Do you want to start an auto repair shop business?
Are you thinking of starting an auto repair shop? Well, auto repair is one of those businesses that allow you to earn considerable profits even by managing a small team. The business provides repair and maintenance services for automobiles. Moreover, in many cases, auto repair shops also offer aftermarket modifications and upgradation services.
So, if you have made up your mind to enter this venture, you should first prepare a business plan for auto repair shop. If you don’t know how to open an auto repair shop or how to make an accurate business plan, you can take help from here.
The essence of an Auto Repair Shop Business Plan
Over the years, we have been monitoring the operations and success of some auto repair shops in a bid to determine the strategies that they use to grow their enterprises. Here are some of the findings that we feel will have a great impact on your new auto repair shop.
- Understand the market needs and tailoring the services right
- Managing their resources well
- Embracing new technology
It is important that you learn how to cope with these problems to business continuity plan checklist reigning supreme and achieve your short and long-term goals such as achieving financial stability. Here are some of the challenges that you will face if you venture into this business without a proper auto repair shop business plan.
As the auto business grows and attracts more clients, you will encounter many challenges that need to be responded to well. Simple mistakes can bring down your business no matter the success that you have achieved so far. For instance, an increase in customers can lead to the lack of enough space to store business the various materials. The most plausible solution to such a problem is by expanding your workspace or renting a large facility.
A business plan for auto repair shop is not complete if it does not give instructions on how scalability challenges or issues will be resolved. As mentioned earlier, we have been monitoring some facilities over the last three years. The research has given us an in-depth understanding of the industry, and we will use the same knowledge to come up with credible recommendations that you can use to jump the hurdles.
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In this blog, we’re providing a sample business plan of a startup, Auto Fix & Services.
2.1 The Business
Auto Fix & Services will be a registered and licensed auto repair shop in Austin. The business will provide usual repair and maintenance services ranging from oil change to parts replacement. The business will also offer car modification and upgradation services such as window tinting, installing air filters, etc.
2.2 Management of auto repair shop
Running an auto repair shop requires a relatively smaller team. Still, you need to have a proper management plan. Because, without strict supervision, your workers may do some negligence during repair work – resulting in losing your customer’s trust.
The best way to ensure efficient management is to create a comprehensive business plan for start up auto repair shop. In which you’ll list all the details of how to start a auto repair shop and how to manage it successfully.
2.3 Customers of auto repair shop
Before exploring how to open up a auto repair shop you should think of who’ll be your customers. As that will enable you to do the relevant preparations.
Auto Fix & Services identified its customers as the following groups:
- Professional Automobile Drivers
- New Car Owners (Households/ Individuals)
- Used Car Owners (Households/ Individuals)
2.4 Business Target
- To achieve an NPS score above 80 within two years of our launch
- To achieve a CSAT score of 95 to 98% within a year of our launch
- To earn a net profit margin of $24.5k per month by the end of the third year of our launch
3.1 Company Owner
Auto Fix & Services will be owned by Robin Redford. Robin is a talented person with exceptional managing skills. He started his career by working in an auto repair shop as an auto mechanic. After working for four years, he got promoted to a managing post. However, he served as a manager for just three years and eventually decided to start his own business.
3.2 Why the auto repair shop is being started
Due to a great demand for trustworthy auto repair works, Robin decided to start his own shop. By starting a auto repair shop Robin wanted to make considerable profits and introduce 100 percent reliable services.
3.3 How the auto repair shop will be started
Step1: Write Auto Repair Shop Description
To start an auto repair shop, the first step is to make a detailed business plan. For that purpose, you can read any example business plan auto repair shop available on the web like this sample business plan for auto repair shop. Or you can hire a professional to make your business plan.
Step2: Make The Arrangements
The second step is to get the licenses and permits to start an auto repair shop. After getting his business registered, Robin will rent a facility to turn it into a repair shop. At the same time, he’ll procure the machinery and tools required to provide his services.
Step3: Recruit Your Staff
Robin will hire the expert and certified auto mechanics for his shop. The complete list of his employees will be given in the upcoming sections.
Step4: Promote & Market
After that Robin will devise his sales strategy to reach out to his customers. He has decided to offer several discounts in the startup phase to get more and more customers.
Step5: Ensure Strong Web Presence
Lastly, you have to ensure a strong online presence so that people can find you whenever they search for the relevant services on Google.
The costs required to carry out all of the above steps are provided in the following table:
|Research and Development||$26,000|
|TOTAL START-UP EXPENSES||$402,800|
|Other Current Assets||$219,000|
|Start-up Expenses to Fund||$402,800|
|Start-up Assets to Fund||$1,170,000|
|TOTAL FUNDING REQUIRED||$1,572,800|
|Non-cash Assets from Start-up||$1,550,000|
|Cash Requirements from Start-up||$373,000|
|Additional Cash Raised||$54,000|
|Cash Balance on Starting Date||$34,000|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$50,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,572,800|
|Loss at Start-up (Start-up Expenses)||$358,200|
|TOTAL CAPITAL AND LIABILITIES||$2,011,000|
Owning your own auto repair shop allows you to offer a wide range of services. From this business plan template auto repair shop, you can see the services provided by Auto Fix & Services.
- General Automotive Repairs: Our primary service will be to do automobile repairs. We’ll repair or replace:
- Automobile engines
- Automobile exhaust systems
- Automobile brakes
- Automobile radiators
- Ignition System
- Electric repairs
- Spark plug, fuel cap, and others
- Regular Maintenance/ Service: Cars need a regular inspection of their parts and systems to ensure safety and longevity. In this domain, we’ll offer the following maintenance services:
- Oil change
- Tire pressure monitoring
- Wheel alignment
- Regulating radiator fluid, brake fluid, transmission fluid, etc.
- Maintaining car’s air conditioning system
- Automobile Upgradations: Many people prefer to modify and upgrade the functioning of their cars. For them we’ll be offering the following aftermarket upgrades:
- Installing Efficient air filters
- New Tires
- Installing the latest stereo system
- Brake discs
- Backup camera
- Turbochargers and more
- Car Accessories: Besides providing repair and upgradation services, we’ll also sell basic car accessories including:
- Seat covers
- Floor mats
- Car lights
- Dash covers
- Fuel consumption meters
- Steering wheel covers
Marketing Analysis of Auto Repair Shop
Before opening a auto repair business you should carry out detailed marketing analysis to explore the market trends and the competitors’ strategies. This critical examination will help you in introducing competitive aspects for your own shop. Moreover, in your auto repair workshop business plan you should also identify the groups of your target customers so that you can devise your policies and pricing plan accordingly.
If you are starting an auto repair business but don’t know how to write a business plan for an auto repair shop, you can take help from here. However, if you think that you don’t possess the skillset to make an accurate marketing plan, you should prefer hiring a professional marketing analyst.
5.1 Market Trends
According to SBDCNet, nearly 160k auto repair and maintenance shops are running in the United States – generating a collective annual revenue of $115 billion. The demand for such services is increasing because of an overall increase in automobile purchases. Along with the fact that cars need regular maintenance after a certain mileage. And that maintenance and upgradation cannot be done without proper space and machinery.
5.2 Marketing Segmentation
Auto Fix & Services divided its target market into separate groups to study their needs and expectations thoroughly. The detailed marketing segmentation done by them is provided below:
Business Plan for Investors
5.2.1 Professional Automobile Drivers
This will be the group of our major target customers. Professional automobile drivers such as Uber drivers, taxi drivers, bus drivers, and others, need car maintenance and repair services much frequently than all other groups. It is because of their long hour driving and large mileage. Moreover, this group is also expected to be a significant buyer of our car parts and accessories.
5.2.2 Used Car Owners (Households/ Individuals)
Our second target customers will be the owners of used cars. People who buy used cars often get the old parts such as seat covers, engine, brakes, replaced by newer ones. Thus, they are expected to avail of all of our services especially car upgradation and repairs.
5.2.3 New Car Owners (Households/ Individuals)
Lastly, new car owners who would want to upgrade their automobiles will also be our target customers. This group is usually very careful about their cars. Thus, they are expected to avail of our regular maintenance services more frequently. Moreover, they’ll also acquire our upgradation services.
To turn these people into potential/ repeat purchasers, we’ll offer several benefits to them. The biggest benefit our repeat customers will get is free video consultation. Whenever they encounter any problem while being far away from us, we’ll help them to resolve the issue themselves. Moreover, we’ll also send our auto mechanics to their location if the fault is of complicated nature.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Professional Automobile Drivers||41%||45,000||48,000||49,000||51,000||53,000||10.00%|
|Used Car Owners (Households/ Individuals)||37%||39,000||40,000||43,000||44,000||47,000||10.00%|
|New Car Owners (Households/ Individuals)||22%||18,000||20,000||23,000||26,000||29,000||11.00%|
5.3 Business Target
Our business targets are:
- To earn a net profit of $24.5k per month by the end of the third year
- To obtain a repeat purchase rate of 80% throughout our service years
- To achieve and maintain a CSAT score of 95 to 98% within a year of our launch
- To achieve a Net Promoter Score of above 80 within two years of our launch
5.4 Product Pricing
Our prices are almost in a similar range as that of our competitors. However, we still expect to get more customers due to our competitive advantages.
After you have fulfilled all the requirements to open a auto repair shop business, you should start thinking about its promotion. To get introduced to a larger audience, you need to develop an accurate auto repair shop marketing plan.
For your help, we’re providing the marketing strategy planned by Auto Fix & Services.
6.1 Competitive Analysis
- Our auto mechanics hold ASE certification. All of our workers are highly experienced and skillful.
- We also provide remote auto repair services throughout Austin. However, this service will be provided in special cases where bringing the vehicle to our facility wouldn’t be feasible.
- Only we in the entire city provide video call assistance so that customers can repair minor faults themselves. However, this service will only be valid for return customers and repeat customers.
6.2 Sales Strategy
- We’ll advertise our startup through posters, Google Local ads service, and social media.
- We’ll ensure a strong web presence to reach out to a wider audience and to keep track of our return/ repeat customers.
- We’ll offer a 50% discount on our services for the first month of the launch.
- We’ll offer a 15% discount on automobile accessories for the first two months of our launch.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|General Automotive Repairs||46,000||48,760||51,686|
|Regular Maintenance/ Service||42,000||44,520||47,191|
|TOTAL UNIT SALES||132,000||139,920||148,315|
|Unit Prices||Year 1||Year 2||Year 3|
|General Automotive Repairs||$53.00||$61.48||$71.32|
|Regular Maintenance/ Service||$48.00||$55.68||$64.59|
|General Automotive Repairs||$2,438,000.00||$2,997,764.80||$3,686,051.60|
|Regular Maintenance/ Service||$2,016,000.00||$2,478,873.60||$3,048,022.98|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|General Automotive Repairs||$51.00||$58.00||$68.00|
|Regular Maintenance/ Service||$45.00||$51.00||$60.00|
|Direct Cost of Sales|
|General Automotive Repairs||$2,346,000.00||$2,828,080.00||$3,514,620.80|
|Regular Maintenance/ Service||$1,890,000.00||$2,270,520.00||$2,831,472.00|
|Subtotal Direct Cost of Sales||$6,203,000.00||$7,491,020.00||$9,198,913.20|
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It is essential to make a list of the employees you’ll need to run your business. When you write business plan auto repair shop you must make your personnel plan enlisting required staff and their expected salaries.
7.1 Company Staff
Robin will hire the following people for his assistance:
- 1 Supervisor to help in the management
- 8 Auto Mechanics to perform the major work
- 2 Technicians to provide overall support
- 1 Database Manager to manage company’s sites and arrange video calls
- 1 Accountant to maintain financial records
- 1 Front Desk Manager/ Call Operator
- 2 General Assistants
- 1 Sales Executive
- 2 Cleaners
- 1 Driver
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Front Desk Manager/ Call Operator||$7,000||$7,700||$8,470|
Great service. Good turnaround time and quality work.
The last thing to do before launching your business is to create a detailed financial plan. Your financial plan should describe the expenses, net worth of your startup, projected loss and profits, and balance sheets for at least three years.
Since startup and running costs for auto repair shops are usually high, it is essential to devise a trajectory to achieve your financial goals – provided the limited resources, sales, and investment. Understanding the importance of an accurate financial plan, Robin hired a professional financial analyst to create a business plan for auto repair shop. The financial plan developed by him is given here to provide you an idea of auto repair shop finances.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.08%||8.13%||8.20%|
|Long-term Interest Rate||8.30%||8.33%||8.37%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5353|
|Monthly Revenue Break-even||$135,600|
|Average Per-Unit Revenue||$237.00|
|Average Per-Unit Variable Cost||$0.68|
|Estimated Monthly Fixed Cost||$163,020|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$6,203,000||$7,491,020||$9,198,913|
|TOTAL COST OF SALES||$6,203,000||$7,491,020||$9,198,913|
|Gross Margin %||6.16%||7.83%||7.95%|
|Sales and Marketing and Other Expenses||$120,000||$122,000||$124,000|
|Total Operating Expenses||$374,690||$399,500||$426,450|
|Profit Before Interest and Taxes||$32,310||$237,136||$368,403|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$18,000||$19,440||$20,995|
|SUBTOTAL CASH FROM OPERATIONS||$74,000||$80,660||$87,113|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$75,000||$81,000||$88,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$63,000||$66,000||$69,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$64,500||$69,660||$75,233|
|Net Cash Flow||$13,000||$14,900||$16,700|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$293,000||$328,160||$368,852|
|TOTAL LONG-TERM ASSETS||$24,400||$27,328||$30,744|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$14,900||$16,688||$18,757|
|TOTAL LIABILITIES AND CAPITAL||$295,000||$332,416||$373,968|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.10%||2.33%||2.58%||2.40%|
|Total Current Assets||150.05%||151.20%||151.80%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||94.01%||96.55%||99.25%||97.80%|
|Profit Before Interest and Taxes||40.97%||42.08%||43.25%||33.90%|
|Total Debt to Total Assets||0.19%||0.17%||0.16%||0.40%|
|Pre-tax Return on Net Worth||74.70%||75.10%||75.70%||75.00%|
|Pre-tax Return on Assets||94.09%||98.79%||103.73%||111.30%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||32.87%||33.89%||34.94%||N.A.|
|Return on Equity||56.18%||57.92%||59.72%||N.A.|
|Accounts Receivable Turnover||7.7||7.7||7.8||N.A.|
|Accounts Payable Turnover||16.2||16.4||16.45||N.A.|
|Total Asset Turnover||2.4||2.4||2.6||N.A.|
|Debt to Net Worth||-0.03||-0.03||-0.03||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$240,000||$253,440||$267,633||N.A.|
|Assets to Sales||0.82||0.83||0.86||N.A.|
|Current Debt/Total Assets||1%||0%||0%||N.A.|
Professional writers OGS capital specialized also on a theme such as auto parts business plan, starting an auto dealership business the right way, car dealership business plan, car wash business plan, car shop business plan, car accessories business plan and etc.
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