How Much Does It Cost to Start an Auto Repair Shop

Starting a business is a big investment, so you need to know what you’re up against before you start saving and investing your money. Starting an auto repair shop can be particularly costly because you need certain equipment to run a shop. So, how much does it cost to start an auto repair shop? Keep reading to get a complete breakdown of what it takes to launch your auto repair shop.

Starting An Auto Repair Shop Business

The first thing to consider is the actual cost of starting a business. Before you officially own a business, you need to choose a business name and get a business license. The good news is that forming a business is actually the easiest and most affordable part of starting your own auto repair shop.

You’ll need to start by choosing a name, which is important because you don’t want to infringe on other companies that may have similar names. Choosing a name should involve plenty of market research, which helps you pick a name that sticks with your customers while avoiding copying another company’s name. Even if a business is operating in a separate state, you’re not allowed to use a business name that’s already been trademarked.

Once you’ve got a name, you can choose a business type and actually form your business. Limited liability corporations (LLCs) are the most common type of business, but you may opt for a sole proprietorship if you’re starting out small with no employees. Partnerships are also a common option if you’re forming a business with a partner, although you should understand how business partnerships work before forming one.

Generally speaking, it costs about $100 to form your business. You may have to spend a little more if you hire somebody for market research or help come up with a business name.

Renting Or Purchasing A Garage Space

Now that you’ve officially got a business, you need to find a place to operate your business. The easiest way to find a space to rent is to look for commercial property for rent where auto repair shops used to be. Finding a space that was previously used as an auto shop means you don’t have to worry about setting everything up to create a shop space.

Shopping for a commercial property to rent is a lot like buying a home, so take your time to find a spot that works for your business. You don’t want a shop that’s too small, but you don’t want to spend too much on space you don’t need. You should also make sure your shop has all the amenities you need, including ample parking, electricity and running water, and sufficient lighting installed throughout the shop. That being said, don’t be afraid to make some minor changes to really make a shop your own.

Because shops vary so much in terms of size, location, amenities, and more, the cost can also vary quite a bit. You can expect to pay anywhere from $1,000 to $15,000 to rent a shop.

Acquiring Equipment

Investing in equipment is one of the biggest expenses when you’re opening an auto repair shop. People count on auto repair shops to fix complex problems with skilled technicians and professional equipment, so you have to make sure you have all the equipment you need to operate as a professional shop.

A diagnostic machine helps you figure out what’s wrong with customers’ vehicles, so you can fix the problem without guesswork. These machines usually cost anywhere from $5,000 to $10,000, but they’re an absolute necessity because many shops offer free diagnostics.

Car lifts are also great to have because they allow you to get underneath a car with plenty of space, which makes it easier to find and fix problems. Each lift typically costs somewhere in the neighborhood of $5,000. One lift per car is ideal, but even having a car lift or two at your shop will make all the difference.

Last but not least, you need to make sure you’ve got a set of high-quality specialty tools. When you’re running a shop, you can’t get by with the cheap tools you might normally use. Now that you’re running a shop, invest $10,000 or $15,000 in getting a set of specialty tools to make your life easier.

Insurance, Bookkeeping Software, & Marketing

Once you’ve got all the tangible stuff figured out, there’s some administrative business to take care of. Start by making sure you have insurance to protect your shop and your customers. Generally speaking, auto repair shops should have general liability insurance, errors and omissions, and commercial property insurance. You can get a quote to learn more about the cost of these insurance policies.

Shop software can also be a big help when you’re running an auto shop. From bookkeeping software to scheduling software and more, you can spend anywhere from a few hundred bucks to thousands of dollars on software.

Marketing is also something that most start-up businesses will need to pay for. These days, local marketing tactics work best for most automotive repair shops. Local marketing tactics can be narrowed down to mailing lists, billboard advertisements, local SEO, Google My Business, and local Google search ads. Typically, however, marketing is not an auto shop owner’s forte. That’s why it’s typically best to hire a professional automotive marketing and consulting firm.

Tallying It Up

As you might have guessed, there’s a lot that goes into starting an auto repair shop. Between forming a business, renting a space, getting the equipment you need, and investing in insurance and software, you can expect to spend about $50,000 to start an auto repair shop.

Are you considering starting an auto repair shop? Make sure you consider all the costs so you can get everything you need to succeed.

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