5 Steps To Starting Your Own Auto Repair Shop

Your strong passion for car repair can be translated into starting your own car repair shop and becoming a boss. If this is your desire, then you’re in the right place. Setting up an auto repair shop might be a daunting process. Think about the legal work, business planning, financing, hiring co-workers, etc. All of these have to be properly put in place for the smooth running of your business. Here is a step-by-step guide on starting your auto repair shop.

Mechanic repairing a car, Mechanic inspects car suspension system and chassis with a torch-lite under the car.
  1. Curate A Business Plan

This is essential for any business, including car repair. Before starting, you must map out a specific plan for your business and consider important factors. Firstly, you need to know your specialty. Do you want to be a general repair and maintenance mechanic, or would you love to focus on a category? Focusing on a category could mean specializing in the repair and maintenance of a particular type of car or a particular repair, (e.g., Engine Repair, Car Body repair, etc.). 

Another thing to consider is your location. Your location is as important as how well your business will do. Your shop will be better off near a market or other accessible and visible places. Your car repair shop shouldn’t be far from your target customers. It should be a place that would support your auto repair marketing strategies

You shouldn’t make this decision in haste; weigh all advantages and disadvantages before settling. Also, consider who your competitors are and how they could affect your business. Don’t forget to draw up a budget for the upfront costs to start the business and how you’d get money to fund its operations. A lot has been said, but none of these should be left out.

  1. Form A Legal Entity

After you draw up a business plan, you should seek to grow into a legal entity. Every state has specific rules for business owners which you must obey. As an auto repair shop, you need to obtain the license issued by your state to car repair shop owners. This is what it means to form a legal entity. You could opt for a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each has different terms of taxation, so you should select the one that suits you. However, it’s often best that you opt for an LLC. You could do this or hire a professional LLC service with a token. An LLC will protect you from personally carrying the costs of damages in case you have a lawsuit.

  1. Get A Reliable Funding Source

A car repair shop might cost a lot. Therefore, it’s better to have a steady and reliable funding source for your business. Your expenses include purchasing equipment, workers’ salaries, insurance coverage, location, building a structure, etc. 

You could decide to take Small Business Administration (SBA) loans. They are government insured and have favorable interest rates and flexible terms. If for a reason, you default in paying the loan bank, they step in and help you to pay a certain amount to reduce your losses. SBA loans can be used to cover funds for equipment purchases, working capital, etc.

  1. Open A Business Bank and Credit Account

You should ensure to separate your personal account from your business account. This is to prevent the risks of losing your personal assets peradventure your business gets sued or in case of bankruptcy. Having a dedicated business account would form a distinction between business funds and personal funds. In addition, you’d be setting yourself up for better interest rates, good credit history, and so on with a dedicated business account. This would come in handy for you when you need money in the future. 

  1. Hire The Best Hands

You should know that you can’t work alone. Only one person can’t serve as the mechanic and work as the receptionist, accountant, cleaner, and so on. Therefore, you need the help of additional staff to keep your auto repair shop running. Depending on the flow of work, you might also need to employ other mechanics you can work with. However, the focus isn’t just on having many hands on deck. You should also be intentional about hiring the best hands. Ensure that only qualified people with the necessary work ethics are employed in your auto repair shop to give your customers the best experience.


How much attention you put into your business setup says a lot about your growth rate. Starting an auto repair shop might be difficult and demanding, but it’s worth it. Put in the necessary effort and ensure that the listed steps are carefully taken. Do this and watch your business sprout rapidly.

Katherine E. Ackerman

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