The auto body shop launch plan
Every step from deciding to opening, in the order it happens, shaped to your situation, with your own numbers beside it. About 48 steps in 8 phases, 23 of them specific to an auto body shop. Free to read; ticking steps off and putting in your own numbers come with membership.
The plan48 steps
- 01Not started0/6Fold
Decide with the numbersa week or two
Before a dollar is spent. Most expensive mistakes happen here, and this phase costs nothing.
A body shop makes money on collision jobs billed mostly to insurers, with parts markup and add-on work on top, but cycle time caps how much each bay can turn.
Typical for one unit is $1,500,000 to $6,000,000 a year; the owner keeps 8 to 16% of it before paying themselves. If that band does not cover what you need, that is the signal to pause and look again.
~50% survive 5 years. Roughly half of new US businesses are still open after five years.
Twelve questions about your money, time, experience and temperament, scored. Then the 3 questions this business asks of its owner, about the hours and the work. Answer both before you spend a dollar.
Rule of thumb: buy for cash flow and existing DRP standing; build only when you have the capital and can earn into the carrier programs yourself. Answer it in your situation above and the plan reshapes.
Customers, prices, rent, staff pay, what it costs to open. We filled in typical numbers; change what you know and everything on this page follows.
- 02Not started0/5Open
Plan the moneya week
What it costs to open, where the money comes from, and the cushion that keeps you alive until the business pays for itself.
Opening a collision shop in a leased building means buying the paint booth, the frame machine and the tools, fitting out the building, and carrying while you earn your way into insurer...
The itemized cost to open9 lines
- Paint booth, prep booth & booth installation: $24,000 to $162,000An unheated crossdraft booth at the low end; a full downdraft with a bake cycle, ducting and fire protection at the high end
- Frame machine, measuring & welders: $18,000 to $117,000
- Lifts, compressor & air system: $9,000 to $50,000
- Spray guns, scan tools & shop tools: $10,000 to $63,000
- Building improvements: $50,000 to $150,000The biggest swing: a former body shop needs a refresh; a warehouse needs three-phase power, air lines and a booth room
- Estimating hardware & signs: $15,000 to $50,000
- Opening paint & materials stock: $10,000 to $25,000
- Deposit, insurance, permits, legal & launch marketing: $34,000 to $90,000
- Initial working capital: $30,000 to $75,000Payroll, parts and rent while insurer work builds; your plan works out the figure for your numbers
Costs start on day one; customers take months. Map the first twelve months of cash so the business does not run out of money while it is getting going.
The business has to earn your pay like any other bill. Set it in your numbers and watch the month it move.
How deals in this business are financed4 lines
- SBA 7(a) loan (Up to $5M · up to 10 yr (25 with real estate) · 75-85% SBA guarantee)The usual loan for opening or buying a shop: it covers the booth, equipment, build-out, paint stock and working capital, and can include the building.
- SBA 504 loan (10% down, 15% for special-purpose buildings · up to 25 yr)For buying the building or the booth and frame equipment at a long fixed rate.
- Equipment financing (Secured by the equipment)Booth and frame machine dealers finance their own equipment, secured by the machines, so you keep cash for payroll while insurer work builds.
- Seller financing (Often 5-20% of price · 3-7 yr)Common when buying a going shop.
Most new shops pair an with 10 to 20% of your own cash. Know the monthly payment before you look at a single space.
Before you shop. A lender tells you what they would fund, what they need from you (credit, your cash in, a plan with numbers), and a pre-qualification letter makes a landlord or a seller take you seriously.
- 03Not started0/4Open
Set up the companya day or two
A day of paperwork, and it has to come before the space: a lease, a loan application and every permit are in the company’s name.
Your state’s business name search, the trademark register, and the domain, before the name is on a sign, a van, or a lease.
A , an , and the S-corporation election each change what you keep and what you are exposed to. Compare them with the numbers, confirm with a CPA and an attorney, then file with your state.
After:The is free from the IRS in minutes once the company exists. The bank account needs both. Keep business money separate from day one.
After:Pick the accounting software and connect the bank account now, so every cost of opening is captured and the numbers you later are real.
- 04Not started0/5Open
Find and secure the spaceone to three months
A body shop needs room for a booth, frame bays, and parked wrecks, plus zoning that allows paint and bodywork.
What decides it for this business: industrial , carrier drp openings, tow & access, competition & consolidators, parts supply.
One call to the planning desk with the address: is this use allowed there, and what will it take (, permits, fire sign-off)? A space that needs a change of use can add months.
Rent, free months for the , who pays for what, the and the renewals, subject to financing and permits. The lender needs this letter or a draft lease to take your application.
After: ,, renewal options, increase caps, what the landlord adds on top of rent, and what happens if you have to leave. For a location business the lease is part of the purchase price.
After:at minimum; property, workers’ compensation and the rest as the business needs. The landlord asks for a certificate at signing and the lender at closing.
- 05Not started0/2Open
Get the loanfour to eight weeks
Four to eight weeks with an SBA lender, longer if the file is incomplete. Everything else waits on this, so send a complete file.
Your plan with numbers (download it as a PDF from this page), the company’s papers, the or draft lease, the and equipment quotes, your personal financial statement, and proof of the cash you put in.
After:The lender approves against the ; you sign the lease once approved; the loan closes against the signed lease and the insurance certificate. Ask for the to match the or longer.
After:
- 06Not started0/12Open
Permits and the build-outone to three months
A body shop sprays paint, welds and stores solvents and customer cars, so it answers to the city, the fire marshal, the state and the EPA.
Bind the policies you had quoted before a contractor, a vehicle or a customer is in play. Keep the certificates; the landlord, the lender and the city will ask.
After:The booth, ductwork, gas, three-phase power and air lines need permits; the fire marshal inspects the booth and flammable storage before the city issues a...
After:Exterior signs need city approval; once you hire, add a federal , state employer and withholding accounts, and workers’ comp.
Form your or corporation and get a city or county business license.
Parts and paint materials are taxable in sales-tax states, and some states tax repair too, so register to collect and remit.
Confirm in writing that collision repair and spray painting are allowed at the address; many cities require a conditional or special use permit.
Some states register repair shops, body shops included: California (Bureau of Automotive Repair, $200 a year), New York (DMV, $160 to start) and Florida ($50 to $300 a year by...
Shops that spray coatings on cars must notify the EPA, spray only in booths or stations with filters that catch 98% of overspray, use HVLP or similar guns, clean guns without...
Many state and local air agencies want a permit or registration before a spray booth runs, and some cap how much paint you can spray; ask yours early, since it can take weeks.
Waste paint, solvents and used filters fall under EPA and state waste rules; most shops need an EPA ID number above the smallest generator level, a registered hauler and pickup...
Fire-marshal review of exits, extinguishers and load, after the build and before the .
After:The booth, ductwork, gas, three-phase power and air lines need permits; the fire marshal inspects the booth and flammable storage before the city issues a .
After:
- 07Not started0/9Open
Set up to runduring the build
During the build, so the business runs from day one: the systems, the prices, the people and the routine.
Writes carrier-compatible estimates and supplements with photos, the language insurers pay in.
Tracks every car through teardown, body, paint and reassembly, and reports the cycle time and touch time insurers score you on.
Garage liability covers injuries and damage from your work; garagekeepers covers customer cars on your lot and in your booth.
See the price the the business needs implies, then check it against what the market pays.
Exterior signs need city approval; once you hire, add a federal , state employer and withholding accounts, and workers’ comp.
After:Wages are the start: , insurance, training time and the hours you stop billing. Owners usually post the jobs a month out and hire two to four weeks before opening so training happens before the doors open.
Daily: Write and approve estimates, order parts, sublet alignments and... Weekly: Reconcile DRP scorecards, chase parts and supplements, manage cycle... Monthly: Review cycle time, parts , total-loss rate, and carrier...
Opening, closing, the sale, the complaint, the cash. One page each. This is the manual a franchise would have sold you.
Free, and it is how most people will find you. Address, hours, photos and the menu or price list, live before opening day; then the sign, the soft opening and the first regulars.
- 08Not started0/5Open
Open and measurethe first ninety days
You own it. Now run it on the numbers.
Friends, neighbors and a short menu or list. Find the problems while the room is forgiving.
Enter the real numbers and see every cost line against the for this business.
Parts & paint materials; Skilled ; Booth & equipment upkeep.
Growth consumes cash before it produces it. Find the rate your own cash funds before you push.
A collision shop is a sellable asset, and buyers range from first-time owners with SBA loans to multi-shop groups.