If you have worked at a technician for a shop, you probably have a good idea of what tools and equipment you will need to open a shop. But to save you time in research, we here at ProRevTech have compiled a typical “startup cost” list for you to include in your startup projections for opening up your shop.
Paying for this equipment can come from several sources. Perhaps you have been saving away money for the moment you leap, and you can pay cash for everything. Alternatively, you can be frugal and buy used equipment off of Facebook and Craigslist or even from equipment auctions. You could make an asset purchase from a shop that is looking to close up operations, or you can finance or lease all of your equipment.
Expenses for Opening a Mechanic Shop
Here is your “day one” list of equipment that you will need:
You can undoubtedly outsource the kind of work that you do not have equipment for, such as alignments, but it will be way more profitable for you to bring all this equipment in house eventually.
Equipment like brake lathes and vehicle lifts will last for years, so purchasing used equipment is always a great option. Depending on the services you expect to provide, furnish your shop with the right equipment to do the job efficiently and profitably.
So What Does It Really Cost in Dollars to Open Your Auto Repair Shop?
Not every mechanic shop performs every type of service, so these are basic guidelines on what you can expect to spend to get an auto repair shop up and running:
Insurance – $ 4,000/year on average
Essential tools – $ 15,000- $20,000
Lifts (installed) – $ 4,000 each. Lifts by themselves are around $1800-$2,500 each.
Diagnostic machines/equipment – $ 5,000 – $ 10,000; this is partially dependent on services provided by the scanner. Some offer full diagnostics while the low-end models simply pull OBDII fault codes.
Rent – this can vary widely, depending on the size of the shop, location, and even geographic area, but you certainly want to be convenient to your expected customer base.
If you plan to specialize in what services you offer, your needs may vary.
Other Expenses to Calculate
There are many other costs to factor into the cost of opening your mechanic shop:
Business permits – find out if your locality requires permits for your operation and any inspections that may be required. Most of the time, these will be one time or annual costs. Typically these are only a couple of hundred dollars.
Labor/Payroll – If you plan on being the sole technician, the chances are that you will need help with the front office accounting and bookkeeping. Don’t forget to include the cost (and value) of hiring additional manpower to keep the shop running efficiently, even if it’s just part-time. To figure salaries in your area, you can use
Certifications – Many shops advertise that their mechanics are ASE-certified. This certification may not be necessary initially, but gaining and keeping up certifications could add to your perceived value to customers.
Marketing- You have to get the word out for the business to survive. To do business today, you need a website. You need to consider running Google ads, and you may also want to consider traditional Marketing methods such as coupon mailings. A quality website could run between $2,500 to $5,000 for a high-quality custom WordPress website. Google ads can run as little as $500/month on up to whatever you are willing to spend each month.
Word of mouth is one of your most valuable marketing tools, but it will be a slow build and is won one customer at a time. Referrals from satisfied customers will bring their friends and family members to your shop.
Emergency Cash Reserves
No matter how well you plan, there will be hiccups. You may have customer payment issues, employee illnesses, weather events that take your business offline vacation time, and slow periods. When things get slow, you will need to tap into your reserves. Experts say to have at least one to two months of overhead expenses in reserves to cover any slowdowns or unexpected setbacks.
We have only scratched the surface here. For a full breakdown of startup costs for your shop along with worksheets and training, consider purchasing ProRevTechs three-part training on how to open and successfully run your own auto repair shop. To get started, click here.