So, you’re debating whether or not you want to open up an auto repair shop. I can tell you right now that if you do decide to go down this path it can end up being a very exciting and rewarding business! In this article, we’ll take a look at the various things you will need to invest in upfront and in the end, determine how much money you will need to open up an auto repair shop.
On average, it can cost between $40,000 and $50,000 to open up an auto shop depending on your location and your clientele. Before you can get started with your auto repair shop, you’ll need to invest in equipment, a space to open up shop, and hire on a team of workers. Let’s take a look at each category individually to determine how much opening an auto shop can cost.
Now that we’ve laid out the basics, let’s take a look at each of these categories individually to determine approximately how much it will cost to open up an auto shop! We won’t be arriving at an exact number, as it will ultimately come down to variables that you will determine on your own, but I’ll give you a good idea of what to expect if you do decide to open up your own auto shop.
Investing in Equipment
First things first, you’ve got to find the proper equipment to get your shop started. You can’t start working on cars if you don’t have the proper tools in place. Let’s take a look at what you’ll need to get started. Here is a detailed list from autoserve1.com that lists sixteen different pieces of equipment that you could invest in to get started. This list is by no means all comprehensive, but is a good place to start if you aren’t sure what kind of equipment you should be getting to get started.
You by no means have to get every single item on this list to successfully open up you auto shop, but you’ll certainly need some tools to get started. Start by brainstorming a list of essential services you’d like to offer up to your clients. Then, from that list, invest in the tools that you’ll need to properly carry out those services. If it helps, check out what the local competition is offering, and try to make sure that your auto repair shop offers at least the essential services so you can compete with your competitors properly. You don’t want clients to overlook your shop because you can’t offer them basic services.
You can start with the basics and continue to add tools to your arsenal as your business grows and starts to bring in a profit.
Looking at some numbers, since that’s why we’re here today, equipment alone can cost you anywhere from $5,000 upwards depending on what you decide to purchase up front. Auto repair equipment can be very costly, and some people spend up to $50,000 up front on equipment alone. This is why I said above that all costs vary, and what you end up spending will depend a lot on what you decide to invest in early on.
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Finding the Proper Space
Next, another very important part of opening up your auto repair shop – finding the proper space. You’ll have to first decide whether you will be buying a space, or leasing it. Buying will be a lot more expensive up front, but could save you money in the long run.
How much you spend on rent monthly will depend largely on the area of town you choose to set up in, and how large the space is. Now, keep in mind you are opening up an auto repair shop and will likely need a large amount of space to fit all of your equipment and fit in the cars that you will be working on. Keep this in mind when finding a space, as you don’t want to invest in something that you quickly find is too small for what you need.
If money is tight, do your research to see if you can find a cheaper space in a less trafficked part of town, but keep in mind that if you are in a less trafficked part of town you will have a harder time getting foot traffic. If you are further from the main part of town, you also may have a harder time getting clients to make the drive to come visit you. All of this comes with the tradeoff of finding a place that is cheaper to rent out.
On top of all this, make sure that you find a place that has good utilities (as electricity, gas, and water are all things you may need for repairs) and make sure that the space you find has good overhead lighting so the team has plenty of light to do their repairs by.
Monthly rent for a larger space can cost anywhere from $4,000 to $10,000 per month depending on the square footage and where it is located in town (as well as the town/state you are getting started in).
Hiring on a Team of Workers
Next, you’ll need to bring on a team of workers. As great as you may be at car repairs, you can’t run the show all on your own. Depending on the size of the operation you are running, you’ll want to bring on at least two to five people to cover all of the repair jobs (if you want to bring on more, that is totally your call to make).
How much you’ll have to pay each employee will depend on how specialized they are in their area, and how many years expertise they carry with them under their belt. For example, you can likely get away with paying minimum wage for a college student who has no experience under their belt, but for someone who is specialized in auto repair and has been in the industry for ten plus years, you’ll likely be paying them somewhere around $20 to $25 per hour.
On one side, specialized workers means that your guests will be getting better quality work, at the tradeoff that you will be spending more money on hiring them. On the flipside, if you hire a kid in college to do the same job, clients aren’t getting the same quality work, because they don’t have the same skill as someone who has been in the industry for years does. Keep this in mind when you hire your team. You don’t want your payroll to sink your business, but you also don’t want to lose customers due to shoddy workmanship. How much you spend on workers will vary based on these factors.
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Other Miscellaneous Expenses
On top of these main three areas of expenses, you’ll also have a few other expenses that you’ll need to take into consideration. Factors such as licenses, insurance, marketing expenses, and any construction fees (if you need to modify anything in your new shop space) are all expenses that can add up. Depending on the state you live in licensing fees and insurance costs will vary, it is always best to check with your local courthouse to determine exactly how much this will cost you.
When it comes to marketing, it really is up to you on how much or how little you wish to spend. You could utilize all of your free marketing tools such as social media and putting up paper fliers to get the word out. Or, you could spend some money on it and put out ads, banners, and mail in fliers to increase your chance of more people hearing about your shop. Once again, the costs of marketing will vary depending on what you choose to put into it.
On top of this, any construction you choose to do to modify the current space you just leased will also add to your initial expenses. This is not necessary to get started, but sometimes depending on the space you find may be necessary in order to get the space ready for business.
The Average Cost of Opening a Repair Shop
Okay, we’ve arrived at the end of the article and you’re thinking, but wait! Where is my magic number on how much it costs to open an auto shop?! The answer is, I don’t have one. Like most things, there isn’t a one size fits all answer to this question. But, with the guidelines I’ve provided you with above, if you go through and answer the questions, we went through one at a time, you’ll get to the final number yourself based on what choices you make and the location you are opening up in.
But if you’re really pushing me for a magic number, here it is. On average, it takes about $50,000 to open up an auto repair shop. You can save money but investing in only the essentials, or you can spend double that and go all out. The choice is yours.
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Frequently Asked Questions
- How do I find a starting fund to open up my auto shop?
You can either take out a loan, or use savings to start a new business. Taking out a loan may be a less riskier option, since that means you will have savings to fall back on in case your auto shop doesn’t start pulling in a profit immediately, but keep in mind that this means you will be going into debt to open up shop.
- What are things to look for in a good location?
Try to find something that is close to the well trafficked parts of town. Whether this is near or in downtown, or near a big tourist attraction or mall will depend on what is in your city. You want to be near your competitors, so guests visiting them will see you as well, but make sure the market you choose isn’t already oversaturated with auto shops.
To learn more on how to plan your own auto repair shop business click here!
Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.
About the author. A lifetime of Entrepreneurship.
Hi! My name is Shawn and I am a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop (link here http://archives.starbulletin.com/2003/05/18/business/index.html) to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet new business owner, I see myself. I know how hard the struggle is to obtain and retain clients, finding good employees and making sure everything works together all while trying to stay competitive.