Every car will require the attention of a mechanic from time to time. No matter how well-designed the vehicle is it will definitely require some form of repair or servicing at one point or the other.
The number of car owners that require the services of mechanics is increasing every day.
If you are mechanically inclined and have the ability to troubleshoot cars, you can take advantage of the flourishing car business to earn money with a car repair service.
Below are some of the things that you have to do to start your own car repair service.
- How do I Start my Own Auto Shop?
- Ways for a Mechanic to Make Money on the Side?
- What are the Benefits of Being an Auto Repair Shop Owner?
- How Much Does the Average Auto Repair Shop Make?
- What is the Most Profitable Repair Service?
- How to Make Your Auto Repair Shop Profitable
- How to Grow Your Auto Repair Business
How do I Start my Own Auto Shop
Determine Your Specialization
There are different brands as well as models of vehicles in the market. Vehicle owners also have a variety of needs. In order to earn money with a car repair service, it is important to choose the type of repair service that you will provide.
Read Also: Using Computer Repair Services to Make Money
You can choose to build a repair service that will focus on brake and exhaust system repair and maintenance, basic tune-ups, body works or engine rebuild.
If you plan to have a more comprehensive workshop, you will have to hire other mechanics who will handle specific tasks.
Prepare A Business Plan
A business plan is an important roadmap that will enable you to clearly see the possibilities of the business. It will enable you to allocate resources properly and to focus on important areas.
You will also be able to envisage potential problems and make preparations for dealing with them.
Write a detailed plan that contains the financial outlay, the number of workers, working hours, possible suppliers, and other details that are essential to the take-off of your new enterprise. A business plan is very crucial if you are planning to take a loan from a bank.
Choose A Good Location
Location is vital when you are starting a car repair business. You should look for a place that is easily accessible for your potential customers. Most people may not want to drive several miles just to fix a little problem with their cars.
It should also have enough space for a workshop, tool shed, waiting area, office, and restrooms. If you have a garage that meets most of these conditions, it can be used as your startup location.
It is important to have an office where you can keep detailed records about your clients and the jobs that you do for them. A well organized office will give you a good image and it will also help you to work more efficiently. A typical office will have a PC, telephone, cabinets and other necessary office materials.
A car repair service can be a very lucrative business if you handle it well. Your ability to earn money with a car repair service is dependent on the number of customers that you have.
This is why you have to ensure that your business is properly marketed. You can print fliers and distribute it to potential customers in your local area. You can also place adverts in newspapers.
Hire Your Staff
Once you’ve determined what you want your initial employee team to look like, get started on those interviews.
Make sure you hire people who will help you meet the goals and objectives outlined in your business plan, including top-quality work and unbeatable customer service.
Market Your Shop
This one should also be outlined in your business plan. Hit up local papers to advertise the opening of your shop as well as any promotions you plan to run during your kickoff.
On top of that, create social media pages to help connect with the local community, and consider sponsoring advertisements on Facebook. Get in touch with local towing companies and other businesses that might be willing to partner up with you.
Ways for a Mechanic to Make Money on the Side?
For most auto repair shops, the daily focus is on fixing cars, not generating aggressive marketing plans. If you have happy customers who rely on your services, you may already be inundated with repeat work and referrals.
After all, offering quality work at a fair price is certainly a recipe for repeat business and referrals. However, the auto repair industry is notoriously volatile.
When the economy weakens, even faithful customers will put off bringing in their vehicles for service. Because of this, it’s a smart idea for auto repair shop owners to prepare for normal ebbs and flows by developing strategies for generating more cash when it’s needed.
Selling Customers’ Cars on Consignment
Thanks to sites like eBay and Craigslist, selling a vehicle has become much easier in recent years. The days of slapping a “for sale” sign in the back window of a used car and hoping for the best are over. For auto repair shops, online car selling is a potential gold mine.
Many consumers who are shopping for used vehicles prefer to buy one from a reputable business such as a repair shop with a strong track record of being honest and thorough.
Likewise, customers with aging cars can benefit from selling through a business with a recognized name. When a customer decides against repairing their vehicle, it’s always a smart idea to learn what they plan to do.
While some may continue to shop for lesser-priced service, others may be considering trading in their car for something newer.
By giving them a proposal to sell the car on their behalf, you can potentially make a percentage of the sale while offering an additional service to a loyal customer.
Start a Subscription Plan
Regular maintenance and occasional repairs are inevitable expenses that need to be factored into the total cost of vehicle ownership.
A growing number of auto repair shops are now offering subscription plans for service and maintenance for their customers to keep these costs consistent throughout the year.
Subscription management solutions like Zuora can be used to create a scheduled plan that enables customers to pay a set amount each month for keeping their vehicle running smoothly yearlong.
It’s a convenient way for customers to budget for repair service while also serving as a strategy for keeping a percentage of your income consistent.
Offer a Seasonal Promotion
There is a cyclical nature to many repairs. Customers want tune-ups before taking summer road trips and windshield wiper blades replaced before the rainy season sets in.
Creating regular promotions around these seasonal repairs can generate new customers and more sales from existing customers.
Of course, it’s easy enough to try and upsell a customer on a seasonal promotion when they’re already in your shop for service.
However, real measurable cash flow can be made when you reach out to existing customers via email blasts and to prospective customers via social media and direct mail.
By running regular promotions, you will over time train customers to seek out the discounts, enabling you to begin to plan on regular upticks in sales that you can count on when they are offered.
Seminars
You might be surprised by how many of your customers don’t know how to do simple maintenance tasks like checking their car engine’s oil level or the air pressure in their tires.
A value-added service that you can offer that can get customers in your shop and scheduling appointments is to offer an informational seminar where you share your expertise and knowledge.
Consider holding a one hour session where you teach specific skills and also allow time for your customers to ask questions.
Thank them for attending by offering them a coupon for a future service, and you’ll probably book at least a couple of new service appointments by spending this hour of your time with them.
Because of your outreach, they will also think of you the next time they need service.
Form Strategic Alliances
Auto repair shops are local businesses that rely on local customers. This means you share the same target market as many of the other business owners in your community.
Partnering with non-competing businesses is a very effective way to leverage word-of-mouth marketing.
The key to this strategy is to find businesses that offer the same quality of work and customer service.
When you are focused on providing a high level of service, you don’t want to take the risk of referring one of your customers to a business with a less than stellar reputation.
However, when you do find businesses aligned with your goals, objectives and service level, it can be a big win-win for all involved.
Ask for Reviews from Satisfied Customers
Because so many customers have had bad experiences with auto repair shops, positive online reviews can be one of the best ways to generate more business.
Like with traditional word-of-mouth marketing, online reviews help potential customers feel comfortable about taking their vehicle to your shop. The more reviews that are published, the more comfortable they will feel.
If you have happy customers who rave about your service when they drive out of your shop, encourage them to leave positive feedback on Yelp, Angie’s List and other review sites.
There’s a secondary benefit to generating lots of positive reviews, too. They will help you move up in search engine rankings, making your business more visible to potential customers who are researching online for a new auto repair shop.
What are the Benefits of Being an Auto Repair Shop Owner?
If you are still wondering whether owning an auto repair shop is profitable, well take a look at this statistics.
There were 32 million cars, 4.1 million LGVs, half a million HGVs, 1.3 million motorcycles, 0.15 buses and 0.77 million other vehicles licensed for use at the end of September 2019.
Research also suggests that the public is willing to part with £21 billion a year to make sure their vehicles stay in tip-top shape. And that UK market value for primary car body repairs is going to increase by 14 percent to £5.43 billion
That’s a lot of vehicles that will need to seek the service of an auto repair shop owner at some point. So how do you benefit from all of this?
1. Flexibility
Car repair shop owners oversee their employees and are in control of growing the business and making sure it is making enough profit. Being your own boss means you have the flexibility to choose your own hours.
But there is a chance these will be long, as you may have to cover for employees if they’re unwell.
2. Good income
The salary of a car repair shop owner can vary depending on how well the business is doing.
But to get an idea, if they own a successful business that is producing a healthy amount of profit, they can expect to earn around £45,000 in the first couple of years, and then around £50,000 after 10 years.
3. Limited shop hours
Most auto repair businesses are only open during business hours Monday to Friday and till midday on Saturday, so you’ll still have time to relax and enjoy yourself when not at work in the evenings and at weekends.
4. Thrive in any economic climate
When the economy is strong, auto repair shops will see plenty of new and used car owners as they often offer maintenance and repairs at lower prices than auto dealerships.
While in tougher markets, drivers are more likely to keep their cars for longer and choose to pay for repairs rather than a new car.
5. Not been replaced by online businesses
Many brick and mortar businesses have struggled to survive in the digital age. Shoppers across the UK can’t resit the ease, vast selection and competitive pricing that online shopping offers.
While you can easily order clothes online and have them arrive at your door the next day, at the moment cars can’t fix themselves, so customers will need to hire someone to come out and help resolve the problem.
How Much Does the Average Auto Repair Shop Make?
According to experts, the average annual salary of an auto body shop owner is $100,000, although this varies by region.
As an auto repair shop owner, you should note that your income is likely to reflect the size and scale of your auto repair business. Business profitability and scale can also affect an auto repair shop owner’s salary even more than time on the job.
However, experience does influence income to some degree. Assuming a mechanic who owns her own shop is operating a business that provides an income on the higher end of the mechanic’s pay scale, one income projection looks like this:
- 1-2 years: $54,753
- 3-4 years: $55,434
- 5-6 years: $56,687
- 7-9 years: $58,312
- 10 or more years: $59,721.
Another study estimated that the median annual salary for all automotive service technicians and mechanics is $39,550 as of May 2017, yet many auto repair owners are more experienced and may be more likely to earn incomes at the top end of the pay scale.
The top 10 percent earn more than $65,430, while the bottom 10 percent earn less than $22,610. The lower end of the pay scale is likely to represent what you could make while learning the trade, rather than what you will make as a shop owner.
An industry report from Body Shop Business Magazine gives the following average annual salaries for auto body shop employees:
- Senior estimator – $59,000
- Painter – $59,000
- Metal Tech – $57,000
- Mechanic – $51,000
- Office Manager – $42,000
- Entry level painter/tech – $32,000
According to the Bureau of Labor Statistics, the average hourly wage for automotive service technicians was $16.88 — approximately $35,000 per year — in 2008.
However, automotive garage owners typically make more than the technicians in their employ, so the upper range of salaries in the automotive repair industry likely represent the salary of an automotive garage owner.
The average salary of an automotive garage owner increases if the shop specializes in a certain type of automotive work.
For example, hot rod shops build custom vehicles for customers or repair existing hot rods. Automotive garage owners might make $100 or more per hour for their work on custom vehicles.
What is the Most Profitable Repair Service?
When starting out as an auto mechanic, you might be wondering which repair services will bring you most profit. Even if you start with rendering few repair services, you want to expand and add more services.
But which services should you focus on to make the most profitable? Some of them are mentioned below.
Diagnostics
As automobiles become more sophisticated and computer-driven, owner-performed diagnostics are becoming a thing of the past. Automobile owners increasingly find they need help to even know what’s wrong with their cars.
Top-of-the-line diagnostic equipment costs a pretty penny. Plus, diagnostics by themselves don’t allow for parts revenue. You’re only charging for your time. But you’re also building your business, and that’s key.
Being able to provide reliable and accurate diagnostics will attract more customers. In other words, offering diagnostic services won’t turn an instant profit, but they will make you more profitable over time.
Determining specific problems and long-lasting solutions will:
- Help retain customers
- Increase overall business
- Lead to a long-term gain in profits
Alignment checks
Do you live in a part of the country where there are extreme seasonal weather changes? If you do, alignment issues may affect your customers. Especially for anyone who changes back and forth between standard tires and snow tires.
With each round of tire changes, there is an increased chance wheels may fall out of alignment which will lead to further wear on tires and steering systems.
Checking and adjusting alignment is a fairly quick procedure. You can offer it on its own or include it as part of a new tire package. And if you’re already rotating tires, it’s an easy add-on service to suggest.
The extra attention to detail will appeal to customers and encourage repeat business.
Suspension
Modern suspension systems are complex and they take a beating day in, day out. Consider everything they endure. Plus, these are not the kinds of repairs the average driver is in any way equipped to handle on their own.
Suspension parts are fairly standard and easy to calculate into a repair quote. So long as you have reliable, affordable access to parts and reasonable labor costs, you should be able to maintain a positive profit margin.
A/C and heating
Drivers in southern states need reliable air conditioning. Drivers in northern states need working heat. Drivers everywhere in between need both.
There will always be a demand for air conditioning and heating maintenance. And if your shop doesn’t offer A/C or heating repair or maintenance, you’re leaving money on the table.
A comfortable driving environment isn’t a luxury when you consider how much time many people spend in their cars.
While some vehicle owners may choose to put off A/C and heating repair for a little while, it’s something most will address as soon as they can afford it.
Oil changes
The oil change is essential car maintenance—even if your car is brand new.
While dedicated oil change businesses do well, there is no shortage of oil change work in full-service auto repair shops.
But immediate profit isn’t the only advantage. You’ll also increase the chances your customers only bring their cars to you. That means you’ll be first in line for any other needed repairs.
Offering a full range of services—from oil changes and inspections to full parts replacement and service—can make you a profitable one-stop-shop.
Brake jobs
Many car parts wear down over time. 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.
As in the case with suspension services, most parts related to brake replacement or repair are standard off-the-shelf items and labor costs are simple to determine.
Brake services are a year-round demand and should be included as part of a regular maintenance schedule leading to greater customer retention and profits.
How to Make Your Auto Repair Shop Profitable
In order to increase the net profit margin of an auto repair shop, there are very particular changes that can transform your business. As with more customers or more cars don’t necessarily mean your business is flourishing.
So what can you do to increase your profit margin and thereby make your business more profitable?
Focus on Customer Loyalty
Consumer behavior in the auto repair sector can be summed up in one word — Trust! Once a shop manages to solve a problem on time, thoroughly, and with civil service, they gain a customer for life.
Price may not matter as much anymore to such a consumer, as several car owners have bad experiences with inattentive service and sloppy work.
Repeat customers are the lifeblood of the net profit margin of your auto repair shop and are especially essential to increase the average profit margin for auto body shops.
If you are not able to retain customers, it often happens that word about sloppy service spreads easily in the neighborhood & this will hurt your auto repair shop profit margin drastically. It is important to take heed of customer response to the business.
Schedule appointments for each customer’s task
Appropriate scheduling ensures that the job can be worked on effectively by the employees and be delivered precisely to customers.
This is undoubtedly one of the most potent ways to increase your garage shop profit margin. Analyze past work and determine the required repair timings.
Once specific tasks are assigned to your workers, you can ensure that work is being done as efficiently as possible.
And you can thus deliver the serviced product to the customer without high waiting times. This approach is a sure-fire method to increase your auto repair shop profit margin.
Invest in the right automobile software
The world runs on computers now, and for a good reason. Our tasks have become far simpler and result in more efficient with the right software.
Research and invest in software to track and organize your sales, and help with accounting and bookkeeping activities.
If you want to explore how to make your auto repair shop profitable, the right software in finance can give you the answers you seek, and exponentially profit your mechanic shop.
5iQ automobile software offers the best way to digitally connect and communicate with your automobile repair shop clients.
It lends a hand by reducing overall labor costs, helps in inspecting vehicles, and assists in boosting profit margins for automobile garage shops.
It further enables swift notifications, current promo discounts, automated text messaging, and conveys real-time status to customers right through the software app.
Now, you can try a free trial which offers you 14 days to test 5iQ software out and get a better experience for how it works for your automobile repair business.
Reducing the labor costs
This is one part of the process that requires a lot of careful thought and planning. It is a tremendous step toward changing the way things work around your shop and increasing your auto repair shop profit margin.
The best way to trim down labor costs is to break down the problem with each car into several specific tasks and assign them to the proper number of staff members.
Remember to take the complexity of the task into consideration. Conduct workshops on how to deal with the more complex tasks, and train your employees to work efficiently.
Consider purchasing certain tools and technologies and reduce manual effort, while factoring in the cost of that machinery.
According to recent studies of the auto sector, the profit margins of labor can be 50% to 65%, as opposed to profit margins on auto parts, which is 20 to 28%.
If you are looking for ways to increase your garage shop profit margin, there is irrefutable evidence that servicing is a genuine money-maker. And further, it is an effective business model.
When labor service happens to be your major product offered, intelligent management of it will profit your mechanic shop.
However, this advice is also applicable to increase the average profit margin for auto body shops, as reducing labor costs involved in inventory control and logistics can be a massive boost to your net profit margin.
Training employees, investing in transport, organizational and maintenance technology, and intelligent labor-management (expressly when dealing with suppliers) can make all the difference.
Rigorous vehicle inspection
We have all had the scenario or experience of a car breaking down just a few days after servicing. And it can be the most irritating feeling in the world. Also, it is a tough time as that the shop absolutely loses that customer’s patronage.
As an owner looking at ways to increase your auto repair shop profit margin, you must ensure that a vehicle is properly inspected for other potential problems before being delivered.
You may explain to the customer if necessary, and increase the time allotted to that car, but it is essential that a car be perfectly operational when it leaves your shop.
It is advisable that you invest in an effective software that can perform digital inspections. And help in sharing the report with the customers to keep them happy at the transparency and prioritization of customer satisfaction of your business.
You may sell this as an extra service to your customers, and give them the understanding to make informed decisions.
Digital vehicle inspections offered as an up-sell can be fruitful to increase the average profit margin for auto body shops too, as these often reveal deeply concealed issues that may require replacement products.
Assessing current expenses
Expenses can be dispersed among several operations big and small without your express notice as part of a routine. And this scenario will hurt your auto repair shop profit margin.
Identify areas in which you are spending money gratuitously. For example, if you are located in a rural area, spending money on online marketing may not be as effective as, say, a referral program that offers discounts to referees.
If you are located in a metropolitan area, maintaining an online presence, promoting through local celebrities and advertising on hoardings or websites frequented by the city denizens can help you establish yourself as a prominent business.
Analyze carefully and quickly cut off ineffective expenditure. Cutting expenses can also increase your auto repair shop profit margin.
How to Grow Your Auto Repair Business
1. Establish a presence online
We are in the Age of the Internet, there are no two ways about it. If you don’t have any sort of online presence, you’re doing your business an injustice.
For many people, especially younger generations, if you can’t be found online you don’t really exist. Put some time into establishing even the most basic website – it’ll get your name out and add to your business’s legitimacy.
You can also use an online service such as Wix to design your website with an easy drag-and-drop user interface, or hire a professional web designer to do it for you!
2. Sharpen up on SEO
Search engine optimization, or SEO, is the practice of improving your website’s ranking on search engine results lists.
For example, when a potential customer searches for ‘affordable auto repair’ on Google, where does your website show up? Is it in the top five results? Top ten?
You might be wondering why SEO is important. Well, data shows that 70% of Google searches result in the ‘searcher’ clicking on a link on the first page. In other words, websites that rank higher are more likely to be clicked on.
3. Connect with local businesses
Small businesses have certain advantages over large corporations, and that includes having an easier time creating mutually beneficial relationships with other local businesses.
For example, you can set up a deal where customers of your auto repair shop can get a discount at local restaurants, and those local restaurants can return the favor by advertising your business.
The other benefit is that you’ll be earning a good reputation with the local community. Take a look at the neighborhood, you may have opportunities to expand your network just around the corner.
4. Encourage customers to leave reviews
There are lots of review websites that you can encourage your customers to visit, but Yelp is the leader when it comes to word-of-mouth feedback on any type of business.
Every month there are more than 120 million Yelp users (between mobile and desktop visits), and nearly 50% of Yelp users in the US earn an income of $100k or more.
So, even if your customers don’t make referrals directly to people they know, a favorable review can still do the trick for your auto repair shop. Bottom line – give your customers a nudge to leave you some nice feedback.
5. Engage with social network communities
Besides making a website, you’ll definitely want to consider setting up social media accounts for your auto repair shop. Hopefully, you’ve at least heard of the top three social media platforms by now: Facebook, Twitter, and Instagram.
The first big reason why you should get involved with social media is it’s absolutely free to sign up, which essentially means free advertising.
It certainly takes effort and skill to get good at it, but there are also the paid advertising options that you can use to automate posts, target specific audiences, and assess campaign effectiveness.
Read Also: 8 Digital Skills You Can Turn into a New Side Hustle
The second big reason to get on social media is that the audience sizes are immense – in the United States alone there are nearly 70 million Twitter users.
While you likely aren’t going to try and reach out to that many people, the point is you’ll want to capitalize on the opportunities to impact potential customers that Twitter and other websites offer for free.
6. Create incentives for referrals
Word of mouth is still the best form of advertisement all around the world, with 92% of consumers saying they trust it above all other forms of advertising.
While that percentage is impressive, telling that to your customers may not be the best way to get them recommending your auto repair shop to their friends.
Incentivize them – have them fill a simple form with their name and telephone number, and tell them that if anybody comes in and mentions your name, they’ll get a discount or a free oil change.
You can be fun and creative, but make sure you focus on the goal: bring in more customers to your auto repair shop!
Conclusion
Instead of getting caught in a roundabout, you can learn how to grow your auto repair business and give your company the edge it needs.
The future of the auto repair industry will doubtlessly have its fair share of potholes and detours, but you can use these tips to tune up your auto repair shop business plan. So buckle up and start your engines, because the ride has only just begun!
