You spend time weighing the pros and cons, even seeking out counsel from close family and friends with small business ownership experience.Â
After months sitting with the idea, you feel good. It’s finally time to move forward. You are ready to build an auto repair shop!
Now comes the hard part: is it financially feasible?
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Below, we walk you through the average cost to open an auto repair shop. With this information, you can determine whether your budget is flexible enough to pull the move off.
Final Check-In Before Considering Auto Repair Shop Costs
Let’s be honest: opening an auto repair shop is a huge financial decision. Once the wheels are in motion and you put significant money down, you will have a hard time changing course.
Due diligence is important in this scenario. So before placing a non-refundable down payment on garage space, answer the following questions for yourself:
- Why am I doing this?Â
- Do I understand the challenges?Â
- Am I willing to work hard?
Here are 5 other things to consider before you commit.
If no reservations come up during this final evaluation, then it’s time to brainstorm next steps. With some baseline estimates, we dive into the average costs to build an auto repair shop.
Cost 1: Garage rental space
Price range: Up to $15,000 per month
Expense type: Recurring
We start off this list with one of the most important costs for you to analyze.
Why is this? Renting out available garage space to run your automotive business will cost you thousands of dollars every month.
Unless you already own property that meets local codes and government regulations, renting a space is your most likely path forward.
In terms of the cost for this space, the range may vary widely. Factors that will influence the price tag on this expense include:
- Marketplace demand
- Location value
- Competing bidsÂ
- Square footageÂ
- Term length on lease
How do each of these considerations factor into the current budget you have for a garage space?Â
If you plan to manage a smaller auto repair shop, then you won’t need additional square footage. That will rule out certain buildings.
If you worry that a more remote setting will prevent you from winning new business and make visits inconvenient for customers, then you may want to rule out the more distant locations.
In terms of the garage layout itself, you have other questions to consider:
- Garage construction options: Once you obtain the garage space, what installations will you need to make?Â
- Insulation options: How much insulation do you need to make your auto repair shop comfortable, sustainable and energy efficient?
- Exterior options: What exterior add-ons do you need? How many sectional doors will you add? Will they be insulated or non-insulated doors? For your garage, will you have easily accessible overhead doors?
- Foundation requirements: Do you need a concrete foundation or lighter foundation design?
Once you feel good about a budget range and garage space logistics, it’s time to consider the administrative costs required to get your business up and running.
Cost 2: Administrative expenses
Anticipated price: $5,000+
Expense type: Startup
To establish your auto repair shop, you will need to have the necessary business insurance and business licenses in place.Â
These administrative costs will include:
- ASE certification for your employeesÂ
- Building codes and permitsÂ
- Insurance coverageÂ
- Miscellaneous administrative fees
Cost 3: Auto repair equipment
Anticipated Price: $8,500+
Expense Type: Startup
Your garage space is prepared and the office regulations are covered. It’s now time to consider the equipment you will need for auto repairs and vehicle maintenance.
By no means is this list exhaustive, as you may require other equipment based on the types of vehicles you work on and other factors. But as an auto repair shop business owner, you will definitely need at least one:
- JackÂ
- Air compressor
- Workbench
- Diagnostics machineÂ
- Hydraulic vehicle liftÂ
- Engine crane
These are just starting points. As your business grows and you accept more cars into your auto repair shop, you will need to purchase additional equipment.
Cost 4: Tools for Technicians
Anticipated Price: $1,500+
Expense Type: Startup
You have settled on the large auto repair equipment that your technicians will use. But your team will need smaller auto tools to operate this technology safely and efficiently.
Larger costs over $100 include:
- Impact wrenchÂ
- Cordless drillÂ
- Jack standÂ
- RampsÂ
- Battery charger and jumper
Cheaper costs under $100 include:
- HammersÂ
- Torque wrenchesÂ
- Ratchet wrenchesÂ
- Oil drip panÂ
- Vice gripsÂ
- Bench viceÂ
- First aid kitsÂ
- GlovesÂ
- BootsÂ
- LED headlamps
As you hire additional technicians, you will need to expand your supply inventory.
Cost 5: Basic Shop Supplies
Anticipated Price: $5,000+
Expense Type: Recurring
Next comes the auto parts and supplies you will need to order from original equipment manufacturers.
To ensure quality service, you will want to invest more money in this area. Cheap motor oil and generic auto parts will create a bad service reputation and poor customer reviews, costing your business long term.
Avoid this headache by seeking out premium options for items like:
- Motor oilÂ
- A/C coolantÂ
- Radiator fluidÂ
- Transmission fluidÂ
- Brake cleaner
Cost 6: Labor Salaries
Anticipated Price: $100,000+
Expense Type: Recurring
Your garage space is stocked with auto repair equipment and you have the necessary service tools. Now it’s time to build out your team.
Even beyond garage space, this expense will cost you the most money annually. For obvious reasons, that makes sense. You can’t successfully operate an auto repair shop without hiring a team of mechanics, technicians and front-office staff.
To plan for this major expense, consider how many employees you will initially hire. For small auto repair shops, you will want at least one technician and front office employee on board. As your business grows, you will add to this team.
When considering annual salaries for a minimum of two employees, you can expect this cost to clear well over $100,000. Within this price tag, you will need to cover compensation, health benefits, payroll taxes and other associated expenses.
While that number may cause heartburn now, it’s important to remember that your business’s profits will help cover recurring labor rates.
Cost 7: Marketing
Anticipated Price: $1,000+ per month
Expense Type: Recurring
Everything is in place. Now it’s time to get out there and win some business.
So where do you start? To attract customers, you will need to run effective marketing campaigns. And those efforts will require an additional recurring cost.
Your budget for marketing options may go towards:
- Organic website and SEO: Hire freelance writers and SEO analysts on a part time basis. These marketing professionals can help you drive traffic by launching your website, targeting organic keywords in content, and publishing blog posts.
- Paid marketing and SEM: Put your new business in front of more potential customers through targeted Google AdWords paid search campaigns.
- Social media: Launch social media accounts across Facebook, Twitter and Instagram. Post relevant daily content highlighting specials, events, customer service highlights, and the unique qualities that set your business apart. Running organic social is free, but you may also consider paid social to generate more impressions and clicks.
- Promotional events: From customer appreciation day to special promotions targeting new customers, you may choose to host regular events in your auto repair shop.
Closing thoughts
Altogether, it will cost you well over $100,000 to open an auto repair shop.
Remember, some of these costs are just initial startup finances required to build an auto repair business. But once your shop is up and running, you will still have recurring costs for labor and other routine expenses to account for. To make routine processes easier, consider investing in AutoLeap, a software for auto repair business. It helps streamline invoicing, ensuring accuracy and efficiency in your accounting process as you manage your shop’s growth
Feeling overwhelmed? This average cost guide isn’t meant to scare you off. Rather, it’s meant to paint a realistic picture of the financial commitment, while highlighting some of the expenses you may not have considered.
If you have a flexible budget in place and the right level of drive to pull it off, opening an auto repair shop is a fulfilling move and potentially lucrative investment. And don’t forget the best part: as your business grows, you will offset many of these costs and reap the financial rewards of your planning and hard work.
Some shops can become very profitable, while others may struggle to generate a profitable return. A shop’s profitability depends on several factors, including:Â
- Customer service experience and reputation
- Shop’s margins for labor and partsÂ
- Time management & technician efficiencyÂ
- Quality of equipment and tools
Mechanic shop size recommendations depend on your individual preferences as a business owner. You will need to factor in your preferred number of shop bays, daily repair orders, total staff and equipment space.
