In my previous hub How to start an auto repair shop3 I discussed the importance of having passion for the mechanical work itself and how to gain new customers and more importantly, how to keep them. If you missed the other hub as well, describing special tools and location, there is a link at the bottom of this page.
In the first of this series of articles I showed you exactly what building to lease, build or buy, what height the roof needs to be, the type of floor needed, the floor surface required and equipment you will need, including an extensive list of time saving equipment.
Once you decide the size of your new business and how many bays with hoists you will be able to support you can start putting rough figures for equipment and machinery in to your business plan.
You may need another mechanic who can operate more profit centres
when you get busy, so ensure that you consider labour costs when
setting up, and keep cash in reserve for it.
If you are an engineering type and have broad skills, with a good understanding of workshop machinery and equipment you can decide to buy used equipment.
You will need to do your homework though, there is a lot of very ordinary equipment suppliers out there and I discuss the best auto shop lifts and other machinery on another group of hubs concerning auto repair shop machinery and equipment.
If you do have the cash to buy top quality new machinery and equipment, don't spend your money yet! Read on.
When setting up profit centres the best way I know is to lease new equipment, not buy it.
I buy only the the hoists and tools that are used for common service work and are not profit centres as such, but the bones of my business.
If I add a profit centre that requires a special hoist such as an alignment hoist, I lease it against it's income, and keep my cash, as I have better use for it as you will see.
Some facts about leasing as opposed to buying outright.
Typical return on profits for various machinery.
With the high investment cost of automotive machinery the returns need to justify the outlay.
Things to consider with installing a brake lathe:
- Some vehicles come with cheap disposable disc rotors that cannot be machined.
- A decent brake lathe fully equipped is going to cost around $10,000 up and running, so you need to find at least $150 worth of work a week to install one.
- You can buy a near perfect used brake lathe for under $5,000 so look at buying used instead of leasing a new one.
- You need a good operator although instructions are usually very good, so it is more a matter of not being sloppy when setting up and handling the delicate cones and cups..
- You need a clear space to put the brake lathe, with room for the operator to move around the machine safely when it is operating.
Advantages of having your own brake lathe:
- You do not need to pay others to have discs or drums machined.
- You will not have a vehicle hanging around waiting for the machined drums to be returned.
- You have full quality control in your own hands when you do brake repairs.
- You can do contract work for car yards and other repair shops who don't have a brake lathe.
- You can attract more brake work and suspension repairs.
- You will not be wasting hoist time while a vehicle waits on the hoist for the wheels to be refitted.
- You will not have the vehicle imobilised and using valuable work space in a work bay.
- Brake lathes return a good profit.
Air-conditioner recharge and repair:
- You need at least $150 a week in work to keep this baby paying for itself and returning a profit. This is not hard to achieve if you educate your customers.
- A couple of recharges a week will pay for a fully automatic machine and customers are always happier when their air-conditioner works to it's full capacity again, so it is a matter of building a regular market.
- You can do recharges for car sales places and other repair shops.
Service backup and training are essentials and don't consider buying unless you are given both with the lease or purchase.
Research is essential when buying an air-conditioner recharge station. The unit can be bought as separate components or combined in one fully automated machine that removes, cleans, weighs and stores the discharged gas, then recharges the unit only troubling you to disconnect the machine when it is finished the recharge.
If you are going to include wheel alignment as a profit centre it can pose a few problems with space, and the use of a dedicated hoist and accompanying work bay.
There is a large array of wheel alignment equipment available, most of it pretty expensive to buy and maintain.
If you already have a hoist suitable for suspension work, a brake lathe, wheel balancer and tire sales then wheel alignment makes more sense as a profit centre.
The pay-off in having wheel alignment equipment is that with modern vehicles requiring four wheel alignment, there is money in the suspension repairs, tire sales, etc often needed to correct alignment and it does complete a "one stop shop."
These days with design changes, the vehicles needing wheel alignment often have bent suspension components. The work to replace them is clean, the bolts are seldom seized and good labor rates can see nice net profit. The trick here, is picking the work, and having the space to hold the vehicle while components are sourced. This gets down to knowing your business well.
I constantly see shops bought to a screeching halt through bad decisions, like taking on an alignment job without test driving first, only to discover it is a suspension job they don't have replacement parts for, resulting in the customer waiting for his car back while the vehicle is using the shop's valuable hoist time waiting for parts.
The way to make money on alignment work is to know in advance what needs to be done. I spend some of my own time making sure the job will be profitable. Trust me, it pays to drive all alignment jobs before you take them on.
Many workshops do this the wrong way. They take the job, get it up on the hoist then hope all is as it should be. It seldom is in my experience!
Older alternaters, generators and starter motors
Auto Electrical repairs are becoming a rarity as computers and sensors, relays and readouts take the place of putting a component such as a starter motor on a growler or testing to find electronic faults with a multi meter like we did in the old days.
You need a good scanner and the right loom these days, or you read it off the fault code. We replace rather than repair most electrical and electronic components now.
This has opened up a market in doing auto electrical repairs on older cars if you have such a clientele don't forget this nice little money maker.
Links to related hubs by earnestshub.
- How to start an auto repair shop-Starting a workshop business 2
Self knowledge and self worth are vital personal attributes when starting a workshop or auto repair shop. You need to enjoy dealing with people. You need to enjoy the work or get someone with that talent at...
- How to start an Auto repair shop-Starting a Workshop3
Operating your own auto repair shop these days involves balancing markets against profit centres and gaining customer loyalty. Some outsourcing is inevitable especially when you start your auto shop, but you...
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earnestshub (author) from Melbourne Australia on October 18, 2011:
If you have leased property you will have needed to be in contact with your local council, who will inform you of any permits, licences, approval you need and that the premises are suitable for an auto shop, what you are permitted to do on the premises, any safety and health requirements etc. Naming your business is another matter but your local council will put you in touch with the appropriate authority about any naming of your business.
I have no idea which country you are in, so it is a bit hard to give you any details on your authorities and their structure.
sara on October 18, 2011:
I am looking for more of the other aspect of advice for starting a shop like; how do you know which names you can use? Do you need to let someone know you are starting a shop in the city? I have a leased location, the tools and equipment, and the employees. What am I missing??
earnestshub (author) from Melbourne Australia on August 31, 2011:
You could do safety inspections, looking for any leaks, or scrubbed tires etc, but you would need someone to look at the car after your inspection and show you what you missed. You will pick up some useful information this way. You could also inspect the hoists daily and learn to operate air-conditioner station or brake lathe etc, as the manual will provide good instructions that you can follow.
Best of luck.
yassine on August 31, 2011:
i' m not a mechanic, a friend of mine is, i' m about tp buy a shop, are they any basic jobs ( inspection....) that you think somebody with not much mechanical knowledge can do or learn faster....thanks.
earnestshub (author) from Melbourne Australia on January 20, 2011:
Thanks for the comment CIRCA. Very happy to be of assistance.
CIRCA 122010 on January 20, 2011:
thanks, ernest...this what i am looking for...thanks..
earnestshub (author) from Melbourne Australia on January 11, 2011:
Thank you jtrader. Leasing is a good method for a new business. It leaves more money for marketing and promoting the auto repair shop until it gets a good customer base.
jtrader on January 11, 2011:
I like the points you made about leasing. Bigger companies use it and profit.
earnestshub (author) from Melbourne Australia on November 18, 2010:
Yes EtheV there are good honest suppliers in all the major countries that I have dealt with when I was selling equipment.
A talented motor engineer should be able to pick good equipment out of the used equipment market too, but I would generally rather trust the dealers I know to supply top quality refurbished or rebuilt equipment that is guaranteed to work properly in areas of high risk such as wheel aligners.
EtheV on November 17, 2010:
Would you recommend buying some used workshop equipment to make money stretch further?
Constanta on November 01, 2010:
WoW! Great work!
Very nice and usefull hub and article!
earnestshub (author) from Melbourne Australia on October 05, 2010:
Thank you Hello, hello. I hope it saves money and time for those starting a workshop.
Tracy from San Francisco on October 05, 2010:
Ernest, This is a very well executed hub. Lots of information here helping to save money in business start-up as well as car-care. As you like cars so much, you may enjoy my hub, "A Retro 1970's, 'Guy-Flick". Love your writing!:)
Hello, hello, from London, UK on October 05, 2010:
A very well extensive laid out hub containing a huge amount of tips of how to start. Great work.
earnestshub (author) from Melbourne Australia on October 04, 2010:
Thank you Lynne.
There are several others hubs I have written on this subject with information concerning suggested auto repair shop machinery and equipment.
The first one is extensive and includes building requirements and suggestions from my own experience of owning successful workshops.
lynnechandler on October 04, 2010:
Hi Ernest I sent this to my daughter so she could share it with her man. He's looking into this at some point.