The age of the average automobile has steadily increased over the last few decades, reaching a peak mean age of over 10 years. With cars lasting longer than ever before, they need more service visits, resulting in an increased demand for repair service shops. For entrepreneurs that understand how to start a successful auto shop, it can be a very lucrative venture.

The planning process that precedes the opening of a new auto repair shop involves a few crucial steps. Once you fully understand the keys to opening a new business, you can guide your shop down the path of success from the moment it opens. The first step is working through the various legal requirements you need to complete before you can open for business. Next, you’ll need to plan for the various start-up costs, get your business Automotive Service Excellence (ASE) certified, and finally, pick a payment processing vendor.

Identifying the Scope of your Business and Completing Related Legal Processes

One of the most important steps to opening a successful business is working through the required legal processes. Opening a business requires quite a bit of red tape; being prepared beforehand makes the initial tasks of opening a business easier. To avoid mistakes during the bureaucratic processes of starting a business, it’s recommended you hire a lawyer with experience in the field.

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You’ll need to decide the type of business you’ll be opening. Franchising with an existing company requires start-up fees that can run up to $400,000 as well as monthly royalty payments. These make the barrier to entry high, but for those that can afford these added fees the benefit is corporate marketing and a recognizable brand name. Independent shops require less initial funding but will need to handle advertising and marketing alone. Additionally, you’ll need to decide between a limited liability C-corporation or a pass-through S-corporation, which have different tax and liability implications.

Other legal steps you’ll have to go through in order to start a new business include registering your name, purchasing a business permit, and filing for local government permits that are required specifically for auto repair shops. Then you’ll apply for a sales tax license through your state government as well as apply for a federal Employer Identification Number (EIN).

Choose a Specialization for Your Shop

The next step in opening a new business is to decide whether to become certified specialists. You can either offer general services like oil changes, tire repair, and tune-ups, or you can cater your business towards one specific type of auto repairs.

If you decide on general services, you will be able to capture a wide segment of the auto repair market. However, you may need to purchase a wider assortment of tools, adding to the start-up costs. Specialization makes it possible for your business to excel in a specific niche and gives you the ability to claim to be the best at a specific type of repair. The downside is that you may miss out on profits from other services and that a single specialization may not have enough demand to support an entire auto repair business.

Plan for Various Start-Up Costs

If you are starting a new business from scratch, you’ll need plan for all the associated start-up costs. Some of these costs include buying or renting property, building out your shop, and purchasing the required equipment and tools for business. You should also purchase insurance to protect yourself from liability. Other cost factors to keep in mind include legal counsel and the cost of specialization, if applicable. Even if you are the only mechanic at your shop, you’ll likely need at least one other employee to interface with customers and answer phones.

Partner With A Payment Processing Vendor

It is expected that today’s businesses be able to accept a variety of payment methods. That means your business needs to work with a payment processor that makes it easy to accept everything from debit cards and credit cards to more innovative options like mobile-based smartphone payment apps. You can save time and labor working with a payment processor that verifies payment information with credit companies and banks. Shop around to find a vendor that caters towards small businesses by providing exceptional service and reasonable rates.

Features to look for in a payment processor include next-day funding, state-of-the-art technology, included equipment, and a high level of customer service. The best payment processors offer state-of-the-art technology, reasonable processing fees, and free equipment to get started. A major challenge facing new businesses is achieving a positive profit margin. Finding the right payment processor can save you money and allow you to take a step towards maintaining a profitable bottom line.


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