Auto Repair Shop Business Plan (9 Step Guide)

Starting a business can be a big risk. But if you map out a plan and execute it right, the outcome is well worth it. Having a solid automotive repair workshop business plan in place is especially important if you ever plan on owning multiple shops.

When you realized that you wanted to be a shop owner, it’s likely you considered the good you can do for both yourself and other people. Helping customers get their vehicles back on the road, and helping service advisors and mechanics grow in their careers is an exceptionally rewarding aspect of owning and operating a repair shop.

In order to make the ride to becoming a successful shop owner a smooth one, your present self will need to have your future self’s back. You’ll need to ensure all of your ducks are in a row. And by ducks, we mean your people, processes, and systems. And most importantly, you’ll need to make sure that you are ready to take on this venture.

You may even get excited thinking about the far future of your business—when it’s feasible to expand your business to include multiple shops. It’s good to dream big, and especially in auto repair, more shops means that you can help more people. But it’s important to understand how you’re going to get there, and what pitfalls to avoid.

Before we jump into how your business can expand, let’s take a look at some of the reasons why new business ventures don’t make it. Don’t let this waiver your goals as a shop owner though. In fact, we’re writing these out so you can beat the odds.

6 Common Reasons Why New Businesses Fail

Each business, and each story, is different. But there are a few common themes that usually lead to new businesses failing.

1. Not investigating the market

When you’re opening up a new business, it’s crucial to consider the demand for auto repair and the unmet auto repair needs within the area you plan on opening shop. It’s easier to satisfy a known need rather than creating a need and having to convince your customers.

2. Business plan issues

Your business plan is like your company’s Bible. You’ll spend months, or even years, making sure it is the perfect guidebook for your shop. Once your business plan is created, it’s important to follow it.

Taking chances that aren’t outlined in your plan could lead to further setbacks. Although setbacks are less common if you’ve carefully and diligently mapped out your plan, there’s always the possibility that your plan isn’t 100% sound. If that’s the case, determine the issue, find a solution, and adjust your plan accordingly.

3. Not enough financing

Financial planning is crucial for any new business venture. If you don’t start off with enough money and end up having to stretch the financial line too thin, it’s possible your business may never get off the ground.

4. Bad location, absent online presence, and other marketing issues

The location of your business, the online presence of your business, and the marketing efforts conducted throughout your business’ lifecycle are pivotal to your shop’s success. If you start an auto mechanic shop that focuses on truck repairs in the middle of a city where there aren’t a lot of truck drivers, it’s likely your shop won’t succeed. The same goes for online presence and marketing efforts.

You need to reach the people who may not regularly drive by your shop by considering where they spend their time online. What social media channels are they on? How do they use search engines to find local businesses? Tailored advertising efforts and five-star raving reviews will help bring more business to your shop. Without the best location, an established online presence, and the right marketing strategies, your business has less potential to last.

5. Becoming complacent

Just because you’ve finished up your business plan and started your business doesn’t mean the research should stop there. It’s always important to remain in-the-know on key market trends. By keeping an eye on the auto repair market, you’ll know exactly when and how you need to make adjustments to your business in order to keep growing.

6. Expanding too fast

Sometimes a business owner that is experiencing newfound success may keep reaching and reaching, and reaching, until their finances are drained. While it’s important to have an entrepreneurial spirit, it’s just as important to make smart investments.

If you want to open up more shops in the future, it’s important to give your new shop just as much tender love and care as you gave your first location.

Make sure you have a solid understanding of where you want your next location to be, who your intended customers are, whether you want to try selling new products or services, and how exactly you plan on testing the success of any new ideas.

According to Investopedia.org, the bottom line is this: “Though the rate of business failure in the first two years is around 20%, it doesn't mean that you have to fail. Through research, planning, and flexibility, you can avoid many of the pitfalls of a new business and be a part of the 25% that make it to 15 years and beyond.”

What Is An Auto Repair Shop Business Plan?

The best way to execute your business is with a plan. An automotive repair shop business plan will outline your auto repair shop business so that you can present it to investors or any other stakeholders that you want to bring along on your business venture.

A business plan is the overall vision of your business, the goals you want to achieve, and the roadmap that will keep your company afloat.

Your Auto Repair Shop Business Plan Serves as a Roadmap

A clear auto repair workshop business plan will provide you with:

1. 1.Clarity on what needs to be done
2. 2.The ability to spot issues as early as possible while making good investments
3. 3.A sustainable and viable business model

Clarity On What Needs To Be Done

An auto repair shop business plan will make it easy for you to explain your business model and where your shop is headed. You’re going to encounter obstacles, and in order to tackle them head on, you need to stick to your strategic plan and adjust accordingly.

Your automotive repair shop business plan will provide you with clarity on:

• ​Financing
• ​Hiring
• ​Operations
• ​Branding

To Spot Issues Early While Making Good Investments

To prevent setbacks, you need to invest in the right things. The way you invest prior to opening up your shop, during your business’ lifecycle, and once expansion is on the horizon, will make or break your business.

Your car repair shop business plan will help you determine the right routes to take when it comes to investing in:

• ​People
• ​Process
• ​Technology
• ​Marketing

A Sustainable and Viable Business Model

By carefully mapping out your business’ roadmap, you’ll have the ability to achieve a sustainable and viable business model.

Your auto repair shop business plan will help you:

• ​Secure funding
• ​Know when and how to expand
• ​Stick to growth goals and milestones

Each three of these categories can be more attainable with a clear mind. According to Walter Isaacson’s The Book of Jobs, Steve Jobs would often stress that the driving factor behind his creative inspiration was a clear mind through meditation.

So, before you get started crafting your quintessential mechanic shop business plan, try to gift yourself the ability to tune out the noise during important decision-making matters. Here are three ways you can go into your business ownership journey with a clear state of mind:

1. 1.Set aside time to commit to a muscle memory activity. A muscle memory activity could be going on a walk every morning with your dogs, heading to the driving range to hit a few golf balls in the evenings, playing an instrument, or picking up a good book.
2. 2.Choose an activity that you genuinely enjoy doing and make it a habit. If meditating isn’t for you, you won’t be able to let go of the daily noise and distractions, and in turn you won’t be able to gain clarity of mind. Whatever you choose should be something you look forward to doing so that you can place all of your focus on that activity. Being able to focus is incredibly important for business owners because there are so many things that can occupy your mind in a given moment. Find an activity that helps you organize and become more aware of your thought process.
3. 3.Reduce the noise around you by finding an activity that you can do by yourself. Finding an activity that helps you clear your mind and step away from others’ input will help you get back in tune with where you really want your business to go.

These are just three tips. What works for one person may not work for you. Our primary recommendation for new business owners is to commit to not only working on your auto repair shop business plan but also commit to working on yourself so that when you hit the road, you’re able to face any and all obstacles with a clear, open mind.

So, What’s Included in an Auto Repair Shop Business Plan?

There are nine steps to crafting the quintessential automotive repair shop business plan that will help you achieve your business goals—from owning one auto repair shop to becoming a multi-shop owner.

1. 1.Write an executive summary
2. 2.Describe your shop
3. 3.State your business goals
4. 4.Describe your products and services
5. 5.Do your market research
6. 6.Outline your marketing and sales plan
7. 7.Perform a business financial analysis
8. 8.Make financial projections
9. 9.Create a plan for growth and expansion

Sure, those nine steps may sound tedious, but it pays to plan.

According to entrepreneur masterminds Francis J. Greene and Christian Hopp, high-growth oriented entrepreneurs are 7% more likely to plan out their business.

Furthermore, entrepreneurs who write business plans are 16% more likely to achieve viability than entrepreneurs who don’t develop a plan.

What Do You Need to Create Your Auto Repair Shop Business Plan?

You can build a successful launching pad for your auto repair business by conducting market research, developing a marketing plan for your auto repair shop, and evaluating the operational costs and investments you will need to make.

Conduct market research

Here are four steps you can follow to successfully conduct local market research:

1. 1.Determine your shop’s market area
2. 2.Create a profile of your shop’s ideal customers
3. 3.Determine the size of your market (pro-tip: check out City-Data for a detailed, informative profile of your target market).
4. 4.Find out how many competitors are in your target market area

Remember that drivers are typically willing to drive a few miles to get their vehicle serviced, but driving over 10 miles might not be realistic for someone if their vehicle has an issue. So you may want to start looking at the demographics within a 10 mile radius of your auto repair shop.

When looking at your target area, you can ask the following questions to get a good sense of your business’ market:

• ​Is there a desire for your products or services?
• ​How many people would be interested in your offering?
• ​What is the income range and employment rate of your customers?
• ​How many similar options are already available to consumers in your area?
• ​How much do potential customers pay for these alternatives?

Even after you open shop, keep conducting market research. You want to be able to keep up with the latest auto repair industry trends so that your shop’s profits keep growing. Getting a feel for the type of customers your shop serves will set a strong foundation for your auto repair shop business plan.

Develop a marketing plan for your auto repair shop

Once you know your audience, develop a marketing plan that aligns your vision with the people you plan on serving. Here’s an overview of marketing strategies you can use to attract customers to your new shop:

1. 1.Get involved in your community
2. 2.Run special promotions for first-time customers
3. 3.Partner up with an adjacent local business like a body shop
4. 4.Advertise locally
5. 5.Run targeted social media ad campaigns
6. 6.Up your shop’s search engine optimization (SEO) game

Evaluate operational costs and investments

When it comes to successfully launching your business, you’ll need to weigh any potential costs and investments that you intend on making. Always leave a bit of wiggle room for unexpected expenses, like hiring one more person than you anticipated, or paying a little extra for a more reliable shop management system. Sometimes spending a little extra means getting a higher return on investment, making it well worth the cost. But you have to ensure that you have the wiggle room first.

The investments you put into your shop at the beginning will play a huge role in determining how profitable your auto repair shop will be in the future. You’ll want to evaluate:

• ​The location you will operate your shop from
• ​The equipment you will invest in
• ​The shop management system that will support you from day one and beyond

The right shop management system will give you and your team:

• ​The ability to gain experience
• ​A methodical system for analysis
• ​Digital tools and integrations
• ​Guardrails that prevent errors
• ​The ability to track declined jobs
• ​Better compliance standards
• ​A workflow to quickly build accurate estimates
• ​A direct tie to all shop systems
• ​The capacity to set and reach profit goals
• ​A clear framework for enhancing customer experience

9 Steps to Create a Business Plan for Your Auto Repair Shop

But before we get too excited about finding the right shop management system, here’s the moment you’ve been waiting for: the nine steps you can take to craft an automotive repair shop business plan that will help you reach new heights and open up more shops in the future.

1. Write An Executive Summary

Your business plan’s executive summary is designed to capture any investors’ or stakeholders’ attention. It gives them an overview of your shop’s business opportunities and an overview of the rest of your auto repair shop business plan.

In your executive summary, you will briefly explain the problem you are solving, your business ideas, the target audience, and any key financial information. Your business plan’s executive summary should capture each of the aforementioned topics in no more than two pages.

The problem statement: this introduces the reader to the gap and/or problem in the auto repair industry that your business aims to solve.

The business statement (aka your business model): this will show the reader exactly how you plan to tackle the problem—both how you plan to approach the problem and how you plan to solve it. During this section, you want to briefly explain how your auto repair business will help solve whatever problem you found in the market.

The target audience statement: during this section, you’ll map out any customer demographic details and how you plan on targeting these audiences.

The financial plan summary: any financial institution or investor you approach will want to know how you plan on spending their funds. During this section of the executive summary, you want to cover where you plan on allocating funds and any applicable financial projections.

For those of you who are current shop owners and want to craft a new automotive repair shop business plan, the financial plan in your executive summary will have to include a history of your shop’s past financial performance.

With Tekmetric, you can use accurate, real-time data to easily track how money flows through your shop. Tekmetric’s Real-Time Financial Reports include three reports that are particularly useful during this step of your auto repair shop business plan:

1. 1.End of Day Report: An overview of how effectively your shop has been selling repair work during a given time range. The End of Day Report breaks down your shop’s overall shop metrics, including Total RO’s, Hours Presented, Hours Sold, Close Ratio, Effective Labor Rate, Average Repair Order (ARO) Sales, ARO Profit, ARO Profit Margin, Gross Sales, and Gross Profit.
2. 2.Profit Details Report: Shows you the exact profit you’ve made across all of your shop’s ROs. You can also break it down even further to show the profit your shop has made within individual ROs.
3. 3.Sales Details Report: Shows you how much your shop has sold in parts and labor over a given time range, how much money has been collected from sublets, fees, and taxes, as well as the dollar amount of the discount your shop has provided to customers.

2. Describe Your Shop

What makes your business stand out? What’s your company’s mission? What are the most important aspects of your business? These are the questions this section of your auto repair shop business plan will answer.

When determining your shop’s mission statement, try to keep the following tips in mind:

1. 1.Make it a long-term mission statement
2. 2.Think big picture and high level
3. 3.Keep it short and concise
4. 4.Use “Our” and “We” when writing your mission statement. For example, “We provide the highest quality repair services to the drivers of East Omaha, Nebraska”
5. 5.Work with your potential stakeholders and/or employees to come up with your mission statement
6. 6.Don’t be afraid to change it

Let’s take a look at ten popular mission statements. If you can think of the company’s name, then their mission statement did its job.

• ​“To bring inspiration and innovation to every athlete in the world.* If you have a body, you are an athlete.”
• ​“To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.”
• ​“To inspire humanity—both in the air and on the ground.”
• ​“To accelerate the world's transition to sustainable energy.”
• ​“Spread ideas.”
• ​“To give everyone the power to create and share ideas and information instantly, without barriers.”
• ​“To organize the world’s information and make it universally accessible and useful.”
• ​“We save people money so they can live better.”
• ​“To be a company that inspires and fulfills your curiosity.”
• ​“To build and deliver an integrated set of digital tools that complement one another and empower shop owners to grow a thriving automotive repair business.”

In order from top to bottom, the mission statements belong to Nike, Warby Parker, JetBlue, Tesla, TED, Twitter, Google, Walmart, Sony, and Tekmetric.

What do each of the above mission statements have in common? They uncover the primary existence for each company, and they deliver their purpose and overall intention.

As you’re developing your automotive repair shop business plan, think of ways your auto shop can stand out in your community. If you want a good example, check out our Shop Spotlight of Turbo Tim’s Anything Automotive. Turbo Tim’s shop owner Tim Suggs crafted his shop around a unique and relatable culture that gives back to the community. Their focus is on “average cars, average people.”

“Early on, it was apparent that if I put people first, the money would come. I focused on building an atmosphere that was both fun and professional for employees and customers alike. One of the most instrumental, yet unintentional, parts of our culture came from a cat I found at a machine shop. I’ve always been a cat person, and I asked the technicians there if that was their cat. They said it was a stray that they regularly fed. After checking that he wasn’t microchipped and didn’t belong to anyone, I brought him home with me.

And that’s the origin story of Bobby, our original shop cat. We now have multiple cats who greet folks in our waiting room. Bobby also positively affected our marketing. Halfway through our growth, we began branding ourselves with a cat logo inspired by Bobby. Today, customers who put Bobby bumper stickers on their cars get 10% off for life. Less productive are our chickens, who ‘work’ in the chicken coop on our outdoor patio.”

When you describe your company in your auto repair workshop business plan, you want to unveil what you see your shop being. Yes, you’ll want to mention the mission, but you also want to capture your shop’s values and culture, and what sets your shop apart from the rest.

3. State Your Business Goals

The next section of your auto mechanic business plan is where you should state your business goals. Here you’ll want to list out the short-term, medium-term, and long-term goals that you want to achieve with your business.

• ​Short-term business goals: these business goals are to be accomplished in no more than one year.
• ​Medium-term business goals: these business goals should be completed in more than one year, but less than five years.
• ​Long-term business goals: these business goals are what you want to accomplish in five years and beyond.

As you’re coming up with your shop’s goals, you need to make sure that they are realistic, attainable, and strategic. Ask yourself these six questions as you come up with your business goals:

1. 1.Why is this goal important?
2. 2.Can we achieve this goal?
3. 3.What can impede or stop us from achieving this goal?
4. 4.If we set this goal, what are the action steps?
5. 5.If we meet this goal, how do we take it to the next level?
6. 6.If we don’t meet this goal, how do we rebound?

Now that you have those six guiding questions, you can start to come up with your shop’s unique business goals. Ask yourself the following questions to help you come up with your company goals:

• ​Why do we do what we do?
• ​Where do I see my business this year, next year, and five years from now?
• ​What are we selling beyond auto repair?
• ​How do we feel about the problems we solve?
• ​What values do we want to stand by no matter how big we grow?
• ​What do our customers want?
• ​Which promises do we want to make? Which promises can we keep? (Only make promises that you know that you can keep)
• ​What do we need to do today to make sure that we can keep doing the things we want to do tomorrow?

Whether your goal is to have a 20% profit margin year one or open up a second location in the next five years, the business goals section in your automotive repair shop business plan will help you remember why you set that goal in the first place.

If your goal is to increase your sales and ARO, then you’ll like Tekmetric’s Digital Vehicle Inspection (DVI) feature. Tekmetric’s DVIs are designed to inform and show your customers exactly what’s going on under the hood. And the better you can explain vehicle issues, the more likely your customers will be on board with getting the recommended repair work done.

Tekmetric’s DVIs include six core features that will benefit both your team and your customers:

1. 1.A searchable DVI history
2. 2.The ability for technicians to attach photos and videos to inspections
3. 3.A color-coded system that indicates the severity of inspection findings
4. 4.A direct tie-in to parts and labor data when building estimates
5. 5.The ability to add canned jobs when building estimates
6. 6.Digital authorization for jobs
7. 7.A declined jobs report that automatically saves and tracks declined jobs

4. Describe Your Products and Services

In the products and services section of your auto repair workshop business plan, it’s important to focus on your customers