How to start a mechanic business

From key business skills to legal requirements, here's what you need to start your own mechanic company.

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Starting a mechanic business isn't an easy undertaking, but the rewards can be very attractive. There is a lot to consider before you get started. This includes completing several legal activities, planning and making important financial decisions.

If you are planning on starting a mechanic business, here are some essential tips to make the process of getting started that little bit easier for you.

What skills, knowledge, or requirements do I need to start a mechanic business?

First things first, you'll need to have at least one qualified mechanic to get started. Most auto mechanic business owners have started out as mechanics themselves, with a few years of work experience under their belt. So, as a bare minimum, you have to complete mechanic training and have good knowledge of automotive parts.

Mechanics who wish to launch a business should begin by designing a business plan. This will be the roadmap for how you will structure, run and make your business grow.

You should also have a marketing plan that will allow you to create your core base of customers. Be sure to seek financial advice for purchases of business equipment and expenses.

Like any business, you'll need to fill out paperwork to register your business with an Australian Business Number and Tax File Number for tax purposes. If you intend to earn more than $75,000 in a financial year, you must also register for GST.

The key courses and qualifications

mechanic

Mechanics will need to be certified in order to be able to work unsupervised at your auto mechanic shop. You'll need a Certificate III in Light Vehicle Mechanical Technology to prepare you for the tasks you will handle. The course will teach you how to work on various services and repair tasks. The duration of the course is three years. You also have to complete a mechanic apprenticeship, which usually takes four years.

Each State (except Victoria) have their own certification requirements for motor and/or motorcycle mechanics. For example in NSW, you will need to obtain a Certificate III in Light Vehicle Mechanical Technology or Certificate III in Heavy Commercial Vehicle Mechanical Technology.

For other related categories of work, further certification is required. Some of these activities include:

  • Examining second-hand vehicles
  • modifying or altering vehicles
  • operating a crane
  • Installing gas.
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    Get the right licence

    Unless your business is in Victoria, you will need to obtain a motor vehicle repairer's licence to run your own auto mechanic business. You can apply for the business licence as a sole trader, a partnership or proprietary company. Licences last for three years and must be renewed 28 days before expiry.

    See below table to access the relevant licence requirements for your State or Territory.

    StateOffice
    Australia Capital TerritoryOffice of Regulatory Services

    www.ors.act.gov.au

    Western AustraliaConsumer Protection Licensing Branch, Department of Commerce

    www.commerce.wa.gov.au

    New South WalesOffice of Fair Trading

    www.fairtrading.nsw.gov.au

    TasmaniaConsumer Affairs and Fair Trading

    www.consumer.tas.gov.au

    QueenslandOffice of Fair Trading

    www.fairtrading.qld.gov.au

    South AustraliaConsumer and Business Services

    www.cbs.sa.gov.au

    Northern TerritoryConsumer Affairs

    www.consumeraffairs.nt.gov.au

    Buy the right equipment and software

    You will need several tools to perform repairs and motor vehicle service for your customers. These include:

    • Welding equipment
    • Screwdrivers
    • Lathes
    • Wrench
    • Pliers
    • Spanners
    • Grinders
    • Pressure gauges
    • Micrometres
    • Air compressors
    • Ratchets
    • Jacks
    • Electronic diagnostic equipment.

    You will also need a professional website and optimise it to ensure that you are visible in search results. Setting up a website will make it easy for clients to request an appointment. In turn, this will boost your sales.

    Choose your business structure

    You can choose between three different business structures when starting your mechanic business: They include:

    • Proprietary company: This type of business structure can have between one and 50 shareholders.
    • Partnership: You can share business ownership with two or more people. The company can employ directors and shareholders and their income will be taxed at personal rates.
    • Sole trader: In this business structure, you will be the only one running the mechanic business. You will have to apply for an Australian Business Number to identify your mechanic business to other people when invoicing or ordering.

    There are various documents that you have to secure before you open your mechanic business. Here are some of the legal documents you will need.

    • Partnership agreement: You will need a written agreement to distinguish the responsibilities and roles of each partner if you choose partnership as your business structure.
    • Tax invoices: You will need tax invoices to determine the supplies that you should include in the taxable period.
    • Client agreement: This contract explains the terms of service under which you will conduct business with your customers.
    • Employment agreement: This is important when you are hiring employees, as it defines your relationship with each worker.

    You can download legal documents on the internet or seek legal help from experienced lawyers.

    Name Product What's offered? Starting price to become a member Annual Fee from Free legal documents available?
    Lawpath
    Legal documents and templates, Access to lawyers, Legal guides, Legal advice
    $79 per month
    Essentials: $288, legal advice: $828
    You can view samples for free and you can create your first document for free.
    Choose an annual plan from just $288 and get unlimited revisions to your legal or business documents. Plus, unlock exclusive partner offers.
    LawDepot
    Legal documents and templates, Legal guides
    $4.99 per month
    $59.88
    Free one week trial available which gives access to hundreds of documents.
    Customise and download legal documents in as little as five minutes. Plus, LawDepot offers peace of mind with two service guarantees.
    Legal123
    Legal documents and templates, Legal guides
    Varies per template
    N/A
    No
    Legal123 offers a range of individual templates or document packages for consultants, app developers, personal trainers and more.
    LegalVision
    Legal documents and templates, Legal guides, Legal advice
    $49 + GST per week
    $2,548 + GST
    No
    Your business can take advantage of unlimited lawyer consultations, fast turnaround times and free legal templates with LegalVision.
    Law Central
    Legal documents and templates, Legal guides
    Free for the Silver membership
    Gold: $99
    You can view samples and create your own document for free with the Silver membership.
    Law Central offers a large number of legal templates for super, trusts, estate planning, employment and commercial uses.
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    Build up your customer base

    With noticeable mechanical skills that begin a business based on word-of-mouth, business growth means understanding the need for automotive licensing, government and local permits, business cover and creating a place in the business community through mutual mechanics' associations. Customers want to know their mechanic has a proven track record of skills as well as certifications and awards in their chosen career field.

    A new mechanic business's growth depends upon the quality of customer service. Therefore, your mechanic business should rely on customer recommendations to verify the quality of auto repair or automotive machining work. Keep in mind referrals and advertising to the specific target market, as ways you can stay ahead of competitors.

    Getting your small business listed in online business directories – like TrueLocal and StartLocal – will help you to increase visibility and rankings. Online business directories help you to connect with more of your customers. They can also help to make sure that your business listings are accurate across the multiple web directories so that your business will come up when users search for the services you are offering.

    You can also use online marketplaces like Airtasker, hipages and Oneflare to sell your services. Here's a little more information on some top-rated brands:

    • hipages. A great source for finding new customers in your neighbourhood.
    • Airtasker. This site gets a lot of traffic and can help increase your visibility by advertising your services. Lots of opportunity for market research too, as you can browse the competition.
    • Oneflare. Another popular site for people searching for a specific service in their area.

    Work out how much to charge your customers

    Most mechanics will charge their customers an hourly rate for labour costs, and an additional charge for auto parts. The cost of replacement parts and the severity of a vehicle's problem will influence how much you need to charge your customers. Prices will also vary depending on the make and type of vehicle, as well as the area.

    To get a rough idea of hourly rates, many car mechanics charge between about $65 and $100 per hour.

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    Frequently asked questions

    Is a mechanic a good career option?

    It can be, yes. Everyone who drives a vehicle needs the services of a mechanic. For this reason, it offers a certain level of security, as you should always be able to find a job.

    Do mechanics ever use software for their business?

    Yes. Mechanic software streamlines work, saves you time and increase productivity. Some of the useful auto repair software includes ALLDATA, R.O. Writer and ARI.

    What affects how much money I'll need to start a mechanic business?

    The exact amount you need depends on several factors including the cost of any courses you'll take, your location and how many people you plan to hire.

    Are there franchise options available?

    Instead of going it alone and taking on the whole legal liability and responsibility yourself, opening a franchise can be an excellent option for the right person. Not only do you get the brand name, but most franchises come with market analysis and costing all structured out for you.

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