Despite high gasoline prices, driving a car is still the primary means of transportation in America. The more you drive your faithful car, the more often it will need maintenance and repair. As of 2012, the U.S. Small Business Administration estimated that there were more than 160,000 automotive repair and maintenance businesses, accounting for revenue of approximately $80 billion. If you have automotive skill or knowledge and a passion for cars, take steps to getting started in the potentially lucrative automotive-repair business.
Decide what legal structure your business will be to shield you from personal liability. For example, a limited liability company can allow you to draw a salary from your business while protecting your personal property from creditors should your business fail or be sued by a customer harmed by your mechanic's workmanship.
Draft a basic business plan that explains how you will fund your daily operations; which repair and maintenance services you will offer, your expansion plans; and other considerations that demonstrate that you have performed due diligence. Include a demographic profile of your customers, including how large your target market will be based on driving-age population and repair shop competition. This document will assist you in receiving financing from a lender.
File articles of incorporation or other legal documents – with the assistance of a Small Business Administration field office – with your state's Secretary of State's office. Register your name and similar names, called fictitious names, with this office to protect it from your competition. Purchase a business permit and any necessary repair-specific permits from local government agencies.
Apply for a sales tax license with your state's Department of Revenue. While auto service labor is typically not taxable, parts are. This department will give you a booklet of monthly coupons to mail with your monthly sales tax receipts. Depending on your state and the scope of your business, you may be asked to purchase a surety bond to guarantee that you will forward collected sales taxes.
Apply for a federal Employer Identification Number. An EIN is similar to a Social Security number and allows you to hire employees and withhold taxes from your employee's paychecks.
Starting Your Shop
Complete Automotive Service Excellence certification or hire employees with these credentials. ASE certification legitimizes your business and can assist you in getting bank financing, parts distributorships and liability insurance.
Decide whether to purchase an existing business, lease garage space or build your own facility. Location is critical in the placement of your shop. Position it where there is considerable traffic. Purchasing an existing car-repair business can be helpful as it may have an existing customer base and because some expensive equipment, such as lifts, may be included in the purchase price.
Apply for financing using your completed business plan and the specifications of your proposed site. Include at least two to three months' working capital, as it may take time to earn a salary.
Hire employees. Employ a service writer to explain repairs to customers and an employee to manage the front desk and collect money from customers. Hire ASE-certified mechanics according to your volume of business.
Design a price list depending on the services you plan to offer and be prepared post it in your waiting room. For example, for a general repair shop, create a price list that covers oil changes, radiator flushing and brake inspections. Decide on a "shop rate" for labor for the many jobs that will not neatly fit into a basic service. Shop your competition to see that your prices are suitable.
Stage a grand opening with substantial traditional and social media marketing to introduce your business to the community. Offer substantial introductory discounts on basic services, such as oil changes or tire rotations, to show the quality of your services and to meet customers. Highlight the work history and repair skills of your certified staff in your marketing materials to build your customers' trust and confidence.
Budget money for the continuing education needs of your employees, as they must stay current on repair trends.
Investigate federal and state grants and loans that can assist in helping your company be financially and environmentally sound.
Diversify by repairing foreign and domestic vehicles and hiring specialists.
Create a fund to purchase vehicles deemed by customers to be expensive to fix.
Utilize industry labor estimation guides or simply estimate the time needed in a repair so you can quote it to your customer.
Purchase industry-specific insurance to protect against liability. Include personal property and errors and omissions insurance products in your policy. Protect your facilities with security cameras, as the tools involved are often targeted by thieves.
Consult local and state government for information on environmental regulations regarding auto mechanics shops.