Are you planning to open an auto shop but not sure whether it’s the right move?
Perhaps you’re a car enthusiast and feel like you can turn your enthusiasm into a profit. Or maybe you’ve worked in the automotive industry for ages and you want to become your own boss.
But are auto shops profitable businesses? You certainly don’t want to pour your money and heart into a business that won’t do well, leaving you with losses and heartaches.
It’s prudent to do extensive research before proceeding to actualize your idea. In this article, we’re sharing a couple of important things you need to know about the auto shop business.
Buckle up and read on!
1. Professional Expertise Matters
Running a successful auto shop requires not just a passion for cars, but also professional expertise.
Well, technically, anyone can start a car repair shop. As long as you have the money to set up the operation, you can easily secure the licenses required to run the businesses, as well as hire automotive specialists like mechanics.
However, money alone won’t get you far. In this business, you need to be an expert. You could be a mechanic, auto parts sales agent, or even a car salesman. This expertise will come in handy since you’ll be in a better position to make informed automotive decisions on your own.
For example, let’s say you want to start a brand-specific auto repair shop. If you’ve years of training and experience servicing that brand’s cars, it’ll be easier for you to know the kinds of car parts to stock.
With vast industry knowledge, you’ll be able to tell whether it’s profitable to start an auto shop that services and repairs vehicles from one manufacturer. Without this knowledge, you could end up starting a repair shop that services cars from a manufacturer that makes only a few sales in your area.
2. Marketplace Conditions
An auto repair shop isn’t the kind of business you can run from home or online. An auto shop needs a physical presence.
This is why you should evaluate marketplace conditions before following through with your plans. If you already have a location in mind, assess its suitability to your business.
It’s not uncommon to find several garages in one location, but you don’t want to start an auto repair shop in a place where there’s too much competition for customers.
If you’re planning to start a BMW auto repair shop or any brand-specific shop for that matter, you want to ensure that there’s a good number of people in the locality who own the cars you want to service.
Here’s the thing, though. The demand for auto services will always be there. The average household in the U.S. owns more than one car.
3. Getting Certifications
Apart from a state-issued business license, you generally don’t need any automotive certification to start and run an auto shop. However, certifications are arguably more important than an automotive shop license.
No car owner wants to take their car to a quack mechanic. Before settling on an auto shop, most customers are always looking for the certifications the shop has.
If it’s a BMW auto shop, for example, is the shop manufacturer or dealer certified to repairs the cars? Manufacturer certifications mean the shop has mechanics who have either been trained by the manufacturer or have demonstrated adequate competence to perform repairs on the cars.
As such, you have to consider the ease of getting the necessary certifications. Manufacturers and other automotive bodies like the Automotive Service Excellence don’t just dish out these certifications. You have to meet their criteria for certification.
4. Startup and Working Capital
An auto shop is a capital-intensive business.
You have to rent or buy a commercial space, build out the shop, purchase key automotive shop machines and equipment, get liability insurance, and hire mechanics.
There’s the technology you need to run the shop and automate some tasks. Software like the one offered by Tekmetric.com will help you manage customer communication and monitor the shop’s financial performance easily.
All in, you’ll need something in the ballpark of $50,000 to start a decent automotive shop.
Do you have adequate funds to start and fund the operation?
Before you answer this question, it’s essential to know how much you need. A small business consultant who’s experienced in writing automotive shop business plans will give you a clear breakdown of the costs.
The thing is, whether you’re self-funding the business or relying on external funding sources, ensure you have adequate funds before you start the auto shop. Don’t get started without adequate funds because it can take several months before the shop starts generating revenues.
5. Access to Trained Labor
An automotive repair shop is only as good as its automotive service technicians.
You need your shop to hire the best technicians, but are they available? It’s easy to assume that you can find good mechanics looking for jobs anywhere, but that’s not the case. If your shop is located in a small town, it can be difficult to attract the mechanics.
As such, consider access to trained labor before starting your shop.
Push the Right Gears When Starting an Auto Shop
As long as there are automobiles, the demand for auto services will always be there. Starting an auto shop is a smart business decision, but success isn’t guaranteed. You have to do proper due diligence to ensure you’re opening a shop in the right location and at the right time.
Stay tuned to our blog for more automotive business tips and insights.