How to Start Your Own Garage Business
Every business or entrepreneurial venture requires a lot of prior research and dedication in order to become successful and in order to start a garage business, one would require good planning as well as execution. Most graduates from technical institutes end up joining as an employee in an auto repair garage. It is from here that they hone their skills and finally end up starting a garage business of their own. Some people who are focussed and business minded start a garage business straight away just after their stint at technical institutes. If you research anywhere or ask someone about how to start a garage, most of your research would reveal that contrary to the general notion about a garage business, it is not just about fixing cars merely but a lot more than that. Not only do you need the right mechanics and machinery for running operations but would also have to take keen interest in domains of advertising, accounting, marketing and many allied areas in order to run it successfully. Since the garage business is capital intensive, it has to be planned to minimize the costs properly in the initial days and spend consciously. The start-up costs should be minimal. Some businesses also purchase an existing auto repair shop equipped with all necessary infrastructure and also manage to engage some of the customers living in the vicinity.
While there is no magical way for a garage business to be successful, here are some of the things a first time entrepreneur should keep in mind before starting his/her own garage business. Here are they as follows-
1. Market Potential Analysis and Business plan
Every business needs to conduct some checks to understand the market potential and then accordingly come up with a business plan with the insights. The entire process can be broken down into the following steps-
Collection of data: A series of data needs to be collected before starting any garage business In order to understand the size of the market and the amount of customers the garage will cater to. Customer surveys can be done to understand the customer pain points and needs. Based on the data obtained, the garage business can decide on the location where to open the shop and the costs
Competitor analysis: It is essential to study the competitors in the area and accordingly plan on the services and prices. A competitor analysis is a great way to understand the strengths and weaknesses. It helps in understanding customers better and offer more unique services to them.
Customer segmentation and target: Knowing the customers properly is the first step in establishing any successful business. The customers vary in terms of preferences and income levels. Services catering to the target consumers can accordingly be planned belonging to different segments of the population.
Proper estimation of costs and revenue: A proper forecast of costs and revenue can help in increasing chances of the business doing better. The business can accordingly use its resources and then go ahead with the forecasts.
Suppose we want to find out the estimated average revenue that would be generated from each vehicle visit. We can use the potential sales figures and assume the average revenue/vehicle visit at INR 1000. This would actually show a revenue of 30 Lakhs in a year. Then the next step is to estimate the operating expense to see that the garage business can make a profit or not. Some of the costs that need to be considered are Employee cost, Material cost, Marketing expense, and depreciation
Feasibility checks like this are extremely important as they reduce risks and the chances of losses occurring.
2. Finalizing the space for the garage business
The next step in the process of opening a garage business is to find a location for the property. The location of the garage business is extremely important and should be located either along the highways or in the middle of the city where a high volume of traffic would be expected.
Once we select the location we need to conduct the market survey to capture the number of vehicles in operation available in the area where we want to set up the garage. Let us assume that there are 30,000 vehicles available in that area and each one needs at least one visit in a year then we have the potential of 30,000 visits to any of the garages. So if we target a 10 % Market share from these potential visits, then we can get 3000 vehicle visits to our garage /year which means 250 vehicles/month and 25 vehicles in a day. A proper estimation can assist in better planning and hence serving customers better.
In some countries, it is mandatory to obtain a license for opening businesses like gas stations and auto body repair shops and the costs for such licenses are huge. In order to therefore go ahead with the plans, businesses need to take some bank loans. In order to obtain this loan from the bank, they should strategize a business plan that clearly outlines the business goals, advertising costs and other miscellaneous expenses.
3. Special and niche services
Every business stands out from its competitors through the unique customer service and niche services it provides. On the same lines, new auto garage businesses should research the market and start services which the other auto body shops in the area do not provide. Niche services can include specialized repairs and services like repainting, collision repair or some detailed repair. Trends in the automobile market are changing every day and new cars in the segments like eco-friendly cars, electric vehicles and hybrid vehicles are emerging every day. It makes sense for garage businesses to start investing in new age technology equipped to provide niche services. They should also hire mechanics who are aware of new cutting edge technology and skills which could assist in the efforts of the auto garage to carve out a niche for itself. More customers would be attracted to visit the garage business if it has niche services which other competitors do not provide. This would translate into better revenues.
4. Hiring the right employees
Employees drive a business and finding the right set of employees is actually an arduous task that takes a considerable amount of time. The auto mechanic colleges are the best places to find out newly trained employees for garage businesses. It is essential to balance out the number of experienced and new employees in order to derive the best for the business. Many garage businesses work in an apprentice system while hiring new mechanics. It is a paid position which can last from one to four years. It is expected that an employee would work in the garage after his/her apprentice stint is over. Hiring apprentices can help in developing long term and meaningful working relationships which can be beneficial if you open your own auto repair shop. The experienced employees provide stability while the new ones bring freshness and updated skill sets. Encourage the employees to clear certifications in order to make the business look more authentic. Employees with diverse skill sets and decent communication skills should be preferred. Garage businesses should also eventually plan for training.
5. Effective marketing and promotions for the business
The better and more effective the marketing campaigns are, the better are the prospects of more customers visiting the garage business. People looking for answers on how to start a garage should prepare a well-researched marketing plan. Special care should be taken to fulfil all the promises that have been made in the advertisements. A garage business should ideally have its own website and social media accounts on platforms like Facebook and Instagram where it should advertise about its services. Offering guarantees to customers in the advertisements is another way to attract attention of customers. Such services can include free repairs within a certain period of time and other related services. A business can also put up videos of how mechanics work in the garage and the practices that are followed in the workplace. Garage businesses can also put up an ethics statement which may outline the rules followed to satisfy customers, its conformance with the laws and policies. Efforts should be taken to portray a clean and transparent image to the customers. Free car maintenance workshops and repair clinics can be organised for those in need and this can actually spread good word of mouth for the business.
6. Invest in customer service
In order to start a garage business, the first thing any entrepreneur should keep in mind is to properly understand customers and accordingly serve them. Not understanding of customer pain points and preferences at the right time can actually lead to a number of issues which cannot be rectified later despite best efforts. Garage businesses can probably have a waiting room for their customers when their vehicles are being serviced. The list of available services along with their rates can be posted here on a board in the waiting room.
7. Document a fool proof business plan and plan financing
It is necessary to document a fool proof and effective business plan on how the business would function, the cash flow, the plans for expansion in the future and other industry related information. To secure funds to start a garage business, businesses can either go to a bank or apply for loans with a local lender. They should opt for minimum funds to secure a location, tools and working capital enough to sail through till the revenue starts coming in. Used cars which customers discard and are in good condition, can be refurbished and then can be put up for resell. This will ensure another mode of revenue generation which will be great for a new business.
8. Chart relationships with dealers and other organisations.
Another key element to start a garage business is to enter into partnerships or long term relationships with tool dealers. These dealers visit garages to exchange tools and offer new products. They can be good agents of referral and can actually bring in new customers through word of mouth publicity. A garage business can also apply for becoming an official vehicle inspection station of the government’s Public safety and Motor Vehicles department. This may not be a great way to generate profits but can actually bring more credibility to the business leading to more customers coming in for repairs.
8. Operations Management
Monitoring the key business performance indicators regularly is essential once the business has started its operations in full swing. Some of the KPI factors that can be considered for this process can be the satisfaction level of customers, the number of customers visiting, revenues generated and the expenses incurred. Involving all stakeholders in the organisation in this process can aid in corrective actions to be taken for sustaining and improving these KPIs. Future expansion plans and adding more services can only be considered once the present KPIs are consistent and matching expectations.
There are surely many ways of approaching the question of how to start a garage and while it may look challenging, it is actually a very profitable business in the long run. Before opening the garage, the business owners should first look in the aspects stated above and then carefully look into the steps of executing the plan. Like everything, it would need meticulous planning, a good amount of research in industry trends and competitors. The garage business would also require innovative modes of marketing on traditional and social media. Some basics aspects of creating good customer service and ensuring feedback comes in properly will also need to be ensured while planning to open a garage. The right employees need to be hired with the right skill sets and they need to train well in order to interact with customers. Some plans look great on paper, but it is hard work that ensures proper execution of such plans on ground. A business may not see huge flow of revenue almost immediately and may take some time to reach maturity. Businesses should plan accordingly and have a contingency plan in order to sail through the initial times. Business owners should not get impatient and constantly try on improving the business. A garage business will become all the more relevant with the introduction of new segments in cars the demand is expected to increase.