As a gearhead, you can sometimes aspire to serve others with your knowledge and skills. As such, you can become a proud auto repair shop owner. If you are this kind of a person, here is a guide on starting an auto body shop. Read to the end and acquaint yourself with the basics.
Write Your Business Plan
A business plan is essential for success when starting an auto body shop or any other type of entrepreneurship. This is how you map out the aspects of a business and discover more things you might not have researched in the past. Here is what you must include in your plan:
The services you will offer – are you focused on starting an auto body shop only, or will you offer other services? Small businesses, especially at the start, focus on a single field before transitioning to different fields. Depending on your capital amount and skills, define your services.
Auto shop location – before starting an auto body shop or the general repair services, you must do simple research to know a better location. A good location accessible to various car owners will help you grow the business.
The upfront costs – starting an auto body shop requires over $50,000. The upfront costs have one-time and recurring costs. Examples of one-time costs are business licenses, LSE certifications, and purchasing specific mechanical tools. On the other hand, recurring costs include rent and insurance.
Your capital sources – starting an auto shop requires a lot of capital. So, you must know where you will get the startup capital. Whether you use your savings or get a bank loan, you must have a clear plan to protect your business from facing financial challenges.
Target customers – the target market is crucial when starting an auto body shop. Whether you are a shop that repairs luxury cars or semi truck repair, define and know who owns such vehicles.
Know your competitors – a little competition cannot hurt. In fact, it helps you improve your services. So, research who your competitors are and how they offer their services. This will help you to know your field better and stand out during marketing.
Business name and logo – a business name and logo help build your brand. So, before starting an auto body shop, determine whether the name and the logo you choose is perfect for the brand.
Costs for each service – before starting your auto body shop, you must know different labor rates depending on each professional you hire. Then, research the cost of the spares and determine the profit your business will make.
Get Legalities In Order
After writing the business plan, the next step is to create a business structure. The most common structures for the auto business are a partnership, sole proprietorship, corporation, and limited liability company (LLC). Legal business entities like corporations and LLC protects you from being personally liable if the business is sued.
Here is a definition of each structure:
Sole Proprietor – it’s the simplest when starting a one-person auto repair shop. However, it offers little protection for your personal assets if someone sues your business.
Partnership – if you start the shop with others, the partnership structure is better. Every partner contributes to the business, thus a stake in the business and shares in losses and profits.
Limited Liability Corporation (LLC) – it separates your personal and business assets. This saves your personal assets in case the company is auctioned for a loan, or someone sues you. Note that there are costs for creating LLC.
S-Corporation (S-Corp) – it allows your small auto shop to incorporate operations as bigger businesses. However, you will not be taxed like large corporations.
Secure Your Financing
While starting an auto body shop, you will require a loan if you don’t have enough savings. Usually, you must pay for the equipment, employee salaries at the start, location acquisition costs, insurance coverage, and more. But before taking a loan, you must determine whether you can service the loan as required.
The safest source of financing for auto repair businesses is the Small Business Administration (SBA) loan. Their loans have flexible terms and impressive interest rates that the Federal Government insures. Suppose you fail to service the loan, the SBA steps in and saves from losses by paying a guaranteed amount to the bank.
Get Licenses and Permits
You must obtain a business license and several other permits before starting the business. This will be clear proof you have followed the regulations. For example, an auto repair shop must have a business license to operate legally. Secondly, you must have an occupancy permit if people have to visit your shop.
Further, you must have employer identification numbers for all structures except the sole proprietorship. EIN is essential in paying taxes. Environmental certifications are also essential if you offer car air conditioning repair services. Finally, you may require ASE certifications, which aren’t necessary when starting a business. But they help build the trust of your customers.
Open Your Business Bank Account
Why is it necessary to open a business bank account? It protects your personal assets if the business goes bankrupt or if any legal action is taken against it. This is known as the corporate veil.
Another benefit of having a business bank account is getting better loan interest and higher credit lines. Also, it makes accounting and filing of taxes easier by accounting for every money transacted.
Getting a credit card is also essential at this stage. A credit card helps you to build a company’s credit history. It also helps separate personal and business expenses.
Prepare Business Accounting
Every business must have a record of expenses and income. Accounting also helps keep detailed records of assets and liabilities. And this helps keep track of business performance over time. For instance, you would want to know how the business is operating after six months to one year of operation.
Moreover, accounting helps you file tax returns easily. The Quickbook integration can help you prepare accounting records.
Register Your Auto Repair Business for Taxes
After opening an account and preparing the business accounting, you must register for various state and federal taxes. You must have the Employer Identification Number (EIN) to register for taxes. Filing taxes is essential to show that your business complies with state and federal laws.
Get Auto Shop Insurance
Starting an auto body shop or any other automotive-related business is expensive. You must purchase tools and also allow people’s cars to park around your shop. As such, you must protect the properties and your investment in case of accidents or calamities like fire.
Auto repair shop insurance will save you from financial losses in case of any danger. But there are various insurance coverage plans you can consider as you get started with your business.
The first one is general liability coverage. It protects the business from many risks like employee and non-employee injuries and property damage. This is the best coverage because you will have various cars from clients in the shop.
The second is commercial property coverage. You will have equipment and supplies in the auto shop to offer services. This coverage protects your equipment in case of theft, damage, or malfunction. It can also help you replace the income in case you temporarily suspend your services.
Commercial auto coverage is the third insurance plan. If you have trucks, vans, or cars registered under the business, you must have a commercial auto policy. A commercial auto policy is a must if you plan to have a mobile auto repair shop.
The last insurance plan is the garage keeper’s liability. It’s an add-on to the general liability coverage to cover damage to the vehicle you don’t own but was left under your care.
Hire Professionals
After the business is covered, you must hire competent auto repair technicians. Also, hire front office staff to help encourage repeat business from clients. Customer service is very essential because it’s the first place you start convincing the customers your services are top-notch.
On the other hand, quality services are even more convincing. When hiring professionals, you must be very keen because you need every service to encourage customers to return for more. As such, if you offer different auto repair fields, you must hire each professional for a specific field. The most common are:
Collision repairs expert – you need a car body specialist to repair the body in case of collisions. This involves restoring the paint job by repainting or buffing and waxing. Moreover, collisions can damage the lights and also sensors and airbags. So, you must hire an electrical technician and other specialists to complete the collision job.
Graffiti artist – most car owners require different paint styles. Some may require to give their vehicle a new face with graffiti or stylish writing. This requires local decal painting services.
Brake specialist – modern cars have complicated hydraulic brake systems. Additionally, they have various components that vary with the car model. Brakes being the most essential component of a car safety, you must hire a specialist with relevant skill and knowledge to offer brakes repair service.
Transmission specialist – vehicles come with different transmissions and features like all-wheel drives, four-wheel drives, automatic, and manual. We also have modern CVT transmissions that require advanced knowledge to repair. So you need a specialist for transmission repairs.
Windshield expert – most car windshields are prone to cracking due to loose chippings on the roads. A windshield expert can help do various windshield repair and replacements. They can also help in repairing automatic windows and offer tinting services.
Define Your Brand
Your brand is how your business is perceived by potential clients. A strong brand will help you stand out and beat your competitors in your region. Ideally, start partnering with other businesses that will require your services. A local taxi company or a local distributor is a good example.
Offer custom services to promote word-of-mouth marketing. This helps the customers to speak out there about your services. For instance, if you offer luxury car servicing and repairs, make your services top-notch.
Introduce the Brand and Start Offering Services
Once the day to start the services comes, start with a good introduction of your brand to catch the potential client’s attention. Below are tips you can promote every service after starting an auto body shop or mechanic shop in your area:
Create a business website – all professional businesses have websites. A basic website will help potential customers to learn more about your brand and locate you easily. How? After reading about your services, they can use Google search to get to your location.
Grand Opening of the auto shop – hold a grand opening of the business and let everyone in your town know you are open to offering services. Grand opening celebrations earn businesses a percentage of future clients.
Ask for referrals – tell your colleagues, friends, and family to refer your business to people. They can send their colleagues and friends your way. A business broker can also help market your brand for a certain duration. But if you offer quality services for a few days after the start, word-of-mouth marketing will work best for your business.
Advertisements – advertise on social media platforms, local radio stations, or papers. Advertisements are the best ways to reach the masses in the modern world.
Signage – make sure after opening the shop, install an outside sign to inform passers-by and clients of your shop location.
Starting an auto body shop or a general auto repair shop is easier. You only write your business plan, get all the legal documents, account for the income and expenses, and market your business appropriately. The current auto industry is growing because many people own cars. So, get into action and become an auto business owner.
