How To Open Up Your Own Car Repair Shop | Step By Step Guide

Are you looking to set up your own automotive repair shop? Setting up an auto repair business is definitely a lucrative idea and could be the perfect project for you. Read this guide, where we'll tell you everything you need to know on how to start an auto repair shop.

Do you wish to open your own vehicle repair shop someday? If so, you should read this article on how to open up your own car repair shop. If you are looking to open up your own auto repair service, now is a great time because currently, the market for mechanics is seeing significant profit gains. Most drivers currently own cars that are at least ten years old, which implies that the need for such a service is growing for more consumers. Read our guide on Best Auto Repair Software For Small Businesses.

Since cars are so necessary for daily life, many people believe starting an auto shop is a great way to get their business off the ground. There are more aspects to opening up a car repair shop than just fixing cars, and it requires starting from scratch. The car repair shop is the greatest small business to launch with little capital.

Businesses and legal matters, finance, and accounting, permits, personnel, and personnel require operating an auto repair shop, which we aim to simplify for you by breaking it into steps. Get going with how to open up your car repair shop. Read our guide on Best Small Business Ideas Of 2022.

Businesses and legal matters, finance, and accounting, permits, personnel, and personnel require operating an auto repair shop, which we aim to simplify for you by breaking it into steps. Get going with how to start an auto repair shop!

How To Open Up Your Own Car Shop?

Starting your own repair shop offers you control over your schedule and enables you to take advantage of the strengths connected with being a business owner. The below step-by-step guides help you to kickstart your garage. Here is how to open up your own car repair shop:

Step 1: Create Your Car Shop Business Plan

Every business must have a clear well-defined plan. A few important subjects to think about are:

Be Aware Of The Type Of Store You Intend To Open.

Choosing the right business concept is the first step in starting an automotive repair shop. If you want to offer general repair and maintenance services, such as oil changes and multi-point inspections, or specialized services, such as transmission, engine, or vehicle body repair, what will you specialize in? Will you stand out from the competition by emphasizing particular car brands or anything else with four wheels?

Due to their frequently constrained financial resources, small business owners must take into account the expense of specialized equipment, at the very least a diagnostic machine, for the services they choose to provide. Many businesses first specialize in one area before branching out into other ones. For example, if you are looking to buy mobile parts online you must search for a mobile repair shop to get original spare parts.

How Much Does It Cost To Start A Car Repair Shop?

To open a car repair shop, potential business owners require at least $50,000+. Starting a shop can be expensive, however, costs often include:

  • Business License —> $50 – $100
  • ASE Certifications.
    • One-time registration –> $34
    • Per certification –> $47 – $94
  • Insurance —> $4.000 – $5,000/ year
  • Mechanic’ hydraulic lift —> $3,000 – $7,000
  • Diagnostic machine —> $5,000 – $10,000
  • Shop rent —> $1,500 – $15,000/month
  • Mechanic’s tool set with specialty tools —> 15,000

Rent for the shop (unless the owner owns the shop building), insurance, and labor costs are ongoing expenses for the business. The pay rate for mechanics can range from a flat rate of $25 to $100. Shop owners may have to pay $4,000 a year for insurance. Depending on the size of the shop, overhead and supply expenditures can range from $10,000 to $20,000 each month.

Who Is Your Target Customers?

This relates to the kind of auto repair services you intend to provide; for instance, independent businesses looking to undertake custom work on luxury automobiles will have a totally different target market than those performing routine repair & maintenance on conventional cars.

In order to bring in new clients, your auto repair shop needs to have a clear target demographic and a solid marketing plan!

Who Are The Competitors?

While a little good competition never hurts anyone, you should absolutely be aware of who your competitors are and comprehend how they affect the potential of your own firm. You may drive about or check them up online. Having access to this knowledge can help you market your auto repair shop more effectively. If you are aware of your competition, it will be simpler to identify your store.

Step 2: Choose The Correct Location

Next, you have to decide the place where you will open your car repair shop. When choosing where to locate a car repair shop, business owners must take into account a number of criteria, including proximity to their target market, accessibility & visibility (for walk-ins), rent, etc. You should carefully consider all the advantages and cons because this is likely to be the most significant choice you’ll ever make.

Determining whether you’ll open your own auto repair shop or lease one is also crucial. On the other side, you may create a mobile mechanic business to remove the factor of location.

Step 3: Raise Fundings

How much does it cost to open a car repair shop? You’ll probably require a loan to start an auto repair shop in order to assist pay for things like equipment, location management fees, employee salaries, insurance coverage, etc. Will you be able to pay us back? is always the first question a bank asks before lending money to a business owner or making an investment in a startup.

Small Business Administration (SBA) loans are a typical funding option for auto repair firms. Since SBA-backed loans are insured by the federal government, lenders are more willing to offer liberal terms and lower interest rates. The SBA takes action and makes a guaranteed payment to the bank in the event of a borrower default to lessen the loss. The two SBA loan types that mechanic shop owners should be most familiar with are:

  • SBA 7(a) Loans. Include funds for working capital, equipment purchases, and debt refinancing.
  • SBA 504 Loans. Working capital cannot be obtained, however, fixed assets such as property and equipment may be bought with the money.

Step 4: Set Up A Legal Entity

The next step is getting legalities. Every new business must acquire business licenses tailored to the state in which it conducts business. Creating a legal corporation for your repair shop is no different. The sole proprietorship, partnership, limited liability company (LLC), and corporation are the four main types of business structures.

The best options for auto repair firms are an LLC or a corporation, as these will shield the owner from having to pay damages out of their own funds in the event of a lawsuit. You can create the repair shop’s LLC on your own, for a nominal state LLC charge, or you can pay a professional LLC service a small price to do it for you.

Step 5: Get The Appropriate Licences And Permits

The licensing requirements for auto repair businesses vary by state. For information on the type of license, you’ll need to run a car repair company in your state, check with your local motor vehicle department. You must: in order to receive a license in your state.

  • Fill out the application form. You can get an application for your license from the motor vehicle department.
  • Meet eligibility criteria. In the majority of states, you must be eligible before you may submit an application. Your age, credit score, and criminal history could all be part of these requirements.
  • Offer the necessary documents and information. Your tax ID number, additional paperwork proving the building you want to utilize has been zoned for your firm, and color photos of your facility can all be required.
  • Pay any fees necessary for the application’s processing. Although the application fee could just be $20, if you’re accepted you might have to pay $300 or more to get the license.

Since every car repair shop operates out of a garage, a Certificate of Occupancy (CO) is required as proof that the garage has complied with all legal and safety requirements and is suitable for employees to work in and clients to visit. Now, let’s take a look.

Certificate of Occupancy (CO)

Typically, companies operating out of a physical site need a Certificate of Occupancy (CO). A CO certifies that all zoning laws, building rules, and other legal requirements have been followed.

  • If you intend to lease a garage.
    • It is often the landlord’s responsibility to secure a CO.
    • Check your landlord’s ability to secure a CO that is appropriate for a car repair business before you sign a lease.
    • After a significant remodeling, a new CO is frequently required. It is advised to include language in your lease agreement saying that lease payments won’t start until a valid CO is obtained if your place of business will undergo renovations before opening.
  • If you intend to buy or construct a location.
    • You will be in charge of acquiring a legitimate CO from a local government entity.
    • To make sure your Car Repair business will be in compliance and be able to receive a CO, review all building codes and zoning standards for the location of your business.

Step 6: Get Business Insurance

Get insurance coverage to shield your store from unexpected incidents like natural disasters or accidents involving clients and employees. Similarly to this, all owners of vehicle repair shops need commercial property insurance to safeguard their company’s assets.

The most frequent type of coverage available to small businesses is general liability insurance. Start with this fundamental insurance program if you’re not sure what hazards might be involved or which kind of insurance best suits your needs.

Another choice to defend your company from employee lawsuits is to have workers’ compensation coverage, for instance, if a mechanic is hurt while working on a car. You can select from a variety of mechanic shop insurance options. Choose the option that best meets the demands of your shop.

Step 7: Create A Business Bank Account And Credit Card

For the protection of personal assets, it is crucial to use special business banking and credit accounts. Your personal assets—your home, vehicle, and other valuables—are in danger if your firm is sued if your personal and business accounts are combined. This is known as “piercing your corporation veil” in business law.

Additionally, understanding how to establish corporate credit can help you secure loans, credit cards, and other funding under your company’s name rather than your own, as well as get better terms and credit limits.

Create A Business Bank Account

Opening a business bank account is necessary for several reasons, including:

  • Separation of your personal assets from those of your business is a requirement for personal asset protection.
  • Simplifies bookkeeping and tax filing.

Open Net 30 Accounts

Net 30 accounts are used to create and maintain business credit and to boost cash flow. Businesses use a net 30 account to purchase items and pay off the entire balance within a 30-day period.

The major commercial credit bureaus receive reports from several net 30 credit providers (Dun & Bradstreet, Experian Business, and Equifax Business Credit). In order to be eligible for credit cards and other lines of credit, firms must first establish their company credit.

Get A Business Credit Card

Having a company credit card is beneficial since it:

  • Put all of your company’s expenses in one location to help you distinguish between personal and corporate spending.
  • Create a credit history for your business, which will be helpful if you ever need to acquire capital.

Step 8: Create Business Accounting

It doesn’t matter what kind of auto repair shop you run; understanding your company’s financial success over time depends on preserving a thorough and organized history of your income, expenses, assets, and obligations. Additionally, since your accounts would have been established, you could file your taxes more quickly.

With the automated flow of transactional data provided by AutoLeap’s QuickBooks interface, you can streamline your accounting while saving a tonne of time and aggravation.

Step 9: Employ The Best Candidates

In order to deliver the finest experience that encourages repeat business from your existing clients, you’ll need to hire the top technicians and front office staff. Since auto repair professionals will have an impact on how well your company succeeds, finding the proper staff should be one of your top priorities.

It’s critical to generate results and solid customer service in order to stay profitable, therefore it could be a good idea to hire employees with these qualities. They should also have a positive growth mindset. Here are the traits of a good technician.

  • Ability to operate modern cars
  • Ability to learn new techniques
  • Understanding of technological issues
  • Ability to communicate repair jobs

Step 10: Market Your Business

The most common method of acquiring new clients is word of mouth, but mechanics can also establish contacts with other companies that might use their services. For instance, a shop can collaborate with a nearby limousine or taxi service to provide routine upkeep and repairs.

Create Your Brand

Car mechanics must network with any other auto repair shop that might need their services if they want to create a strong brand. Join forces with neighborhood cab firms or limo services, which both require the regular car repair and maintenance services of trustworthy auto repair shops. You might also wish to advertise your auto repair service on social media.

Build An Online Presence

In this Internet era, it’s important to stay current with trends. For instance, the young won’t consider something important if they can’t locate it online. Start with the main website, and then progressively expand it.

Utilize Your SEO Knowledge

SEO is required to improve a website’s ranking. Additionally, studies have revealed that 70% of Google users only conduct first-page searches. With other pages, they don’t move forward as quickly. Clients are more likely to click on websites that are rated higher.

Offer Incentives For Referrals

92% of people believe that word-of-mouth advertising is an extremely successful kind of advertising. By allowing them to fill out a form with their names and phone numbers, you can encourage them. Any person who mentions a certain name will receive a discount or perhaps a free oil swap. Although it can be enjoyable, the only real objective is to draw in more clients.

Step 11: Launch Your Business

Hold a grand opening so that local potential consumers may swing by and discover what sets you apart from the competition on your big day. For the first week (or month), you might promote special discounts, or you might offer free maintenance services (like a 5-point check). Software for car repair shops with marketing and scheduling capabilities can definitely help in this situation.

The next stage is to enter the digital market and expand your business online, but let’s face it, asking other companies to distribute your flyers and placing advertising in local publications no longer works, particularly when you are repairing cars. Think of digital advertising as a loudspeaker that lets your target audience know you are open for business. It helps build targeted awareness for your company. That covers everything you need to know to open a mechanic shop.

Your own vehicle repair shop has finally opened after months of careful planning.


Depending on how well you manage it, starting an automotive repair shop may be one of the best business ideas. You can pursue your interest if fixing cars is something you enjoy doing.

We hope that this guide has helped you to better understand how to start an auto repair shop. If you would like more information on any of the points mentioned above or anything else related to creating or taking over an auto repair shop, please leave your comment below.

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