Hiring and Managing Employees will help!
✔ Next Up: Check out our How to become an appliance repair technician post for new technicians.
✔ Check out our How to register a car to a business post.
Starting an auto repair business is an exciting prospect, but you want to handle it correctly to help set yourself up for success. Here are some of the basic steps you’ll want to tackle.
Before opening your auto shop, you’ll need to decide how to structure your business legally. Many auto mechanic shop owners choose to form a limited liability company (LLC) or corporation when they start their own business. These structures offer liability protection, which means your personal assets (like your home or savings) are generally protected if your business faces a lawsuit or debt.
An LLC is a popular choice for small business owners because it’s flexible and easy to maintain, while a corporation might be a better fit if you’re planning to bring on investors or partners.
It is possible to start a car repair shop as a sole proprietorship or partnership, but keep in mind that these structures won’t give you any personal asset protection.
After deciding on a business structure, register your business with your state. Most states will require you to file formation documents and pay a registration fee. You’ll also likely need one or more licenses or permits to operate legally. Depending on where your shop is located, this could include a general business license, a repair shop or mechanical license, a sales tax permit, a zoning permit, and even an environmental permit for handling hazardous waste like oil and batteries. These requirements vary by city and state, so check with your local government to be sure you’re compliant.
Next, you’ll need to get an Employer Identification Number (EIN) from the IRS. This is a federal tax ID for your business and is required if you plan to hire employees, open a dedicated business bank account, or file certain business taxes. Even if you’re operating as a one-person shop, getting an EIN is still a smart move and often required for key business functions.
Opening a separate business bank account is critical for managing your finances. It keeps your personal and business expenses clearly separated, which will save you time and stress come tax season. It also adds legitimacy to your business and can help when applying for loans or insurance.
If you’re starting an LLC or corporation, then you need a dedicated business bank account so you can prove that you’re treating your business as a separate legal entity. But it’s still a valuable tool for unincorporated business, too, so opening an account is well worth the effort.
Auto repair shops need several types of insurance to protect against the risks involved with working on customer vehicles. At a minimum, you’ll want general liability insurance and garage liability insurance. Commercial property insurance can cover your shop’s equipment and tools, and if you have employees, you’ll be required to carry workers’ compensation coverage. Some shops also opt for business interruption insurance in case you’re unable to operate due to an emergency or disaster. Having proper insurance not only protects your shop but also helps build trust with customers and partners.
Starting your own automotive repair shop is exciting, but it can feel like an overwhelming prospect; there are lots of details to handle! Thankfully, you don’t have to go it alone. Here at ZenBusiness, we specialize in helping entrepreneurs navigate the business startup phase (and beyond) as smoothly as possible. Whether you need help starting an LLC or corporation, maintaining a registered agent, or anything in between, we’ve got your back. Let us help with the red tape so you can focus on what you love: your auto repair business.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 800,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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