5 min

How To Start a Mechanic Shop: Do you have what it takes?

What to know about owning a business in auto repair and how to open your business today

Table of Contents

What Are the Basic Requirements for Starting a Mechanic Shop?
Steps to Opening a Mechanic Shop
Concerns About Starting an Auto Repair Business
Final Thoughts

If you are passionate about cars and love to work with tools, your dream of owning a mechanic shop might be closer to becoming reality than you think! Being your own boss and working on cars and trucks is a realistic and rewarding career opportunity. Continue reading if you would like to learn what requirements and logistics there are for opening a mechanic shop.

What Are the Basic Requirements for Starting a Mechanic Shop?

If you're dreaming of running your own business in car repair, there are a number of things you'll need to consider and prepare for.


There are many moving parts in starting a car business, but there is one requirement that is most important: Experience. Without it, your shop will not be able to stand on its own. If you haven’t worked for at least 5 years in a repair garage, then the chances of successfully running one are reduced dramatically.

Certain types of experience are crucial to have when opening a mechanic shop. One type is being experienced with repair and tune of different makes of cars and providing services such as oil change, replacing air filter and belts, cooling pipes and brakes. The second type of experience is for fixing beyond normal services such as charging air conditioning, replacing sections of engines and fuel injection, gearboxes, and crankshafts. Still, the third one is dealing with modern devices and understanding what role cloud-based solutions can and must play in this business setting.

Financing Your Mechanic Business

There are a number of options you can use to finance your own shop. One of these is a mechanic's line of credit with a bank which is a good option for entrepreneurs because the rates are typically very competitive. The downside to this option though is that you will need to put down some collateral.

Another option that can sometimes be more favorable is to partner with other mechanics to start an independent car repair shop. This is often the best idea for younger mechanics who still have student loans or other debts because it can be possible for partners to split up the costs and responsibilities of the business. This also helps mechanics build their business experience and skill set.

Auto Repair Shop Licensing and Permits

Most people who want to open their own auto shop will need to get a license and permits before operating a new business. A license is needed in order to legally operate a mechanic shop and a permit is necessary to run a business on a commercial property. The needed licenses and permits will vary depending on the type of work that you plan to do in the shop and where the shop is located.

Insurance for Auto Repair Business

In most states, as a repair technician, you need to have Public Liability Insurance which is to protect against injuries or damages that might happen to a customer during a repair. The other type of injury insurance that is required is Workers Compensation Insurance. This one applies to injuries that happen anywhere in the garage, shop, or office.

Owner’s Dedication

Starting an auto repair business is no easy task. You're going to have to work hard all the time to stay ahead of the game. This requires a lot of dedication, perseverance, focus as well as making the necessary sacrifices to follow your dream. The only way the business will be successful is if you as the owner of the company are accountable for your actions, ready to lead your team, and passionate about what you do.

Steps to Opening a Mechanic Shop

1. Find a Suitable Location for Your Auto Repair Shop

You'll want to search for a property where there is plenty of parking and determine if you will need to lease or own the building. Choose a neighborhood with good traffic and abundant commercial properties, or invest in a building if you can.

This is definitely the most expensive step so you'll want to weigh the pros and cons. Buying an old building with plenty of potential to be turned into an auto shop is possible, but you might also be able to buy an old car garage with the same potential without the price tag of a house. You could be fine with starting out small, but if you eventually decide to expand, will you have the space?

2. Do a Competitor Analysis

Find out where the auto repair shops with similar specialization are located, how long they have been operating, what services they offer, and at what prices. Read reviews to see what their customers like and don't like. Before you open your own shop, visit your future competitors as a potential customer to evaluate the quality of their services. This will help you decide on a location and how to make your business stand out.

3. Create an Auto Repair Shop Business Plan

This will give you a realistic picture of your future operation, so do not skip this step. Make a detailed and accurate list of your services, develop a market entry strategy, predict future income and expenses (marketing, rent, equipment, staffing, etc.), define your primary revenue source, outline the prospects for development, and take into account the maximum possible risks.

4. Get Ready with the Necessary Automobile Repair Equipment

The choice of equipment depends on your shop’s specialization. To begin with, you can buy or rent only the most necessary and inexpensive tools and machinery.

Auto repair shop equipment list example:

  • tools for diagnosing automotive issues
  • hydraulic vehicle lifts
  • car stands
  • tire repair tools

In this blog post, you’ll find more tips on choosing the right equipment for your newfound auto shop.

5. Add Staff

You need to know how many staff members you're going to need and hire them as soon as you can. You may start by hiring one experienced mechanic and a few responsible trainees who are willing to learn quickly. This way, you won't go broke on your payroll in the first few months.

6. Find the Best Software for Your Auto Repair Shop

All too often, auto shops feel overwhelmed with the work of running their business. To better manage the business operations right from the start, it is worth investing in a software solution that will help with operations management, accounting, inventory, logistics, marketing, or any other aspect of the business. Look for a tool that centralizes inventories, appointment scheduling, customer relationship management, processing of mechanic shop work orders, control of finances, and business analytics.

That’s exactly what Orderry can do for you at an affordable price. Schedule a demo here to see it in action.

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Vehicle repair forms and invoices in Orderry

Concerns About Starting an Auto Repair Business

Being a shop owner can be an exhilarating and rewarding experience but you have to know the ins and outs of every aspect of the business you are going to run.

Not a Quick Start

One of the most difficult aspects of starting an auto repair shop is simply getting started. It can take months before the business is even open to the public. On top of that, there are all sorts of zoning, safety, and other regulations that must be met in order to be in business, which can cause even more delays.

Serious Capital to Run a Serious Business

Another concern is the cost to open the shop. The equipment needed for this type of business is expensive and it can be difficult to find the necessary space. Prices for labor and parts are in constant fluctuation, so the owner needs to be well versed in the field.

You have to be also aware that the costs associated with starting a company increase every year. New pieces of equipment and vehicles need to be purchased and maintained. New employees will need to be recruited and trained. Expenses like fuel and supplies will need to be considered. And the list can go on.

Importance of Staying Up to Date

It's difficult to keep track of all the innovations happening in the auto repair industry. There are new ways of diagnosing problems with a vehicle, new ways of repairing those problems, and new parts being used. This is why it's important to find time for constant self-education to be able to stay up to date with these innovations.

Final Thoughts

There are hundreds of details you're going to have to consider before turning your dream into an official, profitable business. You need to get yourself a garage or repair shop, pay for the permit fees, go through the measures to get the necessary licenses, buy liability insurance, take into account unexpected repair costs, decide on your target market, tools needed for the job, and so on. But don’t get discouraged by this to-do list! As long as you have self-discipline, patience, and creativity, you’ll overcome any challenges on this road.

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