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    Starting an Auto Repair Shop in 7 Simple Steps

    Innovations in auto design and technologies haven’t eliminated the need for auto repair. While much has changed over the decades, especially with the introduction of computerized diagnostics, the auto shop continues to be a necessary commodity. If this is your passion, then you could be stepping into a lucrative industry.

    Steps To Starting an Auto Repair Shop

    Before launching, you’ll need to create a business plan, open a bank account, secure funding, comply with requirements, and create a marketing strategy.

    Step 1: Create Your Auto Repair Shop Business Plan

    Before opening any business, make sure to have a well thought out business plan. This forces you to think strategically. 

    Your business plan should include:

    • Executive summary (legal name, address, owners, purpose, business goal, corporate values)
    • Product and services
    • Vision and mission statement
    • Business structure (job roles and responsibilities)
    • Market analysis (market trends, target market, competitive advantages)
    • Sales and marketing strategy (sales forecast, pricing, advertising)
    • Financials (budget, income/expense forecasting)

    Step 2: Obtain an Auto Repair Business Loan

    Unless you have saved up the money, you’ll need a loan to open an auto repair shop. You could apply for a bank loan, but the application process is complicated and requires at least one meeting with loan officers. It can take months before you receive the money. Alternatively, consider one of these three resources.

    1. SmartBiz: SBA loans are guaranteed, making startups such as yours less risky to lenders. Low-interest rates and long repayment periods make SBA loans one of the most favorable financing mechanisms
    2. Kabbage: Kabbage is an online lender known for providing fast access to capital, especially for new businesses that haven’t established business credit. The online application can be completed in just a few minutes. You’ll receive a response within days and the money deposited directly into your account
    3. Fundera: Fundera is an online marketplace that helps you identify the best lenders for your needs. It doesn’t give loans. Fundera is a great resource, especially when you’re launching a new business and are short on time

    Step 3: Form A Legal Entity And Register For Taxes

    It’s worthwhile to invest in an accountant or business attorney’s service to help you choose the legal status that’ll be most favorable to your financial goals. There are pros and cons to each kind of legal entity that’s available. Here are the most common structures:

    • Sole Proprietorship (profits and losses are included on your personal tax return)
    • General, Limited or Limited Liability Partnership
    • Limited Liability Company (LLC)
    • Corporation

    Your business needs to be registered with local, state, and federal government offices. If you intend to have employees, you’ll need to apply for an IRS employer ID number.

    Step 4: Open A Bank Account, Get A Business Card And Set Up Accounting

    The next step is to open a business account with a bank in your area. This’ll serve as the depository for your startup business loan and all future revenues that come in from the business. It’s essential to keep a solid separation between your business and your personal finances. Apply for a business credit card to make purchases for your business or pay the bills until the cash starts flowing in.

    Money management is critical if you’re to survive, especially during the first few years. Accounting software can help you track income and expenses, track accounts receivable and payable, manage your payroll, and prepare financials for tax reporting. Accounting software will help you quickly assess progress toward your financial goals.

    Step 5: Get Permits And Licenses

    Once you have funding in place, the next step is to obtain the necessary permits and licenses to operate your business. Every state has different licensing requirements. Begin by checking with your local motor vehicle agency to help determine the type of license required to start an auto repair shop.

    Step 6: Auto Shop Insurance

    Before being approved for a license, you’ll need to purchase liability insurance. States typically require insurance coverage between $50,000 to $300,000, depending on your circumstances. Liability insurance protects you and your financial health. Your local motor vehicle agency can also tell you how much insurance coverage your business will need.

    Step 7: Marketing And Advertising Your Auto Repair Business

    You have your location, licenses, permits, and financing. Now you need customers. To establish a strong foundation for long-term success, you’ll need to build brand loyalty. So how do you get the word out that you’re in business?

    Set your business up on Google My Business and be sure to use an accurate map. Take advantage of social media platforms to help advertise your business. You can start by creating and posting engaging videos about your business. 

    Create a website that includes a blog where you’ll post informative articles about auto repair and safety. Offer coupons and exclusive deals. To help encourage repeat customers, consider loyalty programs.


    Starting an auto repair shop can be worthwhile, but it does require careful planning, adequate startup funding, and compliance with all licensing requirements. Fortunately, there are startup loans for opening an auto shop that can now be achieved easily online.