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Automobile Repair Shops: How to Start a Business in Auto Repair

car repair

About 90% of the overall population owns a car, making auto repair an essential service in the US. This is a considerably growing market, and annual revenues can reach about $115 billion. However, with about a hundred thousand establishments specializing in the market, starting a business can be challenging. But by knowing the essentials in starting an auto repair shop, soon enough, you can establish yourself as a respectable competitor in the market. Here are the essentials when starting a business in the auto repair industry.

Business Plan and Projected Goal in Five Years

A business plan is essential in every business. It is even more necessary if you’re looking for investors for your company. Auto repair businesses still require this, even if your main goal is quite obvious: to fix vehicles. It’s important to have the necessary mission and vision laid out for your employees. This is where you can concentrate on where you want to work for the next five years. Believe it or not, there is more to the auto repair business than just repairing cars. There are various fields of specialization you can take that can help you determine where you will be in the future.


If you want your auto repair shop to streamline its costs and potential revenue, you must start specializing. Specialization may include the type of repair you do and the car brands you work with. For example, someone might come to you for their scheduled Subaru car maintenance in your auto repair shop instead of visiting the auto manufacturer. If you don’t have the parts for this particular car brand and the experience, you risk losing a decent amount of revenue.

This is a fairly common service and one that you might miss out on if you don’t specialize. Additionally, car brands such as the one we’ve mentioned above might contact your shop to do offshore repairs for them. This partnership can help drive loyal consumers into your shop, hence increasing your annual revenues by a decent chunk.

Additionally, one of the newer areas of specialization in the industry is customer service. Interestingly enough, many franchises in the field of auto repair are making this their field of specialization. They are creating a friendlier customer experience than ever which includes customer feedback and 24/7 chatbots in websites.

Making Money

Many auto repair shops make their earnings through either a flat rate per repair or an hourly rate. Some use a combination of these. You can also charge routine maintenance such as oil change and radiator checks. Other ways you can make money are through customization and car wrapping. Both of which can be extended services of your business.

cashier counting money

Overhead Costs

Once you have your business plan and you’ve chosen your specialization, it’s time for you to start calculating your overhead costs. It’s estimated that the average annual cost of every start-up business is $184,000. However, this can vary greatly depending on your industry. For small auto repair shops, it’s estimated that your overhead cost annually can be around $50,000 to $100,000. Bigger auto repair shops and those that handle industrial vehicles can have overhead costs reaching one million dollars annually. To be safe, it’s good to have at least $50,000 in your bank account once you’ve started your business.

High-quality Parts

High-quality parts will help drive your business to success. If your auto repair business is known for using high-quality repair parts for repair, clients will surely come into your shop. However, know that high-quality parts don’t come cheap, and you’re most likely to reinvest most of your money back into these things. But they will surely pay for themselves in the future, once you’ve established yourself as a competitor in the industry.

Consider Applying for a Franchise

Ultimately, if you only want to dip your toes into the industry without sacrificing too much, you can apply for a franchise instead. There are many auto repair franchises in the market, and all you have to do is choose the right one for you and your budget. Applying for a franchise is good for new business owners because the franchise will help guide you to grow. It will also handle all the needed equipment for your auto repair shop to function, so you no longer have to shop for those anymore.

This is the safest option if you’ve only gotten into business ownership recently and have no experience whatsoever. But remember that having a franchise means that you have to give a chunk of your revenue to the franchise owner and that you’ll have to follow certain instructions to the letter. If you’re not the kind of person who enjoys sharing or following orders, then this might not be meant for you.

Auto repair is a pretty lucrative business if you know what you’re doing. By considering these suggestions for starting your auto repair business, you can start your company safely. But it’s still vital for you to do your own research, especially when considering where you want to start your auto repair business.

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