starting an automotive repair shop business on a tight budget 1
It can be done, even today you can still start an auto shop on a shoestring.You'll need a bit of guts to do it though!
A keen young mechanic sometimes has the common sense and ability to be an exceptional workshop owner, but may lack the money to get started in their own automotive business, so I am going to show how it can be done on a shoestring. It is not easy starting with less money than you need without being smart about the auto shop business.
Leasing renting buying automotive workshop premises.
Commercial real estate agents begin the day by eating other people's babies!
OK maybe that's a bit extreme, but don't trust them to show you the shortcomings in your selection of premises, or even to mention that the place is under water most of the winter or any other problems for that matter. Speak to business neighbors first when you look at leasing premises and ask them why the previous tenant left and about any other problems such as the landlord being a nutter! Make sure the premises complies with all licencing and regulations for your business, and to this end, consider taking over a premises that already is a workshop that complies is not a bad idea. Many auto workshops close when the owner retires and he may even own the premises in which case you will have an understanding landlord, and maybe he will still have auto lifts installed and some equipment you can lease from him or purchase.
Auto lifts 2 post.
Ammco brake lathe.
Starting small you will need to look ahead. It is fine to begin business with just one hoist in a small cheap shop premises, but you need to have already planned your next move to a larger place with better facilities even before you get started.
Deciding on the length of
your first lease is made easier by having a simple business plan based
on the amount of profit you can make over a set time. This is like all
parts of your business plan only a guess, but if you are on a small
budget, get this one as right as you can because you have nowhere to go
but forward then!
Get real estate agents to start looking
for bigger premises even before you settle in to your first auto shop,
giving yourself as much time as possible to find the best place for
your growing business and some time for you to see what differences can
or need be made to buildings available and know how to choose the best
when you are ready to move up.
A well run small workshops should grow rapidly but you will initially need to farm as much money from repairs back in to the business for more equipment and wages for a part time mechanic. You need to work long hours initially and hoard money for later expansion.
Many young couples start out this way with the other partner working a job to keep them, while doing the books for the new business and using any spare time and money to help grow the business.
Live frugally in this time, cover your mistakes with more hard work and you will grow fast.
By the time you have run out of space, you must have accumulated enough money to move to your new larger premises, and lease or buy more equipment for new profit centers.
When you have more space you will be able to make as many new profit centers as you can handle with your new mechanic and
yourself.At this time you should lease new equipment, and take all the
free training available when you lease a new machine such as a brake
You will need to employ a full time mechanic by now if
you haven't already, and he or she will need to be very well paid if
you want to make good profit from their work. Only people who are
comfortable and happy will be prepared to help you get your dream
completed, and part of your dream must include the mechanic getting his
dream as well. As I grew my first auto shop I promoted my best
mechanics off the workshop floor and in to management. You will find
the best mechanics are ambitious like you are, but will have their own
dreams and shortcomings in achieving them. Train every one of your
staff yourself. Even if this means doing a few part time courses on
people management and motivating others, if you can train staff
yourself, you will get everything nicely uniform and suitable for you.
It is your business after all, and should have your stamp all over it.
This way, business is always fun.
If you can help all your
staff grow as you do, and achieve their goals you will have a bullet
proof way of keeping your staff motivated.
overpay your staff? Because it is an expense directly related to your
profit and business well-being, and the extra pay attracts the right
working out the cost of an employee in a workshop, an average
mechanic's pay doubled is approximately what it will cost to employ and
look after just 1 mechanic. That will allow for a decent pay, all taxes
and health insurance to ensure he feels safe and does not want or need
to move on.
If you do not plan ahead to employ another mechanic you are not getting the gist of what I am trying to teach here, which is that if you are short of money, it is crucial that you get it ALL right the first time, because you are vulnerable as hell until you have money in the bank. Good money in the bank in fact, like quite a few thousand dollars, and a good mechanic will produce a good profit to help you achieve the necessary expansion quickly.
Always employ your mechanics by offering job security after a trial period, better than average wages and full health benefits.
Never employ a mechanic on a share of output basis unless you want to lose your reputation overnight. It is quality that provides the bones of a good business, so everyone has to be on the quality page with you. High throughput may suit your wallet and your mechanic's income as well, but only top quality work will keep your customers.
Your mechanic, (see link above in blue) needs to be exceptional. Not average or good, but a well trained troubleshooter with top analytical skills who is able to run a brake lathe, use an airconditioner recharge station, understand workshop equipment thoroughly, be able to weld, fabricate and innovate. You must start looking for a mechanic 6 months or more in advance, as they are of huge importance to growing your business.
Auto lifts and other essentials.
Look online and in the local paper to find a workshop that is going out of business that has late model quality equipment for sale.
This is easier than it seems, as workshops cease to trade like any business and often you can buy all the hard to get tools and convenient equipment that would take years to collect and cost a small fortune new, for a few hundred dollars.
Buy a quality auto hoist, even if it is very old, if it complies with current safety regulations and has always been regularly serviced, goes up and down quietly when loaded it will be better than a new cheap one and you will buy it for a few hundred dollars. If in doubt you can go to one of the established used auto shop equipment suppliers, such as AllStates in America to buy lifts and other quality brand name equipment that has been professionally rebuilt or refurbished for a fraction of new price, remembering that some older equipment was superb and has probably been updated.I know Bob at Allstates, he is a pro and knows auto shop equipment better than anyone else I know. Here is his website, it will educate you on auto shop equipment .
Things to consider when buying auto lifts or hoists.
Do your research carefully. Some quality hoists are screw type and wind their way up and down on a worm and nut. These nuts can cost $300 dollars or more each and there are 2 of them, one on each side. There is a wear limit that can be seen through a small hole in the lift post where you can inspect the nut for wear, The wear limit is indicated by the position of the nut. Examine the nut for wear. Genuine replacement nuts will last for about 5 to 10 years depending on use.
Other hoists will be driven by a motor and hydraulic pump pushing either one or two large hydraulic rams. Make sure the hoist operates without leaking oil, and is quiet when lifting. Again regular service is important, so unless you are an expert, take careful notice of the lift service intervals which will be on a sticker stuck on the hoist post, it is usually placed at eye height on the post that has the motor mounted on it. It will be date stamped.If this stamp is out of date, in most countries and states it is deemed to be unsafe until inspected and serviced.
As cables are often used with hydraulics on some hoists or lifts, always check to see when they were last replaced and their current condition. They cost a few hundred dollars to replace. Look at spending up to $800 to have them changed including cables and other support hardware.
If you already have work coming in from customers you have made, ensure that they do the heavy lifting when it comes to promoting and spreading the good word about your business.
Advertising is expensive and each new customer costs a lot of money to find, so don't waste a cent of your advertising budget.
You may not have more than a few dollars available for advertising, perhaps enough for a few fliers and a small add in the local newspaper, make these little adds as targeted as possible and unusual.Make sure you offer something valuable for free, such as a free automatic transmission inspection.
You have another way to tackle this, especially if you already have some customers.
Over deliver. You know how to do this and it should be your constant focus. You must donate some extra time on each repair to add value. It is way cheaper to put time in when you are short of money and as a workshop you have many opportunities to use this very powerful marketing method of using time instead of money for advertising.
The tool to use here is one that comes from the higher moral values you wish to promote and is the one reason your customer will never leave you if you follow my lead.
Learn empathy. learn about what is important to your customer and concentrate on their wants and needs. For example, you may notice the auto has children's toys on the floor, and that the brakes need adjusting. It's a small job, so do it for free. This lets your customer know that their family is now in safe hands that are concerned about real things, like the safety of their children.
Give some of your time away to your customer service from that part of yourself that has empathy and you can't go wrong. If you have a female friend, ask her about her ideas on empathy. Women are often well versed in empathy and will explain to you! They have experienced being treated like an idiot by auto shops, and will tell you how they would feel if treated with respect and empathy when they have their auto serviced.
My female customers were loyal and also responsible for a mass of new customers by talking about the service they received to their girlfriends who then booked their cars in for repairs and services.
If you get this right, your customers will send you new customers by word of mouth advertising for free and with great enthusiasm. I know this works, I built my first workshop using this method alone. I discovered that one happy customer produced another 6. That is a hell of a lot of customers for free!
If you keep producing top work and treating each customer like gold, each one of them will bring in another 6 customers until your customers have to make an appointment 3 weeks in advance to get a car serviced at your auto shop. Time for a part time mechanic to be added to your staff perhaps?
Be warned! You can't fake empathy, you need to feel it from within. It is the easiest way to gain trust and a valid honest way to go about your daily business.
If empathy is part of your business approach, your opposition will be eating your dust.
Choose your work very carefully.
With many thousands of customer encounters under your belt, choosing which repairs to do and what to charge for them is a piece of cake, but like any financial transaction, trust is a large factor.
A workshop owner can play god, and I ALWAYS have, because I love the freedom to do so and the way it effects my staff and business in general. This is a part of the job that I love more than I should, as one can be judge and jury on what and who gets through the front door and who gets sent elsewhere. Get this right and you have a higher profit margin than most, the best clientele you could have and an easy business to run.
It is always easy to say choose your work carefully when you have plenty of it, but this is something you learn about quickly on the job in your own workshop, as taking on the wrong jobs is a quick way to lose your money chasing a problem that you should have sent elsewhere. I believe this is crucial for start up repair businesses as you do not have the money to waste and this can make or break you.
For example, leave modified cars alone, old bombs that the owners want to patch up cheaply, your friends and families cars, (unless they are good paying customers like everyone else!) Rude uncaring customers need to be thinned out as soon as you have enough work, as do all lousy payers, people who waste your time and others who use time and take your focus off building a top customer data base.
As your customer base grows, keep records of all the history of repairs and customers. The simple way is to use a workshop report and invoice sheet in triplicate right from the beginning. This forms the basis of the customer data base you are building to support your expansion.
Base your business ideas around the report, as it will have your customers name and address, car make and model as well as the work carried out on the car. I use this sheet to gain more loyalty from the customer, as I include a complete and detailed list of parts and labor used, and a free report on the car's faults, as well as service and consumables that will be needed later. I always do at least one job free and include "With our compliments" alongside the item.
Customers feel very safe when you give them a detailed report, as it shows you are professional and understand that your customer needs to know what you have replaced and why. In the report I include the condition of the parts that needed replacement. " Serviceable meaning that it had not caused damage to the car, "Unserviceable" meaning it had been left too long without replacement so it has potential to cause damage.
This is another marketing opportunity with new customers. If you get a vehicle for repair that is well overdue an oil change, list the oil and filter as "unserviceable," in other words, stating that the car engine has been put at risk by the condition of the oil. The same applies to brakes, exhaust pipe and mufflers, brake pads and discs as well as other consumables. Often this is proof that his old workshop was useless and he will appreciate being told so politely by the "unservicable!" on the report, which does not directly call the customer a fool, but does show him it is time to change auto shops and come to you from now on.
With experience over many years, I have found that if you go about your business concentrating on saving your customer money and keeping them safe by ensuring you are both on the same page in keeping the vehicle in tip top condition, you will make good money from your workshop business and your customer's car will last longer and be safer to drive.
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