How to Open an Auto Repair Shop in California
There is much more to opening an auto repair shop in California than registering the business and opening your doors for your customers. You will follow some steps for your business to grow and succeed. Here are a few tips on how to open an auto repair shop in California.
Plan Your Business
Like any other business, you will need a business plan when opening an auto repair shop. Map out the business specifics that will guide you. Will you buy a business that is already established, or will you start from the ground? The good thing about buying an already established business is that it comes with equipment and potential clients. If you decide to start from scratch, you get to determine precisely how you want your business to look. When starting from scratch, consider things like:
- The startup and ongoing costs: These include the cost of permits, insurance, rent, labor, tools and equipment, and overhead and supply.
- Your target market: Your clients are people with broken and serviceable vehicles. Work on getting clients with ongoing service contracts, rather than one-time customers who only visit when you are giving a discount.
- How much you will charge customers: Research around and see what other mechanic shops near you are charging.
- The name of your business: Find a good name for your business and register.
Planning your business is among the key elements to consider when thinking of how to open an auto repair shop in California.
Think of Funding
Something else to think about is the cost of starting the business and how you will fund it. Here are the things to consider when it comes to funding:
- Cost of rent: You will need to have rent for at least six months as your business picks up.
- Cost of equipment: For example, major equipment like a mechanic hydraulic lift and small tools like a torque stick.
- Staff salaries
- Source of funding. You can either apply for a loan from your bank, a small business lender or from your family. If you borrow from family and friends, put it in writing with repayment terms clearly stated. This is to avoid putting a strain on your relationship if you face challenges paying the loan in time.
Think of Location
Location is critical when it comes to auto repair shops. People start on a small scale, operating from their garage and expanding as they grow. Of course, if you are thinking of this, you have to check the neighborhood guidelines and your city’s restrictions about running a business from home. As you choose a location, think of somewhere convenient to a main road or highway. You may be tempted to have your shop in less busy locations since rent is likely cheap. However, remember that you may not get many customers. Considering that towing services are charged per mile, a customer is expected to choose an auto repair shop that is near. You also have to choose a location that comfortably accommodates your administrative needs and a waiting room for customers. You should factor in the location as it plays a significant role in acquiring customers when thinking of how to open an auto repair shop in California.
Obtain Necessary Permits and Licenses
Another tip on how to open an auto repair shop in California is by getting the necessary permits to run your business. The necessary permits and licenses include:
- Both local and state business licensing requirements: You will need a car repair shop license for your business. For any auto repair shop to operate, you have to comply with all state and federal environmental regulations.
- An Occupancy Certificate (CO): This is to confirm that you have met zoning laws, building codes, and government regulations. When you lease a garage, the landlord obtains a CO, so confirm they have it before leasing. After every major renovation, a new CO is issued. If you build the garage, then you have to obtain the CO from your local government. Ensure you comply with all zoning requirements and building codes when constructing your garage.
Get a Business Lawyer
There are many reasons why you will need a lawyer when opening your auto repair shop. First, they help to determine which business structure is ideal for you. It could be a sole proprietorship, a Limited Liability Company (LLC), or a partnership. Since all these business structures have different tax obligations and setup costs, a lawyer will help you decide what suits you. Business attorneys are also important when it comes to drafting contracts between you and your employees, customers, vendors, etc. They make sure to capture all the important details that protect your business. Another benefit of hiring a business lawyer is that they reduce exposure from lawsuits. Your employee may sue you for negligence if there is an accident at work, or a customer may sue you if a problem occurs with their vehicle after being repaired at your shop. The business attorney ensures that you have followed all protocol that reduces the chances of being sued.
Consider Whether to Specialize or Not
As you think of how to open an auto repair shop in California, highlight the scope of services you intend to offer. Are you only going to specialize in services like tire repairs and oil changes, or will you cover a comprehensive range of repairs? You can specialize in restoring old cars or repairs for specific car types. One advantage of specializing is that you create a name for yourself where people know you with the best garage when they need a specific service. The downside is that you will lose out on other businesses. Before you specialize, do thorough market research, ensuring that there is a good market for the service you want to offer.
Open a Business Account and Get a Credit Card
Open a business account separate from your personal account. When you mix the two, you put your personal assets like your car, home, and other valuables at risk in case you are sued. When you separate, it becomes easier to account for expenses and file taxes related to business. The same applies to a credit card. You cannot be able to account for your business expenditure if you are using the same credit card for business and personal expenses. Separating also helps you build your business’s credit score. Should you be in need of funding, you can easily get it.
Get Business Insurance
Something else to consider when thinking of how to open an auto repair shop in California is getting insurance. This is a requirement, just like permits and licenses. Getting business insurance protects your company from losses like flood damage or fire. There are many different types of insurance policies that you can take to cover different risks. When starting, you may not be sure of the kind of risks you are likely to run into. Therefore, consider general liability insurance, which covers the common basic needs like personal injury and property damage.
Another insurance policy that you may need is worker’s compensation insurance. Apart from the fact that this is a state requirement for anyone with employees, working at an auto repair shop also comes with risks. In the event the employee is injured at the workplace, the worker’s compensation protects you from lawsuits and covers the employee’s damages. Note that the cost of insurance policies varies, depending on the property value, the shop’s location, and equipment. You can request quotes from multiple insurance companies and compare the costs to see which is favorable.
Establish an Online Presence
With the age of the internet, every business should have an online presence. If your business cannot be found online, especially for the younger generation, then you might as well not be existing. This is important when thinking of how to open an auto repair shop in California. Put some time into creating a website for your shop. Any legitimate business, whether big or small, should have a website. The first thing that people do when they hear about your shop is searching you online. Most likely, a customer will doubt your services if they cannot find you online. Take advantage of website builder tools that are found online and create a website.
The next thing you will want to do is create social media pages. Platforms like Facebook, Instagram, and Twitter are essential in putting your name out there, and signing up is free. Also, you do not have to use all the sites. Figure out which works best for you and focus on it. You can post informative content. For example, for a farmer to ensure they have reliable tractors, what maintenance tips they should use. You need to regularly post your content because if the site is dormant, people may assume you shut down the business. Create an environment where people can see you as an expert in the industry.
Invest in Advertising
As you think of how to open an auto repair shop in California, think of how you will advertise your business. You can plan for a grand opening where you give a bracelet key holder to any local who stops by on that day. Accompany it with your business card. Have a special discount or free service for anyone who gets their car repaired on that day. As your business grows, you will still need to keep advertising to attract new customers. Send regular emails to your customers with tips on maintaining their cars at home or informing them of a new service you have introduced. You can also send personalized deals to loyal customers like 20% off pressure washing for their car or a free tire repair with the purchase of another service.
To attract more customers, you will want to differentiate your auto repair shop from other shops. Think of a service that you can offer your customers that most shops do not. For example, you may position your shop as the only one that can swap power for boats into a car if they are of the right specifications. You can also narrow it down by focusing on specific car models like Toyotas and Hondas. However, note that this may limit the number of customers you are getting.
Network with Other Businesses
For small businesses, it is easy to create a mutually beneficial relationship with each other. It would be best to partner with a local taxi company or car rental company to offer your services at a reduced fee for regular repair and maintenance. You can also partner with a local food joint where your customers can have a meal at the food joints at a discount. In return, the food joint can help advertise your business. You get to earn a good reputation as you do this. Look at all the small businesses around your neighborhood and explore opportunities to expand your business.
Form an Alliance with Car Dealerships
Consider approaching a certified broker dealer and request them to refer customers to you. In return, you also advertise their business to your customers interested in buying new cars. When you make such a partnership, do not oversell your services then underdeliver. The dealership broker is putting their business in the line by recommending customers to you. If you under-deliver, customers will blame them. You can even print a brochure with your services like auto ac repair, tire repair, and oil changes. Only advertise the services that you can deliver. A customer does not want to waste time and fuel coming to your auto repair shop only to be turned back.
Hire the Right Employees
Running an auto repair shop by yourself can be challenging. You have to juggle between repairs and administrative tasks, which will be hectic. Consider hiring the right employees who can help you run the business. Be ready to cover costs like their salaries, insurance, and paid time off. Therefore, hire only the necessary number.
As you think about how to open an auto repair shop in California, consider the above tips. That way, you can know whether this is something for you and if you will manage running the business.