Thinking about buying an auto repair shop? There are a few things you need to understand, considering that it could be a significant investment. So opening a new repair shop without getting to know about the automotive industry would be a massive oversight on your part.
More than 235,000 cars were sold in the UAE in 2019 alone. As every car and truck requires constant maintenance to ensure performance and quality over time (I mean you are not going to drive your car around without ever going to a garage, unless you have a Toyota pick-up truck or a Subaru), which means more business for your mechanic shop. But jumping into any business, including buying an auto repair shop without the proper knowledge, could prove to be quite detrimental. So here are a few factors you might want to consider beforehand:
1. Location Is Everything
Do you really want to open a garage with the best facilities, somewhere there is no business around it? That’s why the shop location is considered to be one of the most significant factors. Before starting any business, you need to map out the possible locations for it. If you are thinking of owning an auto repair shop, we suggest you look for an area with an ample amount of expensive cars. On the other hand, if you are looking to work with a franchise, clear up the location beforehand to avoid any issues.
2. Individual Shop Or Franchise
While starting a business, there are two choices. You can either think of starting your own business from scratch (might cost you a bit) or buying a mechanic shop franchise (not enough control over it). Owning an auto repair shop provides you with the liberty to work freely on your own terms. But it might not always guarantee you the success you dreamt of, before owning it. But buying a franchise would provide you with a well-built establishment along with the experience you require to run a successful business.
You might need to pay a few priorly stipulated charges (always read the documents carefully before signing), but it would provide you with a better chance at a profit.
Starting your own business, whatever it is, takes quite a lot of working capital. If you decide to go with buying an auto repair shop franchise, you might need to consider the fact that there are going to be a few prior stipulated charges involved in it. So the best thing for you would be to read every single document very carefully before signing. It would help you understand how much you are paying and how it is going to help your business.
You are going to buy a lot of parts and equipment. So it would be best if you partner up with a franchise that can provide you with a vendor scheme for buying them at a discounted price. Additionally, you need to pay the salaries and benefits (including bonuses and health insurance), the rent for the building (if not bought), etc. The employee salaries are around a fourth of the total expenditure of your shop.
4. Working Capital
Oh yes, the most important question of them all, where you are going to get the required working capital. With the kind of expenditure you might encounter while and after buying an auto repair shop, you will need a lot of working capital. You might have a way of starting the business. But to keep the cash flow open, we suggest you make your customers loyal (a lot of them) to your business with the help of your service, facilities, and the building blocks, i.e. the employees.
One of the critical factors with regards to any new business establishment is the infrastructure. Having a suitable building for your mechanic shop provides your customers with a better feeling than a poorly built establishment would. Along with a good building, the infrastructure also includes repair bays, spares room, paint shop, washing station, upholstery, etc.
While buying an auto repair shop, it is necessary to have ample space to work on more than two cars simultaneously so that the customers won’t have to wait for too long while their vehicle gets worked upon. A large infrastructure also helps the workers switch between the cars not to waste time while a car waits for its spare parts.
6. Latest Equipment
You need the latest equipment required for owning an auto repair shop, along with a good infrastructure. Ensure that you purchase the equipment that is sure to produce a profitable revenue.
The most important thing on anyone’s mind while starting a new business is obviously the revenue. The revenue needs to be higher considering the kind of expenditure required for buying a mechanic shop. Partnering up with a franchise might provide you with the guidance and a well-built establishment, but it would cost you significantly higher. That would reduce your return on investment or ROI.
GaragePlug can help you with the information you require for owning an auto repair shop. We are dedicated to providing you with cloud-based software which is easy to use and can help you keep a customer database, create new orders, set service and maintenance reminders for your existing customers, and keep an inventory of the spares and equipment. It can also help you in increasing the productivity, efficiency and profitability of your auto repair business. To know more, log on to garageplug.com and start your demo or free trial.