10 Steps for Opening a Collision Repair Shop
- Create a Business Plan. After doing some research and gathering tips from your contacts in the industry, take all that you’ve learned and use it to develop a business ...
- Secure Finances. Once you have your business plan, bring it to a commercial lender and/or investors to get the funding you’ll need for all your start-up costs.
- Find a Location. ...
Full Answer
How do I start a collision repair business?
Starting a collision repair business requires a complete, written business plan. Hank Nunn is a 35-year collision industry veteran. He is now retired. There are many reasons you may contemplate opening your own collision repair business.
How do I start a car repair shop?
Your business plan will be shaped by the potential locations for your car repair shop. Leasing a current repair shop might be cheaper than buying one or building one from the ground up. Look for locations that are convenient to either highway or main road access.
What is the best business structure for a collision repair company?
Which business structure is best? Most start out as sole proprietorships or partnerships. The best form for collision repair centers is probably a form of corporation. Work with a business attorney and an accountant when deciding your business structure. You might as well start out with the proper structure.
What is the best form for a collision repair business?
The best form for collision repair centers is probably a form of corporation. Work with a business attorney and an accountant when deciding your business structure. You might as well start out with the proper structure. Be very careful with partnerships.
Is owning a body shop profitable?
Average Profit of a Auto Body Shop In general, a larger auto body shop can earn $100,000 per year, and mechanics themselves can make between $30,000 and $50,000 per year.
How do I start an auto repair shop?
Start a car repair shop by following these 10 steps:Plan your Car Repair Shop.Form your Car Repair Shop into a Legal Entity.Register your Car Repair Shop for Taxes.Open a Business Bank Account & Credit Card.Set up Accounting for your Car Repair Shop.Get the Necessary Permits & Licenses for your Car Repair Shop.More items...•
How do auto repair shops make a profit?
Auto repair shop businesses make money by taking in customers' vehicles, testing them, replacing the parts that don't work, and sending the customers on their merry way. Thus concludes how auto repair shop businesses make money.
How profitable is the auto collision business?
Profit Margins for Parts On average, according to the Body Shop Business website, the sale of parts generates between 36 to 44 percent of sales proceeds, while parts produce only 20 to 28 percent in profit margin. The reason for this has to do with style and control.
What is the most profitable auto repair?
Brake jobs A car's brakes are one of the most critical. A full-service repair shop that offers brake adjustment, repair, and replacement services will never run out of brake job customers.
How do I get more customers in my auto repair shop?
Here are 5 marketing ideas for auto repair shops to help increase their word-of-mouth referrals.Use Email Newsletters to Keep in Touch. Email newsletters are the best way to stay in front of your customers. ... Thank People for Their Business. ... Be Social. ... Get Reviewed. ... Ask for Referrals. ... Stay in touch more easily.
What is the average net profit for an auto repair shop?
For the automotive repair industry, the average profit margin is between 20-28% for parts and 50-65% for labor. In order to maximize your profit margins, you either need to increase your revenue or decrease your costs.
How much do shop owners make?
Retail store owners earn a median income of $51,270 per year. Those who run warehouses earn an average of $55,000 annually. And the median income for those who own construction businesses sits at $62,449 per year.
How much markup is there on auto parts?
Many automotive business consultants suggest an overall 100% markup on parts in order to achieve an overall 50-55% profit margin. This markup is important to achieve a 30 to 35% net operating profit. Shops that fail to succeed often have net operating profits of less than 15%.
What is the average profit margin for a body shop?
According to Body Shop Business, profit margins on parts sales typically average between 20 and 28 percent, while labor profit margins range between 50 and 65 percent (Source).
How much does a mechanic shop owner make a year?
While ZipRecruiter is seeing annual salaries as high as $118,000 and as low as $19,000, the majority of Auto Repair Owner salaries currently range between $31,500 (25th percentile) to $57,500 (75th percentile) with top earners (90th percentile) making $81,500 annually across the United States.
How do body shops increase revenue?
Effective body shop marketing strategies to increase profitsSocial media. First and foremost, let's start with online presence. ... Referral marketing. Referral marketing is one of the least expensive and most effective ways to market your business. ... Community involvement.
Do you need a mechanic license to open a shop in Florida?
Individual auto mechanics do not need to be licensed in Florida. If you wish to improve your job prospects, however, you can become certified in specific auto service and repair skills through ASE.
What does a car workshop need?
Items That Every Car Workshop NeedsA Vehicle Lift. Every workshop, from the smallest through to big dealerships, needs to have a vehicle lift or two. ... Proper Lighting. A dark and dingy workshop is a workshop where mistakes are made. ... Wall Mounts. ... Diagnostic Equipment. ... Air Compressors. ... A Good Sound System.
What is a standard automobile workshop?
An automobile workshop is a place where repairs and servicing of automobiles and automobile systems are done. In an auto-workshop various services are rendered by the technical staff during repairs and servicing of automobile systems and parts.
What is a car repair shop called?
An automobile repair shop (also known regionally as a garage or a workshop) is an establishment where automobiles are repaired by auto mechanics and technicians.
Due to the spread of the coronavirus, is this business essential?
Yes. Based on current information across multiple states with emergency orders, this business provides essential goods and services.For more inform...
What are the costs involved in opening a car repair shop?
Costs for starting a shop vary, but generally include: Business license: $50 to $100. ASE certifications: $36 registration fee, one time, plus $39...
What are the ongoing expenses for a car repair shop?
Ongoing expenses for the business include shop rental (unless the business owner owns the shop building), insurance, and labor costs. Mechanics can...
Who is the target market?
Clients for auto repair businesses are unique in that they all have one thing in common: a broken or serviceable vehicle. The best types of custome...
How much can you charge customers?
Labor rates vary depending on how the shop is set up. At a dealership, mechanics are paid differently than at an independent shop. One of the main...
How much profit can a car repair shop make?
According to US News, mechanics make between $30,000 and $50,000 per year. So, a one-man shop could expect to make around this much. The owner of a...
How can you make your business more profitable?
Making the business more profitable isn’t easy. Owning a shop is hard work. Pulling in extra income is usually a matter of specialization. Converti...
Is this Business Right For You?
This business is good for people who are mechanically-inclined. In most states, a license is required to work as a mechanic. Each vehicle manufactu...
What happens during a typical day at a car repair shop?
Business owners usually have to check maintenance logs first thing in the morning, check upcoming appointments, and meet with shop managers about v...
What are some skills and experiences that will help you build a successful car repair shop?
Mechanics need special training, usually Automotive Service Excellence (ASE) certification, in addition to general automotive education. Some high...
Are You Ready to Start Your Own Collision Repair Shop?
Auto body shops will always be needed, so starting a collision repair shop is a solid, sustainable idea as well as a lucrative business opportunity. However, before you take the plunge, you need to ask yourself if you’re really ready.
How to Start a Collision Repair Shop and Succeed
Use these guidelines to get your business off to a great start, and hit the ground running by learning more about how a Forklift Wrecker can help your new collision repair shop succeed. Contact our team online or call 877-593-6959.
How to get an EIN number for a collision repair shop?
It’s more convenient if you visit the IRS (Internal Revenue Service) website and complete their online forms to obtain an EIN (Employer Identification Number). Once you have completed the forms, you can now collect and pay tax on your sales with the local and state department of revenues. Also make sure that you get a business license from the city government before you operate your collision repair shop. A small fee may be asked at your local city hall.
How to rent a car body shop?
Locate an accessible space for rent. Sometimes, auto body repair shops can be housed in industrial or low-rent areas as well as close proximity to expressways and gas stations. Ask friends and scour ads to find available repair shops for lease. You can also seek out the help of commercial real estate agents in finding the perfect facility to house your shop. Weigh the advantages and disadvantages of renting the place versus buying it. This decision will definitely be based from the plans and start-up funds you have. As a tip, it’s best to search for venues with pre-existing garages or shops since these places offer most things you may need in your facility.
How to start a business plan for a small business?
Organize a business plan that lists all the equipment and tools you need such as insurance, salaries, shop rent, and other concerns. You can view a business plan guide through the Small Business Administration (SBA) of the U.S. website. Determine the strengths and weaknesses of your shop operations as well as the opportunities and threats to watch out for. Plans should be included for staffing and marketing. Also make sure that you can itemize these things to secure good financing.
How to advertise a towing business?
There are many ways to do this – you can place ads through radio, print, or television; put a website together; or network with towing companies.
Is auto body paint a solid business?
This is a solid business because there’s always a steady market that would need auto body paint jobs, detail work, or repair work after collisions.
What happens during a typical day at a car repair shop?
If the owner also works in the shop, then a typical day will involve working on a variety of different vehicles.
What is the growth potential for a car repair shop?
A small auto repair shop can be run out of an individual’s garage in some states. While licensing is usually necessary, there are typically no restrictions on how the shop owner operates the business as long as all local codes and ordinances are obeyed.
How does an auto body shop make money?
An auto body shop or car repair shop makes money by charging a flat fee or hourly rate for service. In some shops, owners set routine maintenance fees, charging a set price for simple maintenance like an oil change. In other shops, all work is based on parts and labor cost.
What is the best type of customer for an auto repair business?
The best types of customers are those with a service contract. Ongoing service contracts ensure steady income for the shop and reduce cash flow problems both in the short and long-term.
How do mechanics find customers?
Finding new customers is usually done by word of mouth but mechanics also network with other businesses that might need their services. For example, a shop might partner with a local taxi company or limousine service to offer regular repairs and maintenance.
How much do mechanics make?
According to US News, mechanics make between $30,000 and $50,000 per year. So, a one-man shop could expect to make around this much. The owner of a larger shop can easily make $100,000+ per year by managing a small team of mechanics.
Do car repair shops have to comply with environmental regulations?
All car repair shops must comply with federal and state-level environmental regulations. A checklist for compliance with federal environmental regulations can be found here.
Why do car repair shops need a CO?
For instance, since car repair shops operate out of garages, a Certificate of Occupancy (CO) is mandatory as it proves that all legal and safety regulations have been met by the garage and it is fit for people to work in/customers to visit.
What to do at a grand opening?
Your big day is here…hold a grand opening where people in the area can stop by and see what differentiates you from the competition. You could advertise promotional discounts for the first week (or month) or give free services (e.g. a 5-point inspection) to get customers into the door.
Why is it important to keep a detailed history of your business?
Whether you run a real estate business or an automotive repair shop, keeping a detailed and organized history of your income, expenses, assets, and liabilities is critical to understanding your business’s financial performance over time. It will also help you file annual taxes faster because your accounts would already be in place!
Do car repair shops have to follow federal regulations?
Car repair shops must follow mandato ry federal and state-level environmental regulations as well. You can find the complete checklist here.
How much does it cost to set up a corporation?
The cost to set up a corporation will likely run $2,500 or more even for a small shop. There also are annual filing fees to be paid in most states that can range from $25 to $500 or more. The administrative costs of accounting and tax preparation can also be more expensive than for other forms of organization.
What to do after determining the potential market?
After determining the total potential market in the area, you need to determine what segment of that market you can reasonably expect to attract to your shop. This will be dictated by competition, location of your shop and, most importantly, your insurance company contacts.
How to start a business as sole proprietor?
1. Sole Proprietorship – To start a business organized as a sole proprietorship, you need only pick a name for your business and start using it. According to Magos, the only form needed is a fictitious owner affidavit, which informs the local government and the public that the business is operating under an assumed name and indicates who the owner is. The cost to file this document varies, but generally runs only a few dollars.
Can you compete with other small shops in a rural area?
In a more rural area, you’ll likely be competing against other small shops with service and price at an equal level in terms of attracting collision repair business. In an urban area, however, you’ll likely have at least one consolidator with which to compete.
How to register an auto body shop?
Register your auto body shop. You'll need to register your business with the city, state and federal government. Since specific registration requirements will vary, contact your state’s DMV for information on the requirements in your area. Plan to prove that you have ownership or permission to use the facilities where your shop is located, as well as proof of the appropriate zoning. Further, you’ll need proof of an official business name, as well as proof of worker’s compensation insurance.
How to find out about franchising auto body repair?
To find out about franchising options in your areas, contact the corporate offices for the auto body repair "chains" that are popular in your state. Be sure to contact them all, and be aware that they may be willing to meet or beat another franchise's offer. Seek the advice of an account and/or lawyer regarding any specific legal or financial questions you have.
How to start a small business if you don't have experience?
Get local business advice. Particularly if you do not have experience starting small businesses, you’re going to need a good amount of guidance. For instance, do you know how to construct a profit and loss statement, balance sheet, and other financial statement? If not, you’ll need to hire, befriend, or otherwise acquire the assistance of an account. You’ll likely also need a lawyer to determine the best structure of your business. Finally, bankers see plenty of business plans – you can likely find one that’s willing to look at yours and provide feedback free of charge.
What to look out for in a car insurance quote?
Specific statistics to look out for include the number, age, and types of vehicles in the area you’re considering. Additionally, find out what insurance companies are commonly used in the area, and how many similar businesses you’d be competing with.
Do auto repair shops need permits?
Auto-repair shops must have permits to do business, as well as specific permits to perform particular types of jobs, such as paint-removal and painting.
Is it worth opening an auto body shop?
However, knowing how to make a vehicle look like new isn't enough to ensure business success. Foremost, you need to develop a business plan that will help you acquire the funding necessary to open a business and ensure that operations run smoothly ...
Is it better to franchise an auto body?
Consider opening an auto body franchise location. You have the option of franchising your business as opposed to opening and running your own business from the ground up. The main benefit of franchising is a considerable reduction in the likelihood that your business fails. This relative advantage is based on multiple factors, including name recognition, large scale marketing, and "tried-and-true" managerial and operational procedures.
Why is it important to open a car repair shop?
If you are interested in opening your own car repair shop, now is a great time because the market for mechanics is currently experiencing significant profit gains. Most drivers now have cars that are at least 10 years old, which means that the need for an auto mechanic is growing for more consumers.
What happens if your shop is isolated?
If your shop is very isolated, it is unlikely customers will come to you, especially when towing costs are often tallied by the mile. Your location should also be able to accommodate an office for you to take care of your administrative needs and a waiting room area for your customers.
How much does it cost to join a Jiffy Lube franchise?
Do you plan to remain an independent repair shop or will you join a franchise like Jiffy Lube or Midas? You will generally need $30,000-$200,000 to join a franchise, but the advantage is that they will handle marketing and they often have a nationally trusted brand name for potential customers. If you do not have any existing customers in your current career that you know would follow you to a new business, joining a franchise might be worth the investment.
How to get more customers for your business?
Consider advertising on TV or on the radio. TV commercials and radio ads may also help you to reach a wider audience and gain new customers.
How much does it cost to open a franchise?
While the costs will be more on the business and administrative side than the equipment and resource side, you should still expect to spend $30,000-$200,000 to open your franchise. Guess again!
Who owns Stingray Auto Repair?
This article was co-authored by Jason Shackelford. Jason Shackelford is the Owner of Stingray Auto Repair, a family owned and operated auto repair shop with locations in Seattle and Redmond, Washington.
Where to place flyers?
You can place them in places where lots of customers might congregate, such as gyms, civic centers, office parks, and the parking lots at universities and college campuses.
