How to Create an Automotive Repair Shop Business Plan

How to Create an Auto Repair Shop Business Plan?

Have you been passionate about repairing vehicles after visiting an auto repair shop? Or have you had the pleasure to intern at an auto repair business? If so, you might be dreaming about setting up your own auto repair business. And that’s great!

But before you decide to take the leap into the auto repair industry, you need to build a solid business plan. And no, I am not talking about just number crunching. I am talking about the real deal: an auto repair shop business plan that covers it all!

However, you don’t have to worry. 

In this post, I am going to walk you through all the main steps of setting up a bulletproof business plan for your auto repair shop.

Why Do You Need A Business Plan For Your Auto Repair Shop?

According to the Chief Executive Officer of a management and training company that offers a complete business system for independent auto repair shops, many auto repair shops and most businesses operate on hope to get new customers. 

However, the CEO goes on to say that it is far from ideal. Once you set up your own auto repair shop, you will have to perform a variety of different functions. And without having an auto repair shop business plan, things could become messy.

As a result, creating an automobile repair shop business plan is critical for your new business.

An auto repair shop business plan enables you to determine the amount of initial finance necessary. It also assists you in the following ways:

  • Prepare for any potential cash flow issues along the road.
  • Estimate how much profit your new auto repair shop is expected to produce in the first three to five years of operation.
  • Obtain banking finance – According to Small Biz Trends, having a business plan increases your chances of obtaining finance by double.

While goal setting is still crucial while planning your auto repair business, it is not the same as business plans, which examine current performance and prescribe precise activities to achieve particular goals. “Keep in mind that, while defining goals is vital in business, it does not constitute a business plan,” adds the CEO of a top auto repair company.

Creating a success cycle for your auto repair shop is critical, and here is where a well-defined business plan can come in handy.

The cycle of success begins with a realistic grasp of present performance in comparison to your planned or optimal outcome. Complete this analysis in great detail.

The planning phase then kicks in, assisting you in defining precise steps to capitalize on outcomes.

Employees throughout your auto repair shop will begin to believe in the business’s potential as the outcomes of this success cycle begin to flow in. This good energy maintains the success cycle, resulting in even greater growth.

Steps For Making Effective Business Plans For Auto Repair Shops

Now that you understand why this sort of plan is necessary, it is time to put pen to paper. Here are some ideas to help you get started with your auto repair shop:

Step 1: Decide on the type of auto repair shop that you want to open

There are several sorts of auto repair shops that you might open, according to A Plus Auto Glass. Before you start your automotive repair shop, you need to decide on the type you’re going for. 

Auto repair service technicians

This is possibly the most standardized service of the bunch. Basic inspections include oil fluid levels and electricals.

If you pick this model, you will most likely have numerous repeat clients (particularly those who drive a lot), because maintaining a car is suggested every 12 months or 10,000-12,000 miles (whichever comes first)!

Automotive Diagnostic Technicians

This model is a little bit more specialized. Such professionals do competent inspections that highlight any problems that automobiles may have.

Because these faults cannot be seen on the vehicle’s surface, it necessitates a greater degree of ability.

Auto system experts

If you opt to provide this model, you will specialize in assessing the vehicle’s major systems.

Most cars’ engines, brakes, and transmissions are all vital equipment.

This business strategy has the potential to generate a lot of money for you.

Auto body repair clinic

This clinic or repair facility handles automobiles damaged in accidents or roadside wrecks.

If you adopt this model, you may not have as many consumers as the other ones, but your income per sale will most certainly be significantly greater.

You’ll repair and retouch automobiles to make them seem as nice as new and to replace any scratches or broken pieces.

Auto repair painters

If you select this model, you will repaint or customize automobiles.

Vehicles frequently require a fresh coat of paint, especially if they are driven in places with high levels of pollution.

Auto glass repair services

This model allows consumers to repair their vehicle’s windscreen, windows, or any other glass-related parts.

You’ll almost certainly need a high degree of talent to accomplish so, but the benefits may be exponential in terms of money.

You may also have a number of consumers who just wish to repair minor fractures in their autos.

This is the first and most important step in building your auto repair business plan.

Step 2: Conduct industry research to assess the potential of your auto repair shop

To uncover your auto repair shop’s potential, you must first set a ceiling and a baseline against which you may assess performance.

Billed hours are the principal source of revenue for an auto repair company in the industry. According to a CEO of an auto repair business, determining your output capacity is crucial since it helps set the ceiling of your financial strategy.

Production hours will influence business potential in terms of revenue and gross predicted profit, which your employees will eventually create. Incorporate this business concept into your own car repair shop’s business strategy to develop a more effective money-generating method.

Examining relevant benchmarks of other shops of a similar type and size, as well as their quality work performance, is one of the common factors.

As an auto repair shop owner, you should also read automotive magazines.

These will give you in depth insights into the industry.

Step 3: Assess your shop’s current performance (if you have started)

As an auto repair shop owner, you also need to analyze your performance and compare it to that of other auto repair businesses. This will help you with business planning too.

Find out how your car repair shop is doing now so you can see how it stacks up against what it could be. This involves examining daily, weekly, and monthly store averages in output, sales, and total predicted profit.

You want to examine not just corporate performance, but also individual performance. Some key performance indicators for doing so include the average output of car mechanics, the average gross profit of service advisors, and the billable hours and income of service advisors.

When creating a business plan for your car repair service, keep these considerations in mind.

The CEO of the auto repair shop says, “This is a great way to effectively set the baseline against which we’ll measure performance progress in these key areas and among our key staff.”

Step 4: Set smart goals for your team and yourself

Teamwork is still required to attain individual and store-level goals. This is where teamwork is essential, as is remembering the SMART acronym—specific, measurable, attainable, relevant, and time-stamped goals.

Set clear monthly, weekly, and daily goals, both at the individual and store levels, to stay on track with your car repair shop business plan. It is critical to include your team in setting these repair services goals and having effective means to monitor them. You should add this to your executive summary as well.

Step 5: Create a marketing strategy

Your marketing strategy is an integral part of your auto repair business plan. It outlines how you plan on standing out from other auto repair businesses through advertising and other marketing tactics.

This is basically your chance to figure out how you’ll get your name out there and differentiate yourself from your competition.

There are many ways to get the word out about an auto repair service, such as making a website and social media network, paying for newspaper ads, or passing out flyers on the street. Auto repair SEO is also a great tactic to market your shop and make it stand out in the online auto repair industry.

Taking the time to identify which marketing initiatives to pursue will help you establish how much money you will need to set aside for each one and how many consumers you can expect, which you can then add into your financial projection.

You should also factor in the cost of marketing in your business plan so you know that you have the budget to implement marketing ideas to increase profits. 

Step 6: Training and Business Plan

Training and business planning are crucial for setting up your auto repair shop business for success. Investing in your employees as part of your overall strategy not only communicates that you care, but also helps them to expand their knowledge and skills.

Business planning to promote customer satisfaction is also important and goes hand in hand with well-trained employees or auto mechanics. While many businesses base their business strategies and goals on the demand for additional auto repair services, which promotes sales, shops should first provide the groundwork for an excellent client experience.

Training and providing employees with all the necessary resources is a great way to do that.

Step 7: Set up your operations plan

While the previous sections of your business plan described your objectives, your operations plan discusses how you will achieve them. Your operations strategy should be divided into two portions, as shown below.

Everyday short-term procedures encompass all aspects of running your car repair business, such as dealing with vehicle owners in person or over the phone, as well as maintaining and repairing automobiles.

Long-term objectives are milestones that you aim to reach. These may include the dates when you plan to fix your 50th automobile or when you aim to earn $X. It might also be when you want to extend your vehicle repair business to a new city.

Step 8: Make Your Financial Plan

Lastly, you need to set up a financial plan that will outline how you will grow your auto repair business. 

Your 5-year financial statement should be broken down into monthly or quarterly sections, for the first year and then yearly in your financial plan. Your income statement, balance sheet, and cash flow statements are all part of your financial statements.

Income Statement: An income statement is also known as a profit and loss statement (P&L). It displays your revenues and then subtracts your expenditures to determine whether or not you made a profit.

You must make assumptions while creating your income statement. How many automobiles, for example, will you fix every week? Will sales increase by 2% or 10% each year? As you might expect, the assumptions you choose will have a significant influence on your company’s financial predictions. Conduct as much research as possible to try to ground your assumptions in truth.

Balance sheets: These are documents that illustrate your assets and liabilities. While balance sheets can contain a lot of information, try to keep them as simple as possible. For example, if you invest $50,000 in expanding your vehicle repair business, you will not see instant earnings. Rather, it is an asset that should help you earn money for many years to come. Similarly, if a bank sends you a check for $50,000, you do not have to pay it back right now. Rather, that is an obligation that you will repay over time.

Cash Flow Statement: Your cash flow statement can help you decide how much money you need to start or develop your firm, as well as ensure that you never run out of funds. What most entrepreneurs and company owners don’t comprehend is that you may make a profit while still running out of money and going bankrupt.

These are some of the primary costs associated with beginning or expanding an auto repair business:

  • Build-out of a location, including design expenses, construction, and so on.
  • Equipment and supply costs
  • Employee pay or wages Business Insurance
  • Taxes and licenses
  • Expenses for legal counsel

If you follow all these steps, you will be able to build a solid business plan for your business. 


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