How to Start a Mechanic Shop? Tips to Establish New Business

How to Start a Mechanic Shop?

Step 1: Create an Auto Repair Shop Business Plan

Every business starts with proper planning. When it’s the beginning of your business journey, prepare a proper roadmap. Your plan should cover every key action necessary to move your business forward. An ideal blueprint should consist of the following –

• What will be the business structure?
• What services will you provide?
• What kind of equipment will you need?
• How many people will you require?
• How will you fund your business?
• How will you analyze the market?
• What will be the pricing strategy?
• What will be the marketing strategy?

The core benefit of crafting an auto repair business plan is getting an idea of detecting the risk and the way to overcome it. However, you should create a plan based on market research.

Step 2: Do Market Research & Educate Yourself

You can meet those mechanic shop owners who have already worked in this field for a long time and possess good experience. Also, you must observe their work and watch out for their strategy for working and managing the car repair business. Additionally, examine what type of challenges they face and how they deal with them. Meanwhile, you will also cover competitor analysis.

Try to explore and learn new things in the automobile industry. Learn how to provide maintenance services in the best way. You must be an expert in all kinds of services, whether it’s engine repair or other auto repair services. This will be useful to refine your services and enable you to offer the best service that ultimately leads you to achieve happy customers.

Step 3: Select a Business Name & Logo

Do you think naming your business is a doddle? It might sound like that until you start deciding on a name.

You must be aware of a few things while naming your business. Some of these are as follows:

• Your business name should never be too long
• The name should be directly related to your mechanic business
• It should be easy to remember
• The name should be unique

To find and pick a unique name, you must check out business registries and website domains.

Your business should feature a distinctive and eye-catching logo. Remember, a logo is your business brand and it represents your car repair business. You can take a logo designing service from the logo designing company or hire a freelancer logo designer.

Step 4: Registering Your Business

It’s mandatory to register your business to run it smoothly and legally in your city. The registration process will be according to your business structure and location and as per the regulations of the state and local authorities.

The general approach to business registration is an online application. This applies to limited liability companies (LLCs), sole proprietorships, and partnerships.

Once you are done with the registration process, the next step is registering for state and federal taxes. You must obtain an Employer Identification Number (EIN) for this purpose. The Federal Tax Identification Number is another crucial element for tax purposes.

Step 5: Open a Business Bank Account and Credit Card

It’s a big mistake to keep the same bank account to manage the finances of personal life and business. It leads to capital mismanagement. Therefore, you must open and maintain a separate bank account for your business. This keeps confusion and financial mismanagement at bay. When starting an auto mechanic business, you must get a business credit card.

Keeping a separate bank account also protects your assets in case of any legal process or bankruptcy. Moreover, this also helps you to gain more credits that are useful to you during the business loan process. Additionally, you can have better interest rates on business accounts.

Step 6: Choose the Location for Your Auto Repair Shop

The location has a great impact on your mechanic business success. So, on your roadmap of how to start an auto mechanic shop, consider this point as an important one.

For choosing the appropriate location, focus on the below points –

• Seek locations in high-traffic areas
• The location should be close to the residential area
• There should be enough parking space
• It should be in the commercial zoning area

Sometimes, buying or taking lease space is out of the budget for many professionals. One of the easiest solutions to this problem is to search for an existing space or garage. This will help you acquire the space without spending too much money.

Step 7: Acquire Licenses and Permits

Your business will need various permits. So, you need to proceed with various applications when you think about what permits do I need to open a mechanic shop. However, the type of license needed varies according to the nature of the business, its location, and the local regulations. For an automotive repair shop, the following licenses and permits are applicable:

• Zoning and Land Use Permit – The local government grants permission to run business operations on certain land.
• Basic Business Operations License – This business license is issued by the city or region where your business will operate.
• Sales Tax License – This kind of license has different names, but it is required for selling almost all services or products.
• Building Permit – This permit is given when there is planning for building a commercial space.

The process and set of licenses vary from state to state. Along with local business licenses and permits, you must acquire a Certificate of Occupancy (CO).

Step 8: Finding the Best Software for Your Auto Repair Shop

Your mechanic business will also involve an invoicing process. You will need a true billing partner to streamline your invoicing, and this is only possible when you choose invoicing software.

Fortunately, you don’t have to search anywhere when you have Moon Invoice. It’s one of the top invoicing software that makes your bookkeeping process up to the mark. The software provides 66+ customized invoice templates in multiple formats – Excel, Word, Google Sheets, Docs, and PDF for different industries. You can make your mechanic business invoicing and billing handy by using its auto-repair invoice template.

You can create a custom and professional invoice a few times while assuring accurate figures and calculations. Thanks to its auto-calculating concept. This invoicing software offers easy sharing of invoices through WhatsApp & Email.

Certain Attributes of Moon Invoice –

• Supporting multi-currencies for international trading
• Multiple languages
• Automate recurring payments
• Signature request
• Importing of files (in CSV, TSV, XLS, and XLSX files)
• Preview of invoice
• Custom print and PDF settings

Moon Invoice also provides the feature to generate and manage of following accounting actions –

• Sales Receipt
• Proforma invoice
• Estimate
• Delivery Challan
• Credit notes
• Expenses

Step 9: Opt for Business Insurance

You might have life insurance, but you should have insurance for your mechanic shop. It is crucial for your business, and you can opt for the listed insurance options –

• Commercial Property Insurance – Whenever your assets are damaged, this insurance will be useful to cover the cost of repair or replacement of those assets.
• General Liability Insurance – This insurance will cover the cost if you meet with an accident or suffer any property damage.
• Garage Insurance – It covers the auto body shop & repair businesses from liabilities.
• Workers Compensation – It covers the business’ medical costs. It is majorly useful when an employee gets injured or ill on the job.

General liability insurance and workers’ compensation are standard insurance options for your mechanic shop. Also, insurance requirements are always state-wise. So, you must check your state’s needs before opting for insurance.

Step 10: Get Funds for Your Auto Repair Shop

Every business needs investment. Your mechanic shop has certain investments like buying equipment, marketing expenses, and setting up the shop. For the same, choosing the best sources of funds is crucial.

There are two major ways to get funds –

1. Getting a Loan from a Traditional Lender

This option is good when you have a financial projection for the next five years, a solid credit history, and a strong business plan.

2. US Small Business Administration Loan Program

This small business loan option is good when you don’t have to go to a traditional lender. It also offers two options as below –

1. SBA 7(a) Loan

This loan program is useful for any business type, buying an existing building and purchasing equipment.

2. SBA 504 Loan

This gives lower down payments and interest rates. It is useful for heavy equipment and commercial real estate.

Step 11: Hire Technicians & Other Staff

In the initial days of your mechanic business startup, you might be able to handle it alone. However, as time passes, you will need manpower to handle your work efficiently.

That’s where you will need to hire technicians to be your helpers. You can hire technicians from the references of your friends and family or by conducting a proper hiring process. Whatever approach you follow, you must check their backgrounds, experience, and expected salary.

Apart from technicians, you will also need to hire other employees. One of them is the front office staff or receptionist to handle potential customers’ queries and complaints. As you grow, you can hire more people to perform different roles. Keep providing the best auto repair services to have repeat business.

Step 12: Online Presence

Forget your mechanic business without a proper online presence. It’s because, in today’s time, no business gets customers and leads without a proper online presence. The same concept applies to the mechanic business.

You must create a business website and social media accounts. When you deal with your business website, keep focus on certain factors. Firstly, your home page should be impressive and convey a clear message of your business to the visitor. Secondly, your website should have easy navigation and good loading speed.

Make sure the website presents eye-catching graphics and high-quality content with a proper call to action.

Additionally, you should follow a proper strategy for social media profiles. Create your business profiles on social media platforms like Facebook, Instagram, and Twitter. Don’t forget to include contact details and keep promoting your business on your accounts.

Step 13: Promote Your Auto Repair Business

Now you have everything ready in your auto mechanic shop, it’s time to launch your business. Marketing and promotion of your business will open the doors for potential customers to meet you and finalize the deal.

To promote your business, you must follow the below approach –

Utilize word of mouth because it is one of the most powerful tools to acquire new customers. The easiest way to perform word of mouth is to establish your business relationship with various partners and customers.

An additional way to promote your business is by using traditional marketing strategies. You can advertise your mechanic services in newspapers and local magazines. This will help you acquire local customers while promoting your business in your local region.

Online promotion and marketing is another business marketing approach. It involves SEO to promote your business website on search engines to gain maximum visitors. Along with it, never ignore social media marketing and do regular posting of your business.

Last But Not Least

So here we are ending our words on how to start a mechanic shop. The overall game is crafting a solid business plan, doing market research, investment ideas, and so on. Additionally, you should choose the best accounting software to manage your billings and overall accounting process.

Are you ready to own a mechanic shop? Follow the above approach and win the business game.

Frequently Asked Questions