For many auto mechanics, opening their own auto repair shop is just the natural progression in their career. The passion for auto repair businesses coupled with a growing demand for these services makes this a valid choice!
There is a lot that happens behind the scenes before opening an auto repair shop. For starters, there is a hefty start-up cost for an auto repair shop that you must be willing to bear.
But the real question is, how much money will it take to open an auto repair shop? Being well aware of the cost involved will help you plan your financing options and basically, lay down the foundation for your auto shop.
With that in mind, here is the complete 101 on the average money required to kickstart auto repair shops!
Understanding The Startup Cost For Auto Repair Shop
As an auto repair shop owner, you will be required to wear many hats. But one of the most important ones is managing the finances for your own car repair shop.
To run a successful business, you will have to remain on top of things, especially the initial cost outlay required.
Now keep in mind that the startup costs of an automotive repair shop will vary with a lot of factors including the scale, location, and type of repair shop.
But we have drawn a ballpark figure, based on the average startup costs for repair shop owners. An auto shop will cost you somewhere around $50,000.
Here is a breakdown of the different components of the business cost:
1. Equipment For Your Repair Shop
Let’s face it, auto repair shops cannot be kickstarted without equipment. The first thing that you will need to consider for your own shop includes the essential equipment.
For example, you will purchase your lifts, jacks, and air compressors. But the type of equipment you will need also depends on the kind of services your auto repair shop is offering.
If you plan on offering specialized services, then you will also need to purchase specialty tools.
You will also have to think about the scale of your business. A different set of equipment will be required for small auto repair shops while you will require different ones for a bigger setup.
Here is a list of the equipment along with their expected cost for a small auto repair shop:
- Set of Screwdrivers ($50)
- Hammer ($20)
- Torque wrenches ($75)
- Ratchet wrenches ($75)
- Hex wrenches ($30)
- Impact wrench ($300)
- Oil filter wrench ($20)
- Oil drip pan ($20)
- Bolt extractors ($20)
- Pry bar ($20)
- Cordless drill ($100)
- Fuses ($20)
- Electrical tape ($5)
- Vice grips ($30)
- Pliers ($20)
- Small butane torch ($20 – Our Recommendation)
- Allen and Torx bits ($20)
- Funnel ($10)
- Bench Vise ($60)
- Jack stands ($100)
- Ramps ($100)
- Battery charger and jumper ($200)
For a medium scaled auto repair shop, you will need to purchase the following tools and equipment:
- Jack ($200)
- Air compressor ($200)
- Workbench ($300)
- Tool chest ($500)
- Diagnostics and OBD machine ($4,000)
And if you are planning on going full throttle with a large auto repair shop, then you will need to get the following tools in addition to the ones we already covered:
- Hydraulic lift ($3,000)
- Engine crane ($500)
Moreover, you will also need to get garage supplies for your auto repair garage.
- First Aid Kit ($30)
- Gloves ($30)
- Boots ($150)
- LED Headlamp ($30)
Note that it’s recommended to purchase good quality tools for your new auto repair shop. Having good quality tools will also help you build a credible and reliable brand in the eyes of your customers.
With so much competition and car repair shops mushrooming up in every nook and cranny, it’s important to make sure you stand out for your commitment to quality.
2. Business and Administrative Expenses
If you are serious about setting up your own auto body shop, you would already know that you need to get your business permits and documents in order.
You will also need to invest in different types of business insurance, to make sure that your independent shop has the necessary coverage.
It’s also recommended to check which documents and permits you need to make auto repair shops start in your state.
Overall, business and administrative expenses will cost around $5-6000. The following is the breakdown of this cost:
- Business license, certifications, and permits ($200)
- Insurance ($5k / year)
- Accounting fees ($500 / year)
These costs might differ depending on which types of insurance you may get, and the permits required for a car repair shop in your state.
3. Shop Rental Fees
One of the most important tasks is to find an ideal location for your auto repair shop. Some people also open an auto repair shop in their backyard but that is not always an option.
In fact, getting a premium location with a lot of footfall is very good for your car repair shop. To compete with other shops, your car repair shop should be located in a business or residential hub that will help you in attracting customers easily.
Some people also open shops in locations where people stop for certain routine services, for example at the beginning of highways.
So depending on which location you choose for auto shops, you will also have to pay the rental fees. The rent is going to vary with the location and size of the space.
But the prices for commercial garages range from $0.50 per square ft/month in smaller towns to $5.00 per square ft/month in large cities on the West Coast.
This means, that for a 3000 square foot garage, the cost is going to be around $5000 to $15000/month.
You can also use websites to search for a space that is more affordable. And if you are looking for a temporary location then you can search for a garage on the website Garagetime.
It allows mechanics to rent temporary spaces for auto shops. You can also rent automotive repair tools on this website.
3. Automotive Supplies and Spare Parts
Just like you need to purchase equipment, you will also have to get supplies and spare parts for your auto shop.
Again, the tools and supplies that you will be needing also depend on the type of auto shop that you are running.
But generally, here are a few common supplies that a car repair shop is expected to be equipped with:
- Oil for oil changes
- Washer Fluid
- Air Conditioning Coolant
- Radiator Fluid
- Transmission Fluid
- Power Steering Fluid
- Brake Fluid
- All Purpose Cleaner
- Brake Cleaner
The total cost of supplies and inventory for your auto shop will be around $5500. This is the price that a car repair shop owner will have to pay for the initial inventory.
This is also the right time to decide on an inventory ordering model for your auto shop. Think about this – do you plan on ordering spare parts on a need-basis or will your auto shop stock supplies?
Usually, it is recommended to stock parts for an auto shop; ordering in bulk will also help you reap benefits from discounts. Moreover, not having the necessary supplies when the customers walk in can leave a bad impression.
4. Marketing Costs
Okay, so we have covered all the necessary business costs. But there are other operating expenses that you will need to consider too.
One such expense is the amount you need to spend on marketing and advertising to get the word out. When it comes to marketing, there are various options available depending on your budget.
You can also invest in costly marketing strategies, that are known to have a higher Return on Investment.
Some of the low-cost options include blogging and using social media marketing to put the word out about your new auto shop. However, there are other paid options that you can use including pay-per-click advertising and search engine optimization.
In addition to these digital marketing avenues, you can also opt for traditional methods like flyers, coupons, and loyalty programs.
The kind of strategies that you implement depends on your marketing budget. The higher the budget, the more you can invest in high-return strategies and build a brand quickly.
5. Hiring a Qualified Team
As a business owner, you will be performing many tasks. However, it’s not possible to execute everything without a business structure. You will have to hire a qualified and trained team.
Labor costs are another major component of the total investment required. You will have to make sure you have the necessary human resource to cater to your customers, effectively.
6. Certification and Training Costs
Next up, is the amount that you will invest in your human resources. For example, you will need to make sure you get the necessary training and certifications for your team.
Auto repair mechanics require special training and usually need the Automotive Service Excellence (ASE) certification. It’s also recommended that you hold a certification in this field before you venture as a business owner.
Now that you understand the costs entailed in setting up an auto shop, let’s look at some of the steps you will have to take for things to take off.
How To Set up Auto Repair Shop: Easy Steps
When you’re looking to start an auto business, it’s natural to think about the money side of things. Sure, it’s nice to get the money upfront, but you can’t forget that the most successful business owners are those that can make money while they’re still learning.
In fact, you need to have a solid business plan for an auto shop with a clear plan of attack.
The best way to start a business is to focus on the long-term, and that means learning a lot of different things along the way. Here are five steps that every new business owner needs to take in order to set up a successful auto repair shop.
Step 1: Understand How Auto Repair Shops Work
The first step is to learn all about the auto repair business. For example, you should find a good auto repair manual. Look around and see if there is an auto repair manual that you can buy.
The best manuals to buy are those that are updated and contain helpful information that you can use. Look at other manuals that are available online and decide which ones you want to read.
Choose the ones that you like best and that will give you the most information. There are a lot of manuals that are available, and you can find many online.
Step 2: Get Up To Speed With Technical Concepts
The next thing that you should do is to prepare yourself to work in the auto repair industry.
If you are going to work in an auto repair shop, you need to know how to do some basic things, like how to start cars, change oil, etc. You should also know how to fix common car problems.
For example, if you are a mechanic, you should know how to fix electrical problems. Learn everything that you can so that you can be successful with your auto shop.
Step 3: Build Your Business Plan
The second thing you need to do is to build a business plan for your auto shop and decide what type of auto repair service you want to offer.
This decision will help you to know whether or not you will be successful in the auto repair space. You may need to figure out what type of auto repair services to offer first before you start thinking about what kind of business you want to start.
Having a business plan will also be fruitful for your auto shop and give you a sense of direction, in terms of the business goals, objectives, and what you hope to achieve.
In your business plan, you should also outline financing options, and how you plan on marketing your business and achieving your goals.