After completing your automotive repair training and gaining a year or two of service experience, the next step in your career could be to open your own auto repair business. This will allow you to transition from a technician to an auto repair shop owner.
You will almost certainly need to learn the art of delegation and management to successfully run auto repair shops.
But, before we get there, one of the most important factors to consider is, of course, the cost to build an auto repair shop.
How Much Does it Cost To Set Up An Auto Repair Shop?
Running auto shops is no joke. In fact, setting up an auto repair garage that provides quality auto repairs can be quite costly. Your auto shop needs to be equipped with all the necessary tools and equipment, which can cost a fortune.
Unless you have unlimited funds, many techs who become business owners learn under the tutelage of other repair shop owners. This allows you to gain the necessary experience and funds to make your dream a reality.
We calculated that the average cost of opening a 5,000-square-foot auto repair shop is between $67,200 and $225,500. This includes all kinds of expenses for example the cost of business permits, recurring costs, investing in steel buildings, etc.
Among the first pieces of equipment you will require for your own shop are:
Diagnostic Instruments: These instruments can search a vehicle’s computer system for manufacturer notifications and stored information about the vehicle’s history, providing technicians with a complete picture to perform the best repair possible.
Lathe for braking: Rotors can be resurfaced using a car brake lathe machine. It can be used to repair warped brake rotors as well as to make captive rotors.
Jack stands and jacks: A car jack is required whenever you need to raise your car to perform an emergency repair, such as changing a wheel after a puncture, or if you need to spend more time under it, such as to renew the engine oil or replace the exhaust system.
Vehicle hoists These types of vehicle hoists, which typically use four posts, allow the vehicle on two “runways” and then lifted by its tires. This allows unobstructed access for the mechanic.
Pre-purchase of Equipment
Depending on the services you intend to offer, equip your auto shop with the necessary equipment to complete the job in the most efficient and profitable way.
The more you can adapt to the proactive purchase ahead of time, the less money you will need to open the auto shop when the time comes.
Many procedures and tasks are outsourced by technicians and business owners. Though this may be advantageous for some, we do not recommend it because it will most likely eat into your profits as a business owner.
You don’t have to spend a fortune to get high-quality, dependable equipment. Investing time in locating name brands with little wear can pay off. Brake lathes and vehicle lifts, for example, will last for many years.
Looking for shops that no longer require certain pieces of equipment is one way to find great deals. Not because they are of lower quality, but because many stores upgrade.
What’s the cost of the investment for an auto repair shop?
Not every mechanic shop offers every service. Here are some general guidelines for how much you can expect to spend to open an auto repair shop irrespective of funneling down the customized services that vary from business to business.
Essential tools
When preparing to open an independent shop, you must ensure that it is adequately stocked for the startup costs. Having high-quality auto repair and reliable equipment at your disposal will make your technicians’ jobs easier.
As a result, they’ll be able to finish their work faster, keeping your customers happy and increasing your car count which falls under the least budget of $15,000.
Installed Lifts
Purchasing an automotive lift is a significant investment that is required for homes and garages, repair shops, and dealerships. This is due to the fact that they make repair work easier and more efficient.
The cost of an auto lift falls under the $4000 budget for individual installation or more, depending on the brand, type of lift, construction, lift capacity, and other factors.
Rent
This varies according to the size of the shop, its location, and even its geographic area. However, you want to be accessible to your expected customer base.
Insurance
Every auto repair shop must have insurance. Your company’s daily operations include dealing with hazardous equipment and driving expensive automobiles. It is estimated around $4,000/annually.
Auto Insurance of the Business
You or your employees will frequently need to test drive the vehicles to ensure that they are in good working order. In this case, a commercial auto insurance policy will protect your employees, your customers’ vehicles, and your business if an accident occurs.
Business auto garage insurance plans also cover employees who are driving out to collect a vehicle component, auto shop’s fees, and equipment and are involved in a crash.
Business Property Insurance
This insurance protects your auto repair shop against robbery, vandalism, fires, and other incidents that cause property damage.
Office supplies, missing inventory, and other risks are also covered by business property insurance. You can modify this policy to include business interruption coverage, which would pay for employee wages, leases, and other expenses incurred when the company was temporarily shut down.
Employee Theft/ Insurance against Crime
This type of insurance will protect your auto shop business from losses caused by your employees’ fraudulent actions or theft.
Shops specialize in various services, so your budget will vary depending on your specialty. Air conditioning, diagnostic machines, transmission jacks, and engine lifts are examples of items.
Other Costs to Consider
There are numerous other considerations to consider when calculating the cost of opening your auto repair shop:
Permits for business – find out if your locality requires permits for your operation, as well as any inspections that may be required in the routine services, or traditional construction. The cost of business licenses and permits will vary depending on the states you intend to operate in and the auto repair services you intend to provide.
Certifications – many shops advertise ASE-certified mechanics. This may not seem important at first, but obtaining and maintaining certifications may increase your perceived value to more customers, allowing more tune-ups in more cars.
Labor – even if you’re a one-man operation in the auto shop, you’ll need help. Tasks like answering phones, handling billing and customer accounts, balancing bank statements, and even maintaining even creation in the workshop. Don’t underestimate the cost (or value) of bringing in additional and exterior options of help to keep the shop running.
Advertising – Even if you’re the greatest mechanic in town, no one will know you’re there unless you get the word out or do not allocate marketing costs. You now have marketing responsibilities as the owner of your own auto repair shop.
You might consider investing in newspaper advertisements, distributing coupons for discounted oil changes, and even creating a website to publicise your presence.
Keep in mind that word of mouth is one of your most powerful marketing tools. Referrals from happy customers will bring their friends and family to your store.
Unexpected Expenditures
When you own your auto repair shop, you must be prepared to deal with problems other than technical ones:
- Customers who do not make timely payments
- Unexpected time off for your employees due to illness, vacation, etc.
- Peak and low business periods (changes in demand for your services) lower the prices at flat rates to meet the breakeven point.
As a mechanic, make sure you’re prepared to handle the demands of running a successful business efficiently.