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How To A Start Auto Shop Business Philippines

How To A Start Auto Shop Business In The Philippines: According to Statista , there are currently 1.1 million registered cars in the Philippines. These data points exclude all other automobiles, such as jeepneys and motorcycles. So we know there is a market within the gap , but is there a gap within the market?

Today we will be specifically exploring the process of how to start an auto shop business in the Philippines for complete beginners.

Table of Contents

How To Start Auto Shop Business In The Philippines

1. build a robust business plan & strategy.

The first stage of any great idea is creating a plan and strategy . The plan is essentially what you are aiming to do with your business. For example, earn 100K Pesos a month or serve 10,000 customers. A strategy is how you will get there, and this is why these two elements are fundamental when starting an auto shop business in the Philippines.

Several robust auto shop business plans can be downloaded; however, if you are looking for a business plan specifically for the Philippines market, we have a free downloadable business plan and financial template that can be used when starting a new business in the Philippines.

You will also find that a business plan comes in very handy in the future. Not only will this help you determine your location, budget, and operations, but it will also help you differentiate. Most importantly, you will see if this business model is profitable for you.

2. Research The Auto Industry In Your Area

Previously, we explored the process of market research in the Philippines and why this is so important. To summarise, market research can save you a great deal of time and money when looking at how to start an auto shop business in the Philippines.

Here are some documents to get you started –

• Auto industry expands 23.8% in Jan.-Oct.
• Automotive industry in the Philippines
• Philippines Automotive Market
• Automotive industry in the Philippines – statistics & facts
• Toyota holds 44% market share in market 30.9% below pre-pandemic levels

As we know, the term auto shop can fall under several categories . For example, some specialize in auto repair businesses in the Philippines, while others specialize in selling new and used vehicles. Therefore, you may wish to conduct several pieces of research depending on the type of business you are entering.

There will also be times when there is very limited information when conducting market research on starting an auto business in the Philippines. Therefore, you may need to conduct a private investigation to assess the current market’s business risks, opportunities , and threats.

3. Find The Perfect Location For Your Auto Business In The Philippines

So, where is the perfect location for your business? For example, if you live in a city, would it be cheaper and more profitable to open your business in the provinces? On the other hand, if you are located in the provinces, could you find more customers in the city?

There are several areas to consider when it comes to the perfect location for an auto repair business in the Philippines or an auto shop business. The first is accessibility. Are your customers able to find you easily and conveniently? The harder it is for customers, the less likely it is for them to return to your business.

The next consideration is affordability. It sometimes makes better business sense being in a higher-priced area if it means that your business gets more customers and visibility. Other concerns include the size of the premises, security, and so on.

4. Find Suppliers And Tools

If you are starting an auto repair shop business in the Philippines, you need to ensure that your business has relevant tools for you and your staff to do the job effectively. Not only are the right tools important for the job, but having the right tools can also save you a great deal of time.

Most tools can be purchased locally at an affordable price; however, if you want to purchase tools in bulk, a great website to find bulk products is Alibaba.

On the other hand, if you are not starting an auto repair business in the Philippines but instead looking to become an auto retailer or something similar, this is a stage where you replace suppliers and tools with vehicles.

5. Seek Financial Support (Optional)

Raising capital for a brand new business is never an easy task, but luckily there are several ways you can raise the capital for an auto shop business in the Philippines. Here are some examples.

It’s often recommended to speak to a business expert or financial advisor during this stage as the business’s finances can be very complex. This is why many businesses have a dedicated team specifically to handle the business’s finances.

Additionally , when starting an auto shop business in the Philippines, one area to think about is your business’s size & overall scope. However, it’s often recommended to start a business small. Most large and successful corporations started very small. It’s always best to build the foundations of a business as early as possible before moving up to the next layer.

A common question that is often asked is how much does it cost to start an auto repair business in the Philippines? The total capital needed to start an auto repair business in the Philippines can be as little as 100,000 pesos. This includes a suitable location, survival budget, and tools. The total capital may be slightly higher or lower depending on the size and direction of your business.

6. Registration And Operations

The next stage when looking at how to open an auto repair business in the Philippines is the registration and finalizing of operations.

To legally open a business in the Philippines, you will need to have a set location for business registration; therefore, you may wish to complete this stage after you have decided on your location. Nevertheless, this stage can be moved forward or back if necessary.

The stage that follows is confirmation of business operations. This is linked very closely with your business plan. This includes who will be doing what and when. For example, when will your business be open, and who will open and close your business every day?

As soon as the business has been registered and the final operations have been confirmed, a business owner will then move on to officially opening their auto shop business. What comes next is the process of growth.

7. Marketing & Growth

For the business to be successful, there will need to be growth. This can include growing your team, customer base, Etc. But the question you may then wonder is how to grow an auto repair business in the Philippines?

To grow, you will need to ensure that you increase your current market dominance. To do this, your business needs to be better. Better can mean shorter waiting times, more convenience, cheaper rates, unique experience, and so on.

However, before you get to that stage, you need to grow your business from the beginning, and marketing is often a great way to do this. Marketing can be free and paid, and recently, we explored how to market in the Philippines , which offered some unique free and paid options for entrepreneurs.

Naturally, there will be new opportunities and challenges when starting an auto shop business in the Philippines. Still, the great news is there are many gaps within the market for innovation. So if you can make the process better in one way or another, never be afraid to be different.

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How to Start an Automotive Service Shop in the Philippines (2022)

The Philippines' automotive industry is growing. Last year was a “recovery year” for new car and truck sales. The used car market also has seen growth. As Filipinos buy vehicles, the need for automotive services increases as well. This is an opportunity for the automotive service shops. This article will guide you on how to start an automotive service shop in the Philippines.

The Philippines Automotive Market Overview

In their 2021 Annual Report , the Land Transportation Office disclosed that there were 13,022,483 vehicles registered. This is bigger compared to 2020 which had 11,851,192 vehicles registered.

According to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA), the total car sales in 2021 reached 268,488 units. It is higher than the previous year which had 223,793 units.

The used car market is increasing as well. Experts predict it will grow at a compound annual growth rate (CAGR) of 8.9% during 2020-2025. They attribute the increase to two main factors, the pandemic and internet penetration.

During lockdowns, private vehicles could run as long as they were essential travels. As the government eased the restrictions, private vehicles could travel but not public transportation. Filipinos saw this advantage of having their own vehicle. Another advantage is that traveling in a car does not expose you to the Covid virus.

Moreover, the increased internet penetration made buying a used car an ease. Used car sellers have their own websites and social media platforms. This gives them a wider reach and easier communication with customers.

All these vehicles need servicing and repair. This gives the automotive service shops a huge opportunity.

Automotive Service Shop Business in the Philippines

In the last Philippine Statistics Authority survey (2017), there were around 2,020 automotive service and repair shops in the country. In the previous year (2016), there were only 1,418 automotive service and repair shops. That is close to a 43% increase.

This increase is a response to the increasing number of vehicles in the country. This proves that the automotive and repair shop business is a viable business.

Services Offered by Automotive Service Shops in the Philippines

Automotive service shops provide all or one of the following services: Repair

• Rebuilding or reconditioning of motor vehicles or parts
• Collision service
• Car detailing

Those focusing on one service are called specialty automotive shops.

Type of Automotive Service Shop Business

Size and structure categorizes types of automotive service shop business in the Philippines.

Size categories

As to size, automotive service shop business falls into four categories: casa (dealership service shop), talyer, branded specialist shop and gas station service center. 

For Filipinos, the dealership service shop is casa. Casa is the Spanish word for house. So, when Filipinos say casa, they are referring to the in-house service shop of the dealership. Toyota Shaw Service Center is a casa.

A talyer refers to the unorganized and organized service and repair shop. ”Talyer '' is from the Spanish taller which means workshop. In the early days of the automotive industry in the Philippines, there were only two types of service shops, casa and talyer. Any shop which was not casa was a talyer.

Today, Filipinos applied the term talyer to unorganized, neighborhood service and repair shops. They also applied to organized service and repair chain shops. Rapide Auto Service Experts falls under this category.

Auto specialty shop

Auto specialty shops focus on a certain work on the vehicle. Some specialty shops focus on either body repair, painting or any other works. Other shops limit their services to certain parts like suspension, aircon, wheels and tires, etc. Goodyear Servitek is an auto specialty shop. Although they operate like a full-service shop, their primary expertise is tires.

Gas station service center

Many larger gas stations offer car services. However, many of them limit themselves to maintenance servicing and quick repairs.

These categories will help you understand the different automotive service shops. They can also help you in planning the type of automotive service business you want to enter. 

Structure categories

As to structure, there are two categories: independent and franchise.

An independent business is a privately owned business and free from outside control. A franchise business is a business where a business owner, the franchisor, allows someone, the franchisee, to use his brand, operation, products and expertise for a franchise fee. Many multi-brand chains offer franchises.

This article aims to help those who want to start an automotive service shop business as an independent and as a franchisee. The end section of this article will present five automotive service shop franchises.

Pros and Cons of Automotive Service Shop Business

Before jumping into it, knowing the pros and cons of the automotive service shop business is beneficial to you.

Lower rates offering

As a talyer owner, you can afford to offer lower rates because nobody obliges you to use original equipment manufacturer (OEM) parts only which are expensive. Regarding parts, you give the customer an option, OEM or aftermarket. The customer also has the option to buy the parts himself.

Multi-brand servicing

You have the freedom to serve all brands, unlike the dealership service centers. Your shop becomes a multi-brand shop.

Wide customer base

Aside from being a multi-brand shop, you can provide service to out of warranty and used vehicles. Owners of these vehicles look for cheaper alternatives to dealership service centers.

Local connections

You can build local connections. Being a multi-brand shop, you can serve all those with vehicles around your shop.

Electronic issues

Each new model is more high-tech than the previous one. Dealerships let their service mechanics and technicians attend a training offered by the car company whenever a new model comes up. You have to wait until this training is available to everybody.

High regards to dealership service centers

People have this high perception toward dealership serviced vehicles. This perception comes out when selling the car. A dealership serviced vehicles fetch higher resale value than non-casa serviced cars.

Challenges of an Automotive Service Shop Business

Every business has its set of challenges. For the automotive service shop business, the top five challenges are: 

Staying up to date with advances in diagnostics

This is quite a challenge for shop owners because car manufacturers are always coming up with new features in vehicles. Shop owners need to train their mechanics and technicians constantly. Going with that is the need to buy equipment and gadgets for diagnostics.

Lack of good, knowledgeable and motivated technicians

Finding the three ideal qualities in a worker is a challenge.

Funds for advertising

If you want to increase your revenue by bringing in more customers, you need advertising. The problem is where do you get the funds?

Diagnostic tools/software too expensive

To stay in the market, you must have the latest diagnostic tools and software. The challenge is the price of these tools and software.

The Importance of an Automotive Service Shop Business Plan

One important factor that leads to a successful business is the business plan. It is like your map to success. It provides you with the direction. Thus, it is important to write a business plan.

Automotive Service Shop Business Plan Sample Outline

To give you an idea of what the different elements found in a business plan are, here is a sample outline.

Executive Summary

This section gives you a picture of the overall content of the business plan. This would include:

• Overview of the business
• Other departments

Opportunity

In this section, you answer these questions:  What service are you offering?  How does this endeavor help solve a problem in the market?  Who is your target market and competition?

In the execution section, you lay down the plan of making a profitable business out of the opportunity you have seen. Here, you present the marketing strategies and plans.

Company and Management Summary

Here, you mention the teams and individuals that you already have and those teams that you are still to create or individuals that you are still to hire. Discuss how they make a good fit to your company. Also, mention how you will manage the business.

Financial Plan

This is a crucial part. In this section, you discuss financial forecasts and source funding for capital.

The appendix should have references, diagrams, tables and others that support the business plan.

If you want to know more on how to create a business plan, Franchise Market Philippines has a blog to help you.

Facilities and Equipment Needed

Here are the basic facilities and equipment needed in an automotive service and repair shop:

Vehicle Lift

There are many kinds of lifts. The most convenient to use are the hydraulic lifts, which can be two-posts or four-posts. However, they are expensive. One good alternative is a ramp. Just ensure that it is safe and sturdy.

Air Compressor

An air compressor is not only for inflating tires but also for operating pneumatic hand tools.

Jack, jack stands, and pole jacks

Jacks come handy when lifting vehicles for certain work not needing vehicle lifts. Jack stands are also useful in supporting raised vehicles. Pole jacks are for support of axles and other parts of the raised vehicle.

Oil drain and oil caddy

When changing engine oil and transmission oil, oil drain and oil caddy are useful. These two ensure that oil does not drain and spread on the floor.

Battery charger and jumper

Battery charger and jumper are for dead batteries and charging issues.

Engine hoist

Sometimes you need to remove and install an engine to the vehicle. You need an engine hoist for this work.

Brake lathe

With a brake lathe, you can resurface brake discs or rotors and drums.

Strut compressor

When working on suspensions, your work will become easier with a strut compressor.

Air conditioning machine

If you accept air conditioning jobs, you need an air conditioning machine. An air conditioning machine can recover, recycle, and recharge vehicle air conditioning systems.

A press is for removing and installing bearings and bushings. It is also useful for bending and straightening metal.

Transmission jack

When taking down and installing the transmission, it is safer to use a transmission jack.

Workbench with vise

A workbench for many jobs like when disassembling and assembling parts, wrenching, hammering, etc.

Some important automotive shop hand tools are: 

• Wrench or spanner sets
• Ratchet and socket set
• Screwdriver set
• Wire strippers and cutters
• Nut drivers
• Greasing guns
• Angle grinder

Business Requirements for the Automotive Service Shop Business

To avoid legal inconvenience later, your automotive shop should comply with the different legal requirements for starting a business here in the Philippines.

Register your shop with the Department of Trade and Industry

There are three types of business ownership: sole proprietorship, partnership and corporation. For sole proprietorship, register with the Department of Trade and Industry (DTI) office.

For partnerships and corporations, register with the Securities and Exchange Commission (SEC).

Secure the Mayor’s business permit

To secure the Mayor’s permit, go to the city or municipal hall where you want to put up your business. Be aware that this permit has many requirements that you have to work on beforehand. They are the following:

• DTI Business Name Certificate for a sole proprietorship, SEC Articles of Partnership or SEC Certificate of Incorporation
• Barangay Clearance/ Permit
• Authorization letter of the owner with ID
• Contract of Lease or Land Title / Tax Declaration
• Sketch of Location
• Occupancy Permit
• Location Clearance
• Public Liability Insurance
• Community Tax Certificate (Cedula)
• Fire Permit
• Sanitary Permit

There are other additional documents or permits that the city or municipality may require from you.

Accreditation with the Department of Trade and Industry

Automotive service and repair shops have to get DTI accreditation before operation. The purpose of the accreditation is to show that your shop has passed the DTI’s personnel and operations standards. The accreditation is proof that your shop is competent and reliable. It gives the customer an assurance of your service.

You can go to this page on DTI’s website for the accreditation requirements and procedure.

Automotive Service Shop Business Tips

Get a good location.

Your location is of utmost importance. To a great degree, a location dictates the success or failure of a business. Here are several helpful considerations when choosing a location for your automotive service shop business:

• Is that where your target market is?
• Is it accessible to your target customers, your potential workers and suppliers?
• Will it make your store visible?
• Can I afford the rent?
• Is it safe?
• Am I allowed to put up an automotive shop in the area?

Recruit the right people

Hiring the right people is a challenge as mentioned above. You have no other choice but to face this challenge. Employees can make or break your business. Qualities you want to see in employees are:

• Reliability
• Trustworthy
• Knowledgeable

Keep the shop clean and organized

Keeping your workplace clean and organized improves your efficiency. Dirty and cluttered workplace slows down your work. Clean and organized shops also attract customers.

Have social presence

It is essential that you build relationships with your customers. To address this, have social media pages. Creating a social media page is free but it brings several benefits to your business.

Five benefits that an online presence provides:

• Customers get to know your company.
• Customers engage with you on a personal level.
• Customers get to know what you offer
• Your online presence boosts your company’s brand.
• Your online presence boosts your credibility. People trust businesses with websites and social media pages. Post updates regularly.

Market through social media

Even without a website, you can still market your business online. Use of social media. It is not only for internet presence. It is wise to use it to market your business since it is free.

Referral program

Provide discounts to customers who can bring another customer. 

Reward your suki

Give your loyal customers or suki special deals. This will encourage them to continue patronizing and promoting your business more.

What special deals can you offer to customers? Here are several ways to offer special deals:

• Gift Vouchers
• 10% Off Discount
• Loyalty Points
• Random Rewards
• Package Deals

Five Automotive Service Shop Franchise in the Philippines

Rapide auto service experts.

Rapide Auto Service Experts is a chain of auto service shops in the Philippines. It started in 1998 with its partner, Midas International, the largest auto service center chain in the world. Midas provided them with the methods and procedures of servicing. Today, Rapide has over 50 shops all over the country.

Franchise Fee: ₱1.45M Initial Investment: ₱4M-7M Royalty Fee: 5% Marketing Fee: 2.5% Website: https://rapide.ph Email: [email protected] Contact Number/s: (02) 895 9486; 0951 923 8031

Car Crew Automotive Service Center

In 2018, a group of Overseas Filipino Workers (OFW) headed by Francisco “Bogs” Malbog opened the Car Crew Automotive Service Center in Imus, Cavite. They equip it with the latest diagnostic equipment and tools. Its crew are specialists in major automotive brands.

Franchise Fee: ₱1.3M Initial Investment: ₱6.7M Facebook: https://www.facebook.com/carcrew4103/ Email: [email protected] Contact Number/s: 0920 302 2222

Value Plus Auto Service Express (VPX)

ValuePlus Auto Service, the casa alternative, started in 2013. They use modern equipment. Their crew came from major car brands.

They want to share their success with others by offering franchising. All franchise branches carry the name Value Plus Auto Service Express or VPX. 

The information below is for their VPX Starter Package.

Initial Investment: ₱4.5M-P7M Space Requirement: 200 sq.m. Website: https://www.valueplusph.com Email: [email protected] Contact Number/s: 632-3413-8888; 632-8521-8878; 0917-625-1132

Motech Automotive 

In 1997, Rommel Naguiat started Ride Center, Inc. in Pampanga. In 1994, Ride Center Inc. became Motech Automotive Education Center, Inc.. The name change was the product of the company’s vision to train mechanics. However, all their shops became Motech Automotive as well.

In 2006, they started offering franchises. Today, Motech has over 70 branches.

Franchise Fee: ₱1.5M Initial Investment: ₱P7M Website: https://motech.ph Email: [email protected] Contact Number/s: (02) 920 2799; 0917-5113818

Ziebart | CarSavers

Ziebart International Corporation is an American vehicle rustproofing company. Kurt Ziebart, Rudy Herman and Joe Selagi founded the company in 1959 in Detroit.

Ziebart came to the Philippines in 1972 through the Philippine master franchisee, Bathala Marketing Industries, Inc. (BMII). In 1981, BMII went into automotive repair and body shop services and named it CarSavers. Now, you can see the two names together, Ziebart | CarSavers.

Website: https://www.carsavers.com Email: [email protected] Contact Number/s: (02) 8818-7777

Filipinos will continue to acquire vehicles. Most people think the pandemic would slow down vehicle sales. But, it did not. Instead, it appeared to accelerate. 

Pandemic is one sales driver. Even during the strictest level of restriction, the government allowed private vehicles as long as they were essential travels. Then, there was a level when the government gave permission to private vehicles to travel but not public transport.

This made the Filipinos think of buying a vehicle. Depending on their budget, some bought new vehicles while some bought used ones. 

Another driver is technology. It is much easier now to buy because of technology. You can find new and old vehicles for sale online. Sales agents are ready to entertain your call or message.

Now, all these vehicles need servicing and repairing. All these vehicles need automotive service shops. This makes the automotive shop a viable business.

The startup investment is quite large. However, the potential income is great. Mark Saberola, the General Manager of ValuePlus Auto Services Philippines Inc. explains that the average car owner’s bill for preventive maintenance services (PMS) is P5,500. A car owner on average does two PMS visits in a year. Multiply that amount with the number of car owners that come to the shop.. 

That is only for the PMS. The shop has many other services as well. So, if you are considering starting an automotive service shop, go for it.

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Disclaimer: Franchise Market Philippines strives to provide relevant and accurate information in all its articles. However, some information in our articles may differ or might be outdated from what you can see or read directly from the establishments' or businesses’ websites. Please get in touch with us directly for any discrepancies.

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Starting an Auto Shop in the Philippines: A Comprehensive Guide

The first step in launching a business is to perform market research to ascertain whether there is a market for the goods or services you plan to offer. Researching the demand for auto repair services in your intended location is necessary in this situation. This can be accomplished by identifying your target market, researching your rivals, and evaluating the business climate.

Step 2: Declare Your Company

The last step is to register your firm after conducting market research and determining the need for vehicle repair services in your target area. You must get a Mayor’s Permit from your neighborhood city hall and register your business with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC).

Writing a business proposal is step three. A business proposal is a written summary of your company’s goals, target market, marketing plans, financial predictions, and other crucial information. You may be able to attract capital from investors or financial institutions with the aid of a strong business plan. Online examples of business proposals are available to help you create your own.

Step 4: Determine Your Business’s Nature The type of business activity you’ll be involved in depends on your type of business. Your line of work will be auto repair services in this scenario. To do legitimate business, you must register your company with the Bureau of Internal Revenue (BIR) and secure the required permissions and licenses. How Can You Increase Your Repair Shop’s Profitability? Repairing automobiles is only one aspect of running a shop. You’ll need to figure out how to increase the profitability of your company. Here are some pointers to assist you in doing that: 1. Provide a variety of services; don’t limit yourself to simple repairs. To draw in more clients, provide extra services like tire replacement, engine tuning, and auto detailing. 2. Invest in equipment and technology – Using the most recent equipment and technology will help you deliver services more quickly and effectively, which can result in increased client satisfaction.

3. Create a devoted client base – To promote repeat business and consumer loyalty, give regular customers discounts and prizes. Starting Your Own Automotive Manufacturing Company Here are some things to think about if you want to launch your own auto manufacturing company:

2. Write a business plan – In your company plan, you should include your goals, marketing plans, projected profits, and other crucial information. 3. Obtain funds – To launch an auto manufacturing company, you’ll require a sizable sum of money. Think about borrowing money or seeking investors as funding possibilities. 4. Obtain the essential permits and licenses – In order to legally conduct your business, you must register it with the relevant governmental bodies and acquire the necessary permits and licenses.

In conclusion, rigorous preparation, investigation, and registration are necessary while opening an auto business in the Philippines. You may increase the profitability of your repair company and diversify into the vehicle manufacturing industry with the appropriate tactics and tools.

It can be tough but gratifying to launch your own business. Here are some broad measures you can take if opening an auto business in the Philippines is something you’re interested in: 1. Carry out market research to ascertain the level of demand in your area for auto repair services. 2. Create an operating plan, budget, and marketing strategy for your business. 3. Register your company with the relevant government departments and acquire the required licenses and permissions. 4. Obtain capital for your company, whether from investors, loans, or personal savings. 5. Locate a suitable space for your auto shop and equip it with the required tools and equipment. 6. Recruit knowledgeable and seasoned technicians to work in your shop. 7. Promote your company to draw clients and begin offering high-quality services.

Remember that starting a business takes a lot of work and commitment, so be sure you’re ready to take on this challenge before you start.

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8 essential tips for starting auto repair business in the Philippines

Updated Aug 04, 2020 | Same topic: Hot Tips for Car Selling

Cars are important possessions, but unluckily they can suffer wear and tear any. In that case, they will need effective car maintenance from in-dealership or specialized and accredited mechanic shops or just a usual car repair shop.

Everyone has a car and they cost money to fix and maintain, therefore starting your own auto shop is a win-win. Those who want to capitalize on this business opportunity will need to have a proper business plan from scratch.

Insightful and informative tips indeed will be pointed out in this article, to give a workflow from step one to the last steps with clarity. All these essential tips to start a small auto repair business are pretty basic, but some steps will need a consultation with experts though.

1. Scout out the best location

Never locate your shop too far away from the center so that the client won't bother to get there! Look for a big and accessible place, which have enough space for parking many cars. Getting locations near commercial areas or a neighborhood with many affordable residents is the key when selecting the place for your store.

Locate your shop near the commercial areas, but it should be big enough to park your car

2. Ask advice from experienced people

If you are not a master of this business, enlisting the help from experienced friends or those with huge networking is a clever move to make money out of auto repair shop. Learning where to source auto parts and getting extra services for hard jobs.

Asking advice from experienced people if you are not master in this business

3. Figure out what is the must-have beginning expense

Start with a blank slate and check what equipment is available; and what can be used in the auto repair to lessen costs. Itemize all the tools and required equipment and how much they will cost to equip the shop.

Under-equipped shops will not be as profitable; since clients prefer a wide array of automotive services to be available. Add up the costs to hire skilled mechanics and techs that will upgrade the shop's services a notch up. It is better to have more capital than just enough, to begin with.

>>> Also read: Putting Up a Car Wash Business in the Philippines

4. Have your business officially registered

Inquire about getting the shop name registered and other requirements that will be needed to make the auto repair shop official. Ask about fees and other miscellaneous expenses to get the amount ready, and how long it will take for official registration.

Without these permits, the business will have problems with taxes and different kinds of penalties, too.

Applying for business permission if you don't want to pay fines

5. Employing certified mechanics and technicians

For starters; this can make or break any auto repair shop on the get-go! The shop should deliver the good with reliability and assure that all repairs are assured of the highest caliber and skill too. Satisfied clients will not argue price when it comes to their autos, but make a wrong call for bad repair.

Make sure all the mechanics and technician are properly certified with proof of their certifications; never get less than skilled mechanics and technician because if services are very good; it should make clients come back to have their cars fixed again.

Or another alternative is getting mechs and techs who are highly recommended and have references that can be verified too. They are the core of auto repair shops; without them, most shops will have no business at all.

Skilled mechanics are the core members of every auto repair store

6. Have a detailed Marketing Strategy

To get the word out about your services; it can be done via online advertising or maybe as advertisements in newspapers that offer services. Or maybe print out flyers and place on a car windshield in parking lots too. Another alternative is to get the bull-horn and drive around and distributing leaflets as well. The main point is to get the word out and disseminate as much as can be done!

Have an advertising strategy to spread your business via online or traditional methods

7. Get an accountant to organize payroll and tax concerns

When everything is all official and registered with all agencies concerned, get an accountant to fix all the papers that refer to taxes, financial, and anything that will involve taxes to be paid annually. These accountants can help maximize profits and work out the tax concerns as well. Anything that has to with money should be ironed out by them.

Get an accountant to organize payroll and tax concerns

8. Offer great customer service

Cultivate regular customers from everyone who has their cars repaired! Be hands-on and make sure that all employees follow SOPs, and make sure they treat clients well! Stopping to get to know clients and check on them; once in a while and answer their concerns too. Staying up front and visible is one if the ways clients will come back.

These are easy to follow and understand so that anyone can go from there! All essential tips to start a small auto repair business could be the cornerstone of success, trying won’t hurt at all!

>>> Get more useful tips and advice for your car maintenance here

Norjan Ismail Abbas

Norjan enjoys writing about various topics, and car is among them. Don't ever ask him which his most favorite car is since he has none. He believes each car is beautiful in its own way.

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MAXSPEED AUTOPORTAL INC.

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Auto Repair Business Plan Template & PDF Example

• October 21, 2024

Creating a comprehensive business plan is crucial for launching and running a successful auto repair business. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your auto repair business’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of an auto repair business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the service industry, this guide, complete with a business plan example, lays the groundwork for turning your auto repair business concept into reality. Let’s dive in!

Our auto repair business plan is structured to cover all essential aspects needed for a comprehensive strategy. It outlines the garage’s operations, marketing strategy, market environment, competitors, management team, and financial forecasts.

• Executive Summary : Offers an overview of your auto repair business’s concept, market analysis , management, and financial strategy.
• Services & Location: Describes the shop’s facilities, services offered, and why its location is beneficial for customers.
• Operational Details: Outlines the operational aspects like workshop layout, equipment used, and staff roles.
• Key Stats: Presents data on market size , growth trends, and customer demographics.
• Key Trends : Highlights technological advancements and changing consumer preferences in auto repair.
• Key Competitors: Analyzes main competitors in the area and your business’s unique selling points.
• SWOT : Conducts a strengths, weaknesses, opportunities, and threats analysis.
• Marketing Plan : Discusses strategies to draw in and keep customers, including promotional activities and customer service enhancements.
• Timeline : Lists important goals and milestones from the outset through the first year.
• Management: Provides information on the auto repair business management team and their responsibilities.
• Financial Plan: Forecasts the business’s 5-year financial performance, including expected income, profit margins, and outlays.

Auto Repair Business Plan Template (Download)

Fully editable 30+ slides Powerpoint presentation business plan template.

Download an expert-built 30+ slides Powerpoint business plan template

Executive Summary

The executive summary is a critical component of your bike shop business plan. It offers a concise yet comprehensive view of your business within the bike retail and service market, including competitive analysis and financial forecasts. This section is crucial for attracting investors and partners, as it highlights your business’s potential and strategic plans.

A two-slide PowerPoint presentation is recommended for this summary. The first slide should detail your business model, covering the range of products and services unique to your bike shop. The second slide should focus on your management team’s qualifications and financial goals, giving a snapshot of anticipated market performance and growth prospects.

Auto Repair Business Plan Executive Summary Example

Business Overview

In the executive summary of an auto repair shop business plan, the business overview section is crucial for detailing the shop’s offerings and operational capabilities. This includes the shop’s location, facility features, range of services, brand specialization, and any additional customer-focused services.

For an auto repair shop, it’s important to emphasize the expertise in specific vehicle brands, the advanced technological equipment available, and the comprehensive nature of services offered, from routine maintenance to complex repairs. The inclusion of customer convenience features, such as loaner vehicles and service guarantees, also plays a significant role in differentiating the shop in the market.

Example: AutoFix Hub, situated in a prime automotive district, operates from a 10,000 sq ft workshop equipped with state-of-the-art diagnostic and repair tools. Specializing in European brands like BMW and Mercedes-Benz, the shop offers a full spectrum of services and stands out with additional customer conveniences like loaner vehicles and a 90-day service guarantee.

Market Overview

The market analysis section should assess the size, growth, trends, and competitive landscape of the auto repair industry. It’s crucial to provide insights into the industry’s dynamics, such as the demand for specialized repair services due to increasing vehicle complexity and the shift of consumer preference towards independent repair shops.

Understanding the competitive environment, including the presence of major chains and local service providers, is vital for identifying the shop’s market position and opportunities for growth.

Example: The US auto repair market, valued at $76.8 billion, is growing steadily. AutoFix Hub is positioned in a market with 281,000 shops, differentiating itself through specialized services for European models. The shop capitalizes on the trend of consumers preferring independent shops for better value, distinguishing itself among 7 key local competitors.

Management Team

In this section, the focus is on the background and expertise of the management team leading the auto repair shop. It’s important to highlight their experience in the automotive industry and their roles within the shop.

The management team’s qualifications are a key aspect of the business’s ability to deliver quality services and manage operations efficiently. This part of the summary should instill confidence in the team’s capabilities to drive business growth and maintain high standards of service.

Example: The CEO, a co-founder of AutoFix Hub, brings over 15 years of industry experience, including management roles at leading auto repair chains. The Lead Mechanic, also a co-founder, possesses extensive expertise in servicing European models, ensuring high-quality repair work and customer satisfaction.

Financial Plan

The financial plan overview provides a snapshot of the auto repair shop’s revenue and profit targets. It outlines the financial goals, including specifics like aiming to reach $7.8 million in annual revenue with a 23% EBITDA margin by 2027.

This section reflects the shop’s financial health and potential for profitability, taking into account market positioning, service offerings, and operational strategies.

Example: AutoFix Hub aims to achieve $7.8 million in yearly revenue with a 23% profit margin by 2027. This financial goal is underpinned by strategic expansion of services, targeting high-value vehicle brands, and leveraging the growing consumer trend towards independent repair shops for specialized services.

For an auto repair business, the Business Overview section can be effectively divided into 2 main sections:

Garage & Location

Briefly describe the garage’s physical setup, focusing on its layout, functionality, and the welcoming environment it creates for customers.

Mention the business’s location, emphasizing its ease of access and the convenience it offers to customers, such as proximity to major roads or availability of ample parking. Explain why this location is strategically chosen to attract your target clientele, considering factors like high traffic volume or lack of similar services in the area.

Services & Pricing

Detail the range of maintenance and repair services offered, from routine services like oil changes and tire rotations to more specialized repairs such as engine diagnostics, transmission work, or electrical system repairs.

Outline your pricing strategy , ensuring it mirrors the quality of services provided and aligns with the market segment you’re targeting. Highlight any service bundles, membership deals, or loyalty programs that offer added value to your customers, fostering repeat business and customer loyalty.

Make sure to cover here _ Services & Location _ Operational Details

Industry size & growth

Begin with an overview of the auto repair industry, noting its size and potential for growth. Highlight key factors like the increasing vehicle population, aging car fleets, and trends towards vehicle longevity.

Key market trends

Next, discuss current trends such as the demand for specialized services, the rise of new automotive technologies, and eco-friendly repair practices. Emphasize the growing need for expertise in electric and hybrid vehicle maintenance and advanced diagnostics.

Key competitors

A competitive analysis is not just a tool for gauging the position of your auto repair shop in the market and its key competitors; it’s also a fundamental component of your business plan.

This analysis helps in identifying your auto repair shop’s unique selling points, essential for differentiating your business in a competitive market.

In addition, competitive analysis is integral in laying a solid foundation for your business plan. By examining various operational aspects of your competitors, you gain valuable information that ensures your business plan is robust, informed, and tailored to succeed in the current market environment.

Identifying Your Competitors in the Auto Repair Industry

Begin by identifying and mapping out local auto repair shops, dealerships offering repair services, and franchises specializing in car maintenance within your vicinity. Direct competitors include shops offering similar services or catering to similar vehicle types, while indirect competitors might involve dealerships with in-house repair centers or mobile repair services.

Leverage online resources such as Google Maps and review platforms like Yelp and Angie’s List to gather insights into competitor locations, customer feedback, and service ratings. Positive reviews praising the expertise and quick turnaround at “Speedy Auto Care” highlight a strength that your competitor possesses in the market.

Auto Repair Competitors’ Strategies

A comprehensive analysis of competitors’ strategies encompasses various operational dimensions:

• Service Portfolio: Evaluate the spectrum of services offered. For instance, a competitor like “Eco-Green Auto Care” gaining traction by specializing in eco-friendly repairs and using sustainable practices signifies an emerging market trend towards environmentally conscious auto maintenance.
• Technical Expertise: Consider the technical proficiency and specialized services provided. An auto shop like “Performance Motorsport Garage” focusing on high-performance vehicle tuning might cater to a different clientele compared to a shop specializing in general repairs.
• Pricing and Packages: Conduct a detailed comparison of service pricing structures with competitors. Is your shop positioned similarly to “Affordable Auto Fixes” or more aligned with premium services offered at “Elite Car Service Centre”?
• Marketing Strategies: Analyze competitors’ marketing approaches. Are they investing heavily in digital advertising, local sponsorships, or community engagement to bolster brand visibility and customer reach?
• Customer Experience: Evaluate the overall customer journey. Perhaps “Friendly Auto Repairs” excels in customer service by offering conveniences such as online appointment scheduling, shuttle services, or a dedicated customer portal.
• Operational Efficiency: Observe technological advancements or innovative processes adopted by competitors. For example, “Tech-Forward Motors” might utilize AI-powered diagnostics or automated service reminders for enhanced customer engagement and operational efficiency.

What’s Your Auto Repair Shop’s Value Proposition?

Define your shop’s distinctive value proposition . It could be specialized services such as transmission rebuilds, a focus on superior customer service, or offering a comprehensive maintenance package with added value services like complimentary car washes or extended warranties.

Identify market gaps by analyzing customer feedback, industry trends, and unmet needs within the automotive repair sector. For instance, an increasing demand for electric vehicle maintenance might signal an opportunity for your shop to invest in training technicians for EV-specific repairs, thus addressing a niche market segment overlooked by competitors.

Tailor your approach based on location: A shop situated in a suburban area might emphasize personalized services, loyalty programs, and extended warranties to build lasting relationships with local customers. In contrast, an urban location might focus on quick turnaround times and express services to cater to the fast-paced lifestyle of city dwellers.

First, perform a SWOT analysis for your auto repair business, identifying Strengths (such as highly skilled technicians and a broad range of services), Weaknesses (like high operational costs or intense competition), Opportunities (for instance, the growing demand for maintenance of aging vehicles), and Threats (such as economic downturns impacting consumer spending on non-essential repairs).

Marketing Plan

Then, craft a marketing strategy detailing how to draw in and keep customers through targeted advertising, promotional offers, a strong online presence, and involvement in local community events.

Marketing Channels

Utilize various marketing channels to communicate your brand and services, engage with potential clients, and drive foot traffic to your shop.

Digital Marketing

• Online Presence: Maintain a professional website that showcases your services, customer testimonials, and informative content about automotive maintenance and care. Optimize your website for local SEO to improve visibility in local search results.
• Social Media: Utilize platforms like Facebook, Instagram, Twitter, and YouTube to showcase your expertise through before-and-after repair images, customer testimonials, and educational content. Engage with your audience by responding promptly to inquiries and comments.
• Email Marketing: Build an email list by offering valuable content or discounts in exchange for sign-ups. Send regular newsletters featuring promotions, DIY car care tips, and updates about new services or events.

Local Advertising

Connect with your local community through targeted advertising efforts:

• Local Publications: Advertise in local newspapers, magazines, or community newsletters to reach a wider audience. Consider sponsoring specific automotive sections or publishing informative articles on car maintenance.
• Community Engagement: Participate in local car shows, street fairs, or dealership events. Offer free vehicle check-ups or workshops on basic car maintenance to showcase your expertise and build rapport with potential customers.
• Collaborations: Partner with car dealerships, rental companies, or local businesses for mutually beneficial promotions or referral programs. Cross-promotions can expand your reach within the local market.

Sales Channels

Optimize sales channels to maximize revenue and enhance customer satisfaction.

In-Shop Sales Techniques

• Service Upgrades: Train your staff to suggest additional services or maintenance checks during customer interactions. For instance, recommending a wheel alignment with a tire change or a fluid flush with an oil change can add value to the customer’s visit.
• Retail Merchandise: Display automotive care products or accessories prominently within your shop. Educate customers on their benefits and relevance to vehicle maintenance.
• Service Packages: Offer bundled services, such as a ‘Seasonal Maintenance Package’ or ‘Pre-Trip Inspection,’ to incentivize customers and simplify their automotive care choices.

Online Sales Integration

Leverage technology for streamlined sales processes:

• Online Appointment Booking: Implement an easy-to-use online booking system on your website and social media platforms. Offer incentives like discounts or priority scheduling for online bookings.
• E-Commerce Integration: Consider selling car care products, accessories, or merchandise online. Offering package deals on services or maintenance kits can attract customers looking for convenience.
• Virtual Consultations: Provide online consultations for basic troubleshooting or pre-service assessments. This personalized approach can lead to tailored service bookings or product recommendations, enhancing the customer experience.

Membership & Loyalty Programs

Encourage customer retention and repeat business:

• Membership Options: Create membership plans offering discounted rates for routine maintenance services or exclusive benefits such as priority scheduling or complimentary check-ups.
• Loyalty Rewards: Implement a digital loyalty program where customers earn points for every service or purchase. These points can be redeemed for discounts on future repairs or merchandise, fostering long-term customer relationships.

Lastly, set up a comprehensive timeline highlighting key milestones for the auto repair shop’s launch, marketing initiatives, customer base development, and expansion goals, ensuring the business progresses with clear objectives and purpose.

The Management section focuses on the auto repair business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the auto repair business toward its financial and operational goals.

For your auto repair business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your auto repair business’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs and capital expenditures.

For your auto repair business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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• Sample Business Plans
• Auto Repair Shop Business Plan

Auto Repair Shop Financial Plan

Ready to launch your own auto repair business?

Well, it’s a thrilling venture with plenty of potential, especially with the ever-growing demand for automotive repair and maintenance services!

But in the process of shaping a business plan, you might be wondering how to draft a solid financial plan without any hassle.

However, managing the financial aspects of your auto repair services will be integral to its success and sustainability, providing an accurate picture of your shop’s profit and loss potential.

If finance isn’t your strong suit, don’t worry; we’ve got you covered. This sample auto repair shop financial plan will help you get started!

Key Takeaways

• The income statement, balance sheet, cash flow projection, and break-even analysis are the primary elements of a financial plan.
• Make reliable financial projections with thorough industry research, clear market understanding, and realistic assumptions.
• Preparing an auto repair shop financial plan is much easier and faster when you use financial forecasting software.
• Enhance the accuracy of your plan by exploring the methods of test assumptions and scenario analysis.
• Be practical and conservative about your revenue forecasts and cash flows to grab investors attention.

Auto Repair Shop Financial Outlook

Before diving right into financial planning, you must explore the financial landscape of the automotive repair industry. Here are some latest industry highlights:

• The global automotive repair & maintenance market value reached $825 billion in 2023, registering a CAGR of over 10.2% (2024-2032).
• By 2032, it’s predicted that the global automotive industry will grow significantly, reaching a whooping value of $21.4 trillion .
• The U.S. auto repair industry is a massive market. It is expected to reach $188.13 billion in 2024 and $251.52 billion by 2029, with a CAGR of 5.98% (2024-2029).
• Recently, there have been a total of 286,000 auto mechanics businesses in the United States, and they’ve employed roughly 592,000 people.

So, with the increasing number of cars on the road and the average age of the vehicle fleet, there is ample room for new businesses to venture into this market.

Now, without further ado; let’s get started on how to create a successful financial plan.

How to Prepare an Auto Repair Shop Financial Plan

• Calculate business startup costs
• Determine financing requirements & strategy
• Understand your business model
• Identify revenue streams
• Market analysis and pre-assumptions
• Make financial projections
• Test assumptions and scenario analysis
• Monitor and update your plan

1. Calculate Business Startup Costs

Once you’ve decided to open your own auto repair shop, it’s very crucial to have a clear understanding of your finances. Right? So, you’ll need to calculate the startup costs very first!

You may start by identifying all the initial expenses associated with your auto repair venture. It includes rental fees, equipment & tools purchases, inventory, insurance & licensing fees, employee training, and marketing costs.

You can also research local market conditions and industry benchmarks to evaluate the typical costs of starting an auto repair shop. This will help you get accurate estimates.

Try to be clear and comprise every potential cost, no matter how small it is. You can make a specific list of all the expenses, as shown in the below table:

So, having a fair idea of startup costs will help you create a proper budget and determine the necessary capital to launch your business successfully.

Say goodbye to old-school excel sheets & templates

Make accurate financial plan faster with AI

Plans starting from $7/month

2. Determine Financing Requirements & Strategy

Sometimes, people don’t have enough money to start their own business. So, they might need to ask for help from others to get the initial investment.

For your auto repair shop, you may evaluate the current monetary position and determine how much startup capital you’ll require to fund your business. Also, assess various financing options and develop a clear strategy to secure funding.

Here are a few funding options you may consider:

• Bank loans or lines of credit
• Investors or partners
• Venture Capital (VC) firms
• Crowdfunding
• Small Business Administration (SBA) loans

For each option, you have to evaluate the terms, interest rates, and repayment methods. This will let you devise a financing strategy that aligns with your investment goals and risk tolerance.

Then, you can decide which funding option is the most appropriate for your auto repair business.

Furthermore, while seeking credit from banks or investors, you’ll need a professional document that projects how your auto repair shop’s financial modeling works. It will assist potential lenders to have a better idea of your business.

3. Understand Your Business Model

Developing a scalable business model is a crucial aspect of a financial plan. This is something you have to decide before you start running your business.

It is a strategic framework that defines how you generate income, manage expenses, and reach your financial objectives.

Here is a list of different types of business models for an auto repair shop, each catering to specific client needs and market niches:

• Full-service garage
• Specialty auto repair shop
• Mobile repair service

While deciding on any of the above models, you have to understand their financial considerations, including startup costs, revenue potential, ROI, profitability, and operating expenses.

This will help you make well-informed decisions and achieve your financial goals in the long run.

4. Identify Revenue Streams

Identifying your business revenue streams is an essential part of maximizing profitability. So, try to diversify your income sources beyond general repairs and increase your shop’s revenue potential.

It will help potential investors or lenders determine how much revenue your business intends to generate over the next few years.

For instance, you may include the following revenue streams in your auto repair shop financial projections:

• Labor charges
• Parts sales
• Emergency repair services
• Maintenance packages
• Diagnostic fees
• Customization and upgrade services

Diversifying income sources and providing a range of services will help you build a sustainable auto repair business model in the competitive industry.

Well, using Upmetrics could be a great help here. It will not just calculate financial projections but also help you identify relevant revenue streams.

For better understanding, you may consider the following example prepared using Upmetrics:

Furthermore, it allows you to make informed decisions about your revenue by using different ways to forecast income streams, such as unit sales, the charge per service, recurring/hourly charges, or fixed amounts.

So, this can be an effective and accurate way of estimating your income potential.

5. Market Analysis and Pre-Assumptions

A successful business requires a comprehensive market analysis to gain valuable insights into the local business landscape.

While writing a auto repair shop business plan , you’ve already conducted thorough market research and had a better understanding of the target market, customer demographics, industry trends, and competitors.

So, it’s time to use that knowledge to prepare a financial forecast and make realistic assumptions about labor costs, inventory, contingency funds, utilities,  facility outlay, and marketing expenses.

Here are some key factors that you can define based on market insights and presumptions.

Pricing Strategy

When it comes to devising a pricing strategy, there’s no bound law. Yet, you’ll need to analyze a few factors, such as your expertise, products or services, target customers, market demand, and competitor rates, to set optimal pricing.

You may conduct a competitive market analysis to comprehend the general market prices and set competitive yet profitable sales prices.

Remember, your prices should reflect the value of your auto repair offerings and still help you generate sufficient returns on your investment.

Sales Forecast

A sales forecast is a primary element of any business, serving as the cornerstone for its profitability and growth.

It helps you estimate the number of customers your auto repair shop expects to serve over a specific period. You can predict future sales based on historical data, economic conditions, emerging trends, and seasonality.

Apart from that, consider market demand and assess the effectiveness of your marketing initiatives to predict the number of new customers your auto repair shop acquires.

Business Expenses

Generally, business expenses are operating costs or day-to-day expenses that will keep your business running smoothly.

For an auto repair store, you may conduct a detailed analysis of the anticipated expenses, categorized into fixed, variable, one-time(non-recurring) expenditures, and contingency funds.

Additionally, you may consider a few factors, like market trends, inflation rates, and industry standards, while estimating the business expenses.

Here, you should note one thing—you must account for probable cost overruns or unexpected expenses during business operations. So, be conservative in your financial projections.

6. Make Financial Projections

If you want to attract investors, let the numbers do the talking. This is so because potential investors or stakeholders will look at the financial reports once and decide whether or not to invest in your business.

So, ensure that your key reports give a clear picture of an auto repair shop’s financial health and viability.

Here’s a list of several financial statements and analyzes you may incorporate into your projections:

• Cash flow statement

A cash flow statement helps you track the cash flow in and out of your business over a specific timeframe, generally monthly, quarterly, or annually.

It provides a detailed explanation of how much cash your auto repair shop brings in, pays out, and ends with the cash balance. Typically, it’s an illustration of how well your auto repair shop is generating cash.

You may take into account the cash flows related to operating activities(e.g., repair charges, parts sales, inventory, labor, utilities, rent), investing activities(e.g., equipment purchases, facility upgrades, and financing activities(e.g., loans, repayments, equity transactions).

Be realistic about your financial assumptions and measure your auto repair shop’s liquidity, capability to meet financial obligations, and sufficiency of cash flow to fund future investments and expense outlays.

• Balance sheet

A balance sheet provides a quick overview of your business’s financial position at a specific time.

It clearly demonstrates what you own, what you owe to vendors or other debtors, and what’s left over for you. After all, it has three main elements:

• Assets: Cash, equipment, inventory, and property, and accounts receivable
• Liabilities: Debts, loan repayments, and accounts payable
• Equity: Owners’ equity & other investments, stock proceeds, and retained earnings

Ideally, it is formulated as, assets = liabilities + equity

By looking at your balance sheet, anyone can get the exact idea of how financially stable your business is, how much cash you hold, and where your money is tied up.

• Income statement

The income statement is also known as a profit and loss statement(P&L), explaining how your business made a profit or incurred a loss over a specific period, typically monthly, quarterly, or annually.

Depending on the structure and type of your business, consider adding these factors—revenue or sales, operating expenses, and gross margin to your profit and loss statement.

You may calculate the gross margin by subtracting the cost of sales or COGS from revenue. It enables you to determine your business’s efficiency in utilizing resources.

Further, the P&L statement should also include operating income, which is equivalent to EBITDA. And the net income is the ultimate goal of any business, found at the end by deducting the operational expenses from EBITDA.

Overall, the income statement helps you gauge your business’s profitability, financial performance, and feasibility in the long run.

Break-even Analysis

The break-even analysis allows you to determine the point at which your auto repair shop’s total revenue matches its total expenses, causing no profit or loss.

It helps you evaluate the level of sales or service volume needed to cover your shop’s fixed and variable costs.

This analysis provides valuable insights into your financial sustainability and helps you set sales targets, pricing strategies, and cost-control criteria.

What is the average break-even period for an auto repair shop?

Generally, the average break-even period for an auto repair shop may range from the first 6 months to 2 years of operation, depending on several factors, such as location, pricing strategy, customer service, seasonality, and operating expenses. However, your shop can expedite the break-even process and gain profitability sooner with the right financial planning, effective marketing, and efficient business operations.

7. Test Assumptions and Scenario Analysis

As your entire plan is prepared based on assumptions, you’ll need to regularly review and stress-test your financial projections to check their relevance with market realities and business performance.

In this stage, you may consider various “what-if” situations and think about scenarios where things go well or don’t.

For instance, you’ll need to consider the fluctuations in demand, pricing changes, or unexpected expenses to measure the stability of your auto repair shop financial plan.

By performing test assumptions and sensitivity analysis, you can adjust your strategies accordingly to mitigate risks, optimize returns, and make well-informed business decisions.

8. Monitor and Update Your Plan

Once your plan is ready, continuously evaluate and monitor your auto repair shop’s financial performance closely against your financial projections and key performance indicators(KPIs) .

You can compare the actual financial results with the projected income streams, expenses, and ROI to take note of any variances or deviations from the plan.

If some factors are remarkably different from projections, recognize the causes behind them. This will help you understand which areas need improvement and which works as anticipated.

Also, review and update your strategies accordingly to optimize financial results and achieve long-term success.

Now that you know how to create a solid auto repair shop financial plan, it’s time to explore an example for easy understanding.

Auto Repair Shop Financial Plan Example

Writing an auto repair shop financial plan from scratch can be overwhelming, right? But not to worry; we’re here to help you with a realistic financial plan example prepared using Upmetrics.

It includes all the key elements of an auto repair shop’s financial projections, including the income statement, balance sheet, cash flow statement, and break-even point. This will simplify your entire planning process and help you get started.

Start Preparing Your Auto Repair Shop Financial Plan

And that’s a wrap—we’ve discussed all the fundamental aspects of financial planning. Now, it’s time to put that knowledge into action.

But if you still feel swamped by the thought of creating a financial plan, don’t worry. We’ve got your back.

Upmetrics’ robust financial forecasting tool can be your savior here, making your process a breeze. You’ll have to simply enter the financial assumptions and let it figure out the rest.

So, wait no longer; start writing a financial plan for your startup venture!

Frequently Asked Questions

How often should i review my auto repair shop financial plan.

It’s recommended to review your auto repair shop financial plan regularly, at least once a year, or whenever there are significant changes in your business or market. This will help you track your progress, update your strategies, and ensure your financial goals remain achievable.

What are the key components of the auto repair shop financial plan?

You should include the following key components in the detailed financial plan for your auto repair shop:

• Startup costs
• Sales forecasts
• Revenue projections
• Operational expenses
• Break-even point
• Ratio analysis

What are some financial tools I can use for an auto repair shop?

There are several financial tools available for managing the finances of an auto repair shop, such as financial forecasting software, accounting tools, Point of Sale(POS) system, inventory management software, and payroll processing tools. This will help track expenses, manage cash flow, streamline operations, and optimize profitability.

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Auto Repair Shop Business Plan

Start your own auto repair shop business plan

F and R Auto Repair

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

F & R Auto (F & R) is the desire of John Ford and Michael Ronald who together have 30 years experience as auto mechanics. Both have a dream of starting up their own company and offering better service to their clients than competitors.

1.1 Objectives

The objectives over the next three years for F & R Auto Repair are the following:

• Sales revenues increase steadily through year three.
• Institute a program of superior customer service through rigorous evaluation of service experience.
• Hire three more mechanics.

1.2 Keys to Success

In the auto repair industry  a company builds its client base one customer at a time and mostly through word of mouth marketing. With this in mind, the keys to success for F & R Auto Repair are:

• High-quality work.
• Constant contact with clients so as to keep them informed about the state of their automobile and the repair job progress.
• Knowledgeable mechanics that are friendly, customer oriented, and will take the time to explain to customer the intricate nature of our business and our work.

1.3 Mission

The mission of F & R Auto Repair is to provide high quality, convenient and comprehensive auto repair at low cost. The most important aspect of our business is trust. It is the goal of our firm to have 100% customer satisfaction in regards to quality, friendliness, time to completion and to discover new ways to exceed the expectations of our clients.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

The company will be a partnership with John Ford and Michael Ronald each owning 50% of the company. The company will be a limited liability company registered in the state of Washington. The firm will have facilities on 1312 1st Ave NW in Ballard, a neighborhood of Seattle. The facilities will contain a two-bay garage, office space and storage space for tools, parts, etc.

The company is seeking a  loan in order to finance the start of operations for the company. Each of the owners will be putting up some of their own capital as equity.

2.1 Start-up Summary

The data obtained for the start-up comes from research done in the Seattle area with other small mechanic shops who have started their own business. Inflation has been taken into account between the estimates of these fellow business owners (and when they started) and the current prices for expensed items.

Much of the equipment to go into the facilities such as tools, air compressors, etc., are currently owned by the two partners.

F & R Auto offers a wide range of services as outlined in the detailed sections below. It is ultimately the goal of the company to offer a one-stop facility for all auto servicing needs, including brakes, transmission, wheel alignment, etc. In this way the company can offer greater perceived value for the customer than many other shops which specialize in certain areas.

The industry is highly competitive with suppliers having a great deal of power in setting and negotiating the prices of their products and services to repair shops. In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors, buyer power is also very high. Finally, the barriers to entry are moderately low, and the large number of competitors in this field, including substitutes (such as do-it-yourself work) mean that the pricing for such services are very competitive. The only way to have an advantage in this industry is a low cost leadership principal applied aggressively or to create higher switching costs through the building of strong business to customer ties.

F & R Auto will hire trained and certified mechanics who are able to prove they have superior customer awareness and interaction. It is the company’s professional people who will fulfill the firm’s contracts and goals. The largest part of the company’s expenses will be in labor costs.

3.1 Service Description

F & R Auto provides a wide range of auto repair services. These include:

• Scheduled maintenance.
• Wheel alignments, tires and rims.
• Brake repair.
• Comprehensive engine repair.
• Transmission.

Each job or project will be on a reservation basis, although we will accept a small percentage of drive in repair work.

3.2 Competitive Comparison

The auto repair industry is highly competitive. Each company within this field has high capital costs, low margins, and a high intensity of competition.

 Suppliers have a great deal of power in setting and negotiating the prices of their products and services to repair shops. This is due to the fact that the suppliers who absorb the greatest amounts of cash from repair shops are large auto part companies. These companies are more consolidated that the repair industry, have deeper pockets, an almost limitless number of substitute customers, and finally they are the single most important supplier to F & R’s industry. Therefore, these companies can set whatever price they wish to. Furthermore, labor is a supplier in this industry as well, and salaries for such individuals are well known and not very flexible.

 In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors (if they offer a suitable level of quality) buyer power is also very high. Additionally, the costs of our services are not cheap, and buyers are willing to search for the most favorable combination of price and acceptable service.

 The barriers to entry and exit are moderately low in this industry. Switching costs are virtually non-existent and the costs to entry and exist the market are low. The large number of competitors in this field including substitutes mean that the pricing for such services are very competitive. The only way to have an advantage in this industry is a low cost leadership principal applied aggressively to all aspects of the business or to build up customer relations to a point where the switching costs are raised.

3.3 Technology

The technological revolution in computers has enhanced our abilities to diagnose and repair our clients vehicles. F &R will remain on the cutting edge by instituting the use of computer diagnostic equipment in its shop. The company will continue to seek new ways to provide a better service through technology.

3.4 Future Services

The company does not have any plans to create further services at this time.

Market Analysis Summary how to do a market analysis for your business plan.">

4.1 Market Segmentation

The following table and chart show the market analysis for F & R Auto Repair.

4.2 Service Business Analysis

This section is covered in the Competitive Comparison section of the Plan.

4.2.1 Competition and Buying Patterns

While many customers looking to purchase automotive repair services are concerned with price, the primary concern is with building a relationship of trust between themselves and their service provider. A large number of people within the country have experienced or heard of bad service encounters within this market. As a person’s car is usually connected in one way or another with that individual’s livelihood, a dependable automobile is crucial. Therefore, many clients are willing to pay a little more for a mechanic they feel does a quality job and understands their needs.

An automotive repair company that can anticipate, meet, and even exceed customer’s needs can build a defensible position within the market place and acquire market share at the expense of other rivals.

4.2.2 Main Competitors

As stated before, the automotive repair market is very fragmented. The chief competitors in this industry for F & R are the high quality automobile dealerships and licensed service reps. This includes Toyota, Ford, Chrysler, and other major brand names. Within F & R’s immediate service vicinity, There is Rodham’s Toyota, Lester Ford and Woodmark’s Chrysler dealerships. Each of these direct competitors have a service facility. These competitors dominate the market place, have the largest market share, and have advantages such as specially trained personnel, access to lower priced parts and tools, and deep pockets. The other competitors are mostly “mom & pop” style outfits that make up the majority of the competition. For F & R this includes Dave’s Auto Repair, The Taller Mechanico, Kirkland Auto and Body, and Vancouver Auto. The advantages of these firms is that they can seek a low cost leadership strategy due to lower personnel costs. However, they have a much more fluid customer base and higher customer turnover.

F & R will seek to compete initially in the low cost strategy. At the same time, it will seek to provide a higher level of customer satisfaction by having more rigorous quality control and seeking ways to enhance the entire service experience (not just repairing a person’s car). In this way it will lock in a loyal customer base who value the client-service provider relationship.

4.2.3 Business Participants

The auto repair industry is highly fragmented. In fact, there are so many small providers that any company in this industry is facing a purely competitive environment. It is very difficult to create a differentiation, or niche, strategy in this environment and until F & R is able to establish a reputation for quality, on time, superior customer service, the company will seek a low cost role. Once it has achieved what management believes to be a sufficient reputation for its services along with a profitable customer base, the company plans to leverage this advantage into a differentiation strategy that will be able to charge more for its services.

Strategy and Implementation Summary

The following section outlines the company’s strategic focus in growing the business.

5.1 Competitive Edge

F & R Auto’s competitive edge lies in the vision of its partners, who understand better than many of their rivals that a service visit does not just include repairing a client’s car, it includes the entire service experience from the first time a client talks to their mechanic until they decide to stop driving. The long-term profitability of a service firm of this type lies in the repeat customer that finds F & R’s services an excellent experience, DESPITE the fact that they usually have suffered a inconvenient breakdown. The company will seek to examine ALL aspects of the service experience to seek ways to improve its customer satisfaction. In addition, all employees will be rigorously trained and retrained to think about customer satisfaction in order to create a self-sustaining company culture that revolves around this issue.

5.1.1 Positioning Statement

It is the express purpose of F & R to become the local leader in quality and service experience of all the small (non-dealerships) automotive repair firms within the Seattle area while maintaining a low cost plan. Once a reputation for quality and service experience is created, and an ongoing network of referrals is bringing in new business, the company plans to re-evaluate its strategy and positioning within the market to see if a differentiation strategy is viable. If so, this will allow the company to raise prices and increase profit margins in relation to its rivals. This in turn is expected to leverage long-term growth until F & R can reach a regional scope of operations.

5.2 Marketing Strategy

The company has a modest program of marketing its services that include the following:

• Direct mailers.
• Newspaper ads.
• Yellow pages.
• Referrals through other local businesses.

Each of these marketing approaches has the advantage of being low cost and creating service awareness. The company’s long-term marketing goals are to use local radio and TV ads similar to the Les Schwab Tire Center ads.

The company is also investigating the possibility of having a grand opening program that would feature discounts, food, a local radio disc jockey, and other promotional ideas.

5.2.1 Promotion Strategy

The principal owners of F & R Auto expect that a significant number of their pre-existing clients (where Ford and Ronald currently work) will desire to switch to F & R Auto to retain the services of their personal mechanics. This will provide a sufficient income until F & R can build up a reputation and see its marketing program take effect.

This promotion strategy will take the form of flyers, direct mailers, price discounts, and advertisements in newspapers and yellow pages. F & R does not desire to spend a large amount on marketing until the firm is ready to expand either into new facilities or open up new ones. It is estimated this will occur sometime after year five.

5.2.2 Pricing Strategy

F & R Auto exists in a purely competitive environment where each firm must be a price taker. In other words, the firm has no ability to affect the market price of its services, regardless of how many automobiles it repairs. In this case, therefore, marginal revenue (the revenue incurred by producing or servicing one more unit) is equal to the price charged. Furthermore, because the demand curve is essentially horizontal, F & R can service automobiles at total capacity without effecting the price.

5.3 Sales Forecast

Since the automotive repair industry is, operationally, a job-shop environment, it is somewhat difficult to estimate sales. For job-shops, each individual product or service is tailored or unique to that job, and is only initiated once an order is made. However, the sales forecast reflect the professional opinion of Mr. Ford in how much sales he will make based on the following assumptions:

• The number of clients Ford and Ronald can attract from their previous companies.
• The effect of planned promotions and word-of-mouth marketing.
• Current prices and costs of doing business.
• The types of automobiles and jobs that will occur in every month.

For the most part, sales for an automobile repair firm are steady year round and reflect little seasonality.

The table and charts below outline the sales forecast.  Three years of annual sales and costs of sales are shown.  Twelve monthly tallies are included in the appendices.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

John Ford began working as an apprentice mechanic in his father’s shop in 1984. Since that time, he has worked for a variety of automotive shops and dealerships and has numerous certificates in automobile repair. During the past two years Mr. Ford has attended Bellevue Community College where he received an Associates degree in business administration in June of 2000.

Michael Ronald attended ITT Technical Institute where he received a certificate in electronics repair in 1980. In 1983 Mr. Ronald went to work for Jim Click Ford Dealership in Tucson AZ, where he worked on automotive electrical and electronic systems. Desiring to expand his skills, Mr. Ronald received a mechanic’s certificate in 1988 and since then has become certified in various automotive fields. In anticipation of F & R’s business needs, Mr. Ronald is taking night classes at Seattle University in marketing.

6.1 Personnel Plan

F & R’s initial staffing will consist of Ford and Ronald, plus Ronald’s wife who will act as a part-time office manager. The company will seek two entry level mechanics to be hired within a few months after the company is operating. Accounting, bookkeeping, and marketing services will be outsourced. The company’s intermediate goal is to have four full time, fully trained mechanics at the original facility, plus a full-time office manager. However, management has decided to await future developments before determining the best time to bring on such personnel.

Financial Plan investor-ready personnel plan .">

The following sections outline the financial plan for F & R Auto Repair.

7.1 Break-even Analysis

The company’s Break-even Analysis is based on an average company’s running costs within this industry, including payroll, and its fixed costs for such things as rent, utilities, etc.

7.2 Projected Profit and Loss

The following table and chart show the projected profit and loss for F & R Auto Repair.

7.3 Projected Cash Flow

The following table and chart are the projected cash flow figures for F & R.

7.4 Projected Balance Sheet

The following table shows the projected balance sheet.

7.5 Business Ratios

The Business ratios give an overall idea of how profitable and at what risk level F & R Auto will operate at. The ratio table gives both time series analysis and cross-sectional analysis by including industry average ratios. As can be seen from the comparison between industry standards and F&R’s own ratios, there is some differences. Most of these are due to the fact that there is a very large variance in assets, liabilities, financing, and net income between companies in this industry due to the vast differences in company size.

Overall the company’s projections show a company that faces the usual risks of companies in this industry and one that will be profitable in the long-run. The company shows that it has higher SG&A costs than other competitors, however management has deliberately overstated costs and minimized profits in order to create a “safe” or “buffer” zone in case of hard times or other unforeseeable problems. Pre-tax return on net worth and pre-tax return on assets appears to be very high, especially within the first two years, however this is due to the fact that the company will be operating with fewer assets than most companies in the first few years until it can build up enough cash to acquire the tools and facilities that are desired and go beyond the “adequate” level.

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