10 Ideas to Start Your Auto Business Plan Today
Starting your very own business is a big decision. It’s courageous, exciting, risky, and hopefully rewarding. Given the stakes, it makes sense for many to get into one of America’s largest and most dependable industries – the automobile industry. It is massive. There are 286.9 million registered vehicles on American roads today. According to the Alliance for Automotive Innovation, auto manufacturing drives $1.1 trillion into the US economy each year through various auto-related activities such as vehicle sales, servicing, parts supply, tax revenue, plant worker paychecks, and income for auto-related small businesses. In this article, we’ll be exploring ten auto business plan ideas you can start today.
General Car Repair Service
Getting started with your auto business plan requires some initial outlining. After all, failing to plan is planning to fail. If you want to run an automotive repair service, you’ll have to decide on the kind of service you’ll be offering. Here are some options to choose from:
- Dealer services – for anyone who is planning to open dealerships and offer auto repair services for the makes and models they sell
- Independent services – these shops offer various general maintenance and repair services, e.g., oil changes, brake replacements, and engine repair
- Specialty services– these shops work on specific brands or offer limited specialized services such as engine swaps or customized services
You can also become a franchisee to a larger brand such as Jiffy Lube or Midas. Joining one typically costs anywhere between $40,000 – $200,000 and carries with it the benefit of carrying a recognized brand. If you are worried about finding customers, joining a franchise may be the ticket.
You also have to consider other costs. For example, do you have the training it takes to fix a vehicle? Do you know how to diagnose vehicle problems? While you may not need ASE (Automotive Service Excellence) certification to repair vehicles, not having it can make it more difficult to raise funds and obtain insurance for your auto repair services shop. Here are some other costs to consider:
- Business license – this usually costs $50 – $100
- ASE certifications – there is a one-time $36 registration fee in addition to a $39 certification fee, though Level 1 to Level 3 certs are $78 each
- Insurance – you’ll pay about $4,000 per year to insure your shop
- Mechanic’s hydraulic lift – these usually cost around $4,000
- Diagnostic machine – this will cost anywhere between $5,500 to $11,000
- Shop rental fees – $1,500 to $15,000 a month
- Mechanic’s toolset with specialty tools – everything you need will typically cost around $15,000
All in all, you’ll probably be in for at least $50,000. Consider also how much you’ll pay staff according to experience and ability (rates are typically between $25 and $100 per hour). And depending on how many clients you’ll be serving, you should budget in anywhere from $10,000 to $20,000 to pay for parts and extra tools. With all the costs considered and budgeted for, remember to pick a busy location, select good staff, and advertise your shop.
Automotive Painting Business
According to Enterpreneur.com, the startup cost for an auto body painting business is $10,000 to $50,000. Some of the equipment you require will include a spray gun, air compressor, and a dual-action sander. You may also need a slide hammer, auto body hammer, and dolly set. Another main requirement is that you or an employee must have the skill set and experience to actually do the painting. Similar to an auto repair shop, your auto business plan here can also include franchising. Examples of franchises that offer auto painting include Touch Up Guys, Aero Colours, and Maaco.
Otherwise, you can establish a legal identity for your company, be it a sole proprietorship, partnership, or limited liability corporation. To reduce startup investment costs, consider partnering with an automotive repair shop that doesn’t offer auto painting. This allows you to take advantage of their client base and share expenses where possible. You can also gain more clients by becoming an approved provider for insurance companies. They often recommend clients to automotive painting shops. Lastly, just like running an auto repair shop, don’t forget to market yourself both online and via traditional media.
Vehicle Upholstery Repair Service
The third auto business plan you can start is a vehicle upholstery service which includes upholstery repair, restoration cleaning, conditioning, complete reupholstery, and custom reupholstery. Auto upholstery repairs is also a lucrative business that is not capital intensive if you are the only full-time employee and the business is small. Purchasing tools and other equipment will take up most of your startup capital. The tools you’ll require include an industrial sewing machine, working table, cutting shears, hog ring pliers, industrial steamer, heat gun, compressor, glue gun, staple gun, measuring tape, seam ripper, chalk, and dykes. Like the other businesses mentioned earlier, choose a busy location and write a detailed business plan. As for licenses, only ten states require upholsterers to have a license, charging an average of $102 to acquire one.
Automotive Glass Repair Service
Before you launch your auto glass repair services shop, look around at the competition to help you decipher what services you should be providing. You must understand how your business will fit into the local market, which is true for any of the businesses mentioned on this list. For example, you could start a windshield repair service that only requires a windshield repair kit as tooling. Repairing a windshield is as simple as injecting resin into the damaged areas. That’s why many windshield repair businesses are mobile. According to data from IBISWorld, the US windshield repair market is worth $5.5 billion.
When starting your business, consider the primary types of business in the automotive glass repair industry: insurance companies, consumers, and commercial fleets. Understanding their needs will help you alter your marketing strategy to suit each one. Your ability to be competitive and offer better value will play a big role in your success. In addition, you may want to consider partnering with an auto glass franchisor especially considering the complexities associated with current auto glasses. For example, some vehicles are fitted with Advanced Driver Assistance Systems inside windshields. A franchisor can supply you with the tools and techniques necessary to fit these newer, specialized vehicles.
Vehicle Brake Repair Company
Brake checks are necessary to keep vehicles operating safely on the road. Just like an auto repair shop, you will need an ASE certificate to prove your technical know-how. You also want to be careful not to set up shop next to a full auto repair shop that will offer full service, including brakes. Here are some of the things that you’ll need for your auto brake repairs:
- A good tool set – These include professional wrenches, sockets, and ratchets that will endure daily rough use. A good reputable tool set will cost you $2,000 to $5000.
- Brake lathe – This resurfaces brake drums and brake rotors, making them as good as new. The average brake lathe plus a stand and accessory kit will cost you about $9,000.
- Hoist – Purchase a good hoist because a cheap one can be dangerous. The average cost of a 10,000-pound four-post car hoist is between $2,000 and $4,500. Go for a clear span or clear floor design.
You also have the option of leasing equipment when you’re just starting. Also, don’t neglect to market yourself; otherwise, you risk not lasting long in this competitive market.
Specialized Vehicle Company
This auto business plan has quite a hefty asking price. A specialized vehicle company or dealership is a large-scale venture of which there are two types – new and used car dealerships. Depending on the brands you carry, your costs will differ. Franchise fees from the big five auto manufacturers (GM, Toyota, Ford, Hyundai, Honda) can range from $30,000 (Ford) to $500,00 for Toyota and Hyundai. Meanwhile, the minimal financial requirement for Yamaha vehicles is $363,000.
The are other costs to factor in as well. These include business registration and license fees, dealer license fees, rental costs, starting inventory, office equipment, salaries, advertising, and liability insurance. For rental properties, you can expect to pay between 0.40 cents to $4.00 per square foot every month on rent, depending on your location. Your employees will likely include a mechanic, sales associate, salesperson, bookkeeper, and accountant – budget about $60,000 for the first three months’ salaries. In addition, there will be other miscellaneous costs such as a website launch, furniture, etc, that will require your consideration.
Automotive Accident Law Firm
The first step to owning an auto accident law firm, in most states, is to become a lawyer. According to the Attorney Rule of Professional Conduct 5.4, law firms cannot be owned by non-lawyers, except in the states of Arizona and Utah. To increase your chances of being a successful auto accident lawyer, think of how much revenue you would need to be successful and how many cases you’ll have to take to meet that revenue goal. According to the US Bureau of Labor Statistics, lawyers earned a median wage of $127,990 in May 2021.
Do a market analysis as well, including details such as who your client demographic is, the projected size of the automotive accident industry, competition analysis, and how much your clients would be willing to pay. Understanding these aspects will help you create a unique selling point that helps you stand out.
Write down as much of your plan as you possibly can. You’ll also want to speak to a tax preparer so you can structure your business as desired.
Vehicle Rental Company
According to Grand View Research, the car rental market industry size was worth $103.14 billion in 2021 and is expected to grow by up to 4.6% by the time 2028 rolls around. About 40% of this is attributed to airport transport.
The first step to starting a vehicle rental service is deciding what type of vehicle rental company you want; franchise, or independent. You can also choose to partner with a dealership and work out an arrangement where you offer rentals to customers who bring their cars for repairs.
Your target market can be tourists (the largest segment), loaner vehicles for a repair shop or dealership, long-term rentals, or short-term rentals for business travelers. Many rental companies register themselves as sole proprietorships, corporations, and LLCs. Sole proprietorships are the easiest to set up but not the best since they leave your personal assets exposed to legal action. One critical part of owning a rental company is maintaining an online presence, especially because tourists are responsible for a huge chunk of total revenue.
Car Insurance Business
The first step to starting an auto insurance company is becoming a licensed insurance agent per your state’s requirement for a property and casualty license. Next, you need to create an auto business plan that helps you lay out your vision clearly and secure lending from investors. It should include details such as the individuals involved, insurance product offerings, customer acquisition plans, target market, competition, budget, cash flow projections, etc. After that, acquire a business license, registration, permits, and insurance licenses to begin selling insurance.
Car Wash Service
According to the United States Census Bureau, many car washes in America are small businesses featuring less than five employees. It turns out that nearly half of all car washes in America are run by small business owners. Many Americans (72%) report that they prefer washing their cars at car washes rather than at home. Like other businesses, this one starts with a detailed auto business plan providing a road map for the venture. You’ll need to acquire a car wash purchase loan, or come up with the funds to start the business. You must also register your company, get a federal tax identification number, set up a business entity, and obtain permits, licenses, and insurance. Most self-serve bay car washes will cost about $30,000 on the low end, and more advanced setups can cost anywhere from $45,000 to $300,000 to get started with equipment, land, and rent.
Alone, the automotive sector supports 10.3 million jobs. It historically has constituted about 3 to 3.5% of the country’s GDP, so it’s certainly not a bad sector to get into. It’s also projected to keep growing. According to Zippia, the automotive market is expected to continue growing at a compounded annual growth rate (CAGR) of 7.22%.