If customizing vehicles is your passion, you can't start just any auto repair shop. Maybe you'd like to do auto body work on a classic car, add window tinting to luxury cars, or put decals on race cars for motorsports. Customizing cars is hard work, but it can be a labor of love.
If starting a vehicle customization shop is your dream, this guide will help you make it a reality. We'll go over everything you need to get started. Like any business, starting the best custom car shop won't be easy, but it can be extremely rewarding.
Mechanical Training and Experience Requirements
To start your own custom car shop, all you'll need is experience in the auto industry and the technical skills to complete the customizations you plan on offering. However, you can learn automotive skills from a trade school or an apprenticeship.
While you don't need any formal education to open up a body shop, having an automotive service excellence (ASE) certification as a repair technician can help you do things like secure funding for your business and get insurance. To get ASE certified, you'll have to take a certification exam.
There are also a few soft skills you'll need. As the boss, you'll need management skills to ensure everything runs smoothly, customer service skills to keep your customers happy and coming back, and the ability to keep up with trends in the industry.
Necessary Resources and Equipment
Think about your target market and what auto customization services you'd like to offer them. Do you want to service classic sports cars, luxury vehicles, or do custom paint jobs? Some shops even work on fleets of vehicles (like ambulances or police cars) and can secure lucrative government contracts.
Most custom car shops charge about $100 an hour and up for labor. You can also charge flat rates for certain custom work. For example, vehicle wraps can start at around $2,000. Customers will pay for parts and supplies first and pay for labor when the job is done. The amount of work you can take on will depend on things like the demand for your service in your surrounding area and the size of your business.
The initial cost to start your shop will vary greatly depending on the size and location of your company and the services you offer. For example, if you specialize in custom audio systems and car stereo installation, you won't need as much capital as a shop that specializes in collision repair for high-quality luxury vehicles or performance upgrades for sports cars.
You'll have initial costs for things like tools and machinery, as well as recurring costs for things like rent and insurance. You should start out with at least $50,000 to cover materials, licenses, and insurance. Here are some items you might need to start your shop:
- Air compressors and air tools (like air wrenches and saws)
- Air conditioning
- Dual-action sanders and sanding blocks
- Painting equipment like suits and safety masks
- High-volume low-pressure (HVLP) air spray guns of various proportions
- Mechanic tool sets
- Electrical tools
- Parts washer
- Diagnostic machine
It's also wise to document your labor safety rules and display them in your shop, especially if you have employees. This will make sure you're abiding by all Occupational Safety and Health Administration (OSHA) labor rules for mechanic shops.
A business plan will help outline the trajectory for your business and show how you plan to operate, make profits, and deal with any issues your business might face. A detailed plan can help you get investors and support for your shop. A business plan should include:
- An executive summary that introduces your business's mission statement and briefly outlines the rest of the plan
- A company description of what you do
- A market analysis that shows where your business fits in the market
- Your management and stakeholders
- Your service and sales strategies
- Financial plans and funding requests
Starting Your Custom Car Shop
Now that you know the resources you'll need to get your shop up and running, we'll take a look at how you can register your business and go over a few things you'll need to keep your shop in compliance.
Legally Form Your Custom Car Shop and Follow Regulations
Choose which type of business you want to start. You can start a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. Sole proprietorships and partnerships are legally considered the same as their owners. Having an LLC or a corporation protects your assets in case your business is sued. However, while corporations offer the highest level of asset protection, they're also double-taxed.
You're generally not required to register your shop with the federal government, but you are required to register it with your state. This can usually be done by submitting documentation to your Secretary of State. In addition to paperwork, you'll need to identify your business name, locale, members, structure, registered agent (who handles the service of process), and the number of shares (for corporations).
You'll want to find a unique name for your business. You can see if your chosen name is being used nationally using the United States Patent and Trademark Office (USPTO) website database. You can also check with your Secretary of State's office and county clerk to see if a name is being used in your area.
You may also need different licenses to do business depending on where your business is located. For example, some states will require you to get a resale permit if you plan on selling custom parts for vehicles. Take a look at the requirements in your state by reading the United States Small Business Administration (SBA) guide to federal and state licenses and permits. To find out what local licenses you need, contact your county clerk's office or do a search for a local association listed on the SBA website.
Some common forms of insurance you'll need are liability and workers' compensation. Here are a few other insurance options that can be valuable to your auto shop:
- Business auto insurance for when you have to drive cars to test your work
- Property and equipment insurance just in case your expensive tools get stolen or broken
- Business property insurance to protect your shop from vandalism and natural disasters
Getting a business bank account is essential because it protects your personal assets in case your business owes money. Having a business line of credit can also help you get better interest rates on business loans and higher amounts of credit. To apply for a business line of credit, you'll need your Social Security number or employee identification number (EIN). You may have to bring additional documents, as well, like your personal identification, business license, and formation paperwork.
Knowing the tax rules for your business will keep you in compliance and can even save you money. For example, many states - like Texas - don't require you to pay sales tax on resale items. Federally, you'll have to pay income tax for your business. You'll also have to pay and withhold a portion of your employees' Federal Insurance Contributions Act (FICA) taxes. You may also be required to pay several state taxes, like sales tax and real property tax. Check with your state government website to see what taxes you're required to pay.
Because your shop will run out of a physical location, you'll likely need a Certificate of Occupancy (CO). This form certifies that building codes and rules have been satisfied. If you're leasing, it's the landlord's job to obtain a CO. Make sure they get a new one every time any renovations or changes are made to the building. Check your city's government website to ensure you're meeting all codes in your area.
Successfully Market Your Custom Car Shop Online
Every business needs a website. You can build your own using a website builder like WordPress or Squarespace or hire a professional developer or team to do the job using a talent platform like Upwork. Remember to include your company phone number with a message that says something like "Call us." Customers who call in have a higher chance of buying.
Make your company available on different social media sites, as well. Market on Facebook, Instagram, and Twitter. Feature images and videos of all the cool customizations you've made. You can also make YouTube videos showcasing your work. You may even want to offer discounts for likes or shares of your pages. Be active on social media and interact with your audience whenever possible.
To stand out, your company needs a unique logo. You can use software like Themeisle or Tailor Brands to create a professional-looking custom logo for your company. Remember to trademark your logo on the USPTO website.
Perhaps the best way to promote your business is by word of mouth and testimonials. You should always be courting testimonials from your customers. Send out customer satisfaction surveys to customers after you've done work for them. Keep in contact and publish great testimonials on your website, social media, and everywhere else. You can sign up for sites like Yelp and Google My Business to get feedback, as well. Be sure to engage with both positive and negative reviews.
Keep Track of Your Custom Car Shop's Administration
It's important to keep accurate accounting records for your business. Custom auto work is expensive and you need to get paid fairly. Be sure you have plenty of the documents you'll need. Accounting software like Skynova can help you keep track of things like payments, costs, and deposits.
You can use Skynova's free business templates to quickly make accounting documents like invoices, estimates, and quotes. If you send these documents online, you'll be able to know when a customer has seen and approved them.
This process saves time for both you and the customer and lets you get more work done. For example, wrapping a car can take around two or three days for professionals to do. Cutting out the lag time between sending a quote and getting the customer's approval ensures that you can start right away.
Set Up Your Custom Car Shop for Success
Setting up a business is never easy and a custom car shop is no exception. It can be tough to keep up with all the rules and regulations that go with building an auto shop. If you set up your business correctly, run it efficiently, and strategically market it, you'll have a great chance of being successful.
Whether you do car window tinting, custom interiors, or auto detailing, you like working with cars, not doing paperwork. Let Skynova take some of the administration weight off your shoulders. See how our software products make processes like accounting much easier.