Starting a car repair business: What you need to know to open a garage

If you’re a petrol head looking for life in the business fast lane then setting up a car repair shop may be enough to lure you out of paid employment.

Ideal for mechanics or those who have worked in car dealerships, if you’re looking to go it alone in the motor trade a prerequisite is the need to find suitable premises. A quick search for MOT garages for sale pulls up a host of options. Key to garage premises are parking spaces for customers, a reception and customer waiting area, payment counter, back-office, toilets and a kitchenette.

Tools, diagnostic equipment, ramps, and insurance to cover buildings, vehicles and public liability are a must. Many pre-existing garages for sale will include much of the necessary equipment in the package. Equally, they’ll have relationships with suppliers and customers they may be willing to pass on, although you’ll need to establish your credentials. Beyond that you’ll need clear signage and to get the business listed in every available directory.

Every business comes with costs and car repair businesses need to cover rent, business rates, electricity, refuse disposal, which almost certainly includes a waste carrier licence via the Environment Agency to help you dispose of used oil, batteries and tyres.

Here, we talk garage owner Nalani Watts, who shares what it’s like running a car repair shop and hear from small business accountant Paul Donno about some of the key considerations…

Robbies

Owner: Nalani Watts
Company: Robbies
Description: Automotive garage
Based in: Haverhill, Suffolk
Website: www.cb9tyres.co.uk

Brought up in a car-obsessed family that boasts 70 years in the motor industry, Nalani Watts most likely has petrol in her blood.

Her father Robbie Watts opened his own garage in 2003 and Nalani has since established herself as a garage owner in her own right.

“My father has been in the motor trade for 35 years so it has always been in my blood,” she says. “There was an opportunity for me to take over the garage and expand the business to also selling car parts and consumables to the public – so I took it!

Her passion for cars and working with the public is certainly evident and here she offers a window to her world as a small business owner.

What’s your average day like?

Hectic! The garage is open from 8am – 5:30pm, I often leave at 6:30 as the extra hour when the garage is closed gives me the chance to focus on the following day’s work – making sure the correct parts are in stock or have been delivered, it also gives me a chance to catch up on paperwork. I answer the phone and deal with our customers on a daily basis – I set out the technicians’ work schedules, some days it is manic.

Who are your main suppliers – what do you need and how do you tend to buy your materials?

I tend to deal with my suppliers over the phone, around 15-20 times a day, ordering parts in for the vehicles, oils, workshop consumables etc. I have access to over 30 different suppliers – who offer between 5-10 deliveries a day.

How do you keep your records?

Purchase invoices and outgoing invoices are kept in lever arch files in monthly order, I try to update the accounts system daily, but sometimes I do have to take work home!

What are the pain points that other people wanting to start a garage business should know about?

The service you give your customers is the most important. I always keep the parts we have replaced on customers’ cars in the reception with me to show customers, give them some sort of understanding of what we have replaced – and explaining in depth what a part does. They are always very appreciative – especially people who don’t understand cars very well. Our technicians take time to sit down with the customer and explain everything – and even show the customer their car on the ramp to pin point exactly what has gone wrong or the part that needs replacing. Customers are the main priority in the business. Also having a fleet of courtesy cars is always very handy. It isn’t often that parts deliveries don’t go to plan – but when they do having a courtesy car available for your customer to get themselves to work or their children to school etc is always very handy. Keep up-to-date on your paperwork do not fall behind, this will cause more stress than is worth!

When do you do your accounting?

I try to update the accounts software on a daily basis and file paperwork weekly. Keeping on top of paperwork in the motor trade is a must, we deal with over 100 purchase invoices a week, maybe more, so falling behind is not an option!

How does using an accountant or bookkeeper help?

Our accountant always gives us advice on how to move the business further – what direction we should take next, and also sorting the final accounts and any issues we have regarding PAYE or VAT returns.

The small business accountant’s view

Founder: Paul Donno
Company: 1 Accounts
Description: Cloud-based accountancy firm
Based in: Suffolk
Website: www.1accounts.co.uk

As with any start-up and indeed small business it is essential to keep up-to-date with the paperwork and using cloud based software helps businesses understand their numbers with the accountants able to offer advice when needed.

If you have many suppliers and account customers then knowing how much you owe and what is owed to you is essential for cashflow. Setting these systems up correctly at the start with fewer transactions will definitely help in the long-term as the business becomes busier.

The other area that is essential is robust payroll software and the ability to pay people on time while reporting to HMRC under the Real Time Information regime (RTI). We have helped Robbies to monitor the payroll as well to try and avoid HMRC penalties.

Nalani has opted for our VAT-registered Sole Trader service with an option to incorporate when needed and of course we can monitor when this may be giving the business owner peace of mind that we are only an email away and have access to the business records.

This article was produced in association with Sage One. For more business insight and tips to keep on top of cashflow and small business tax visit the Sage business bloghttp://uk.sageone.com/blog/.  

For a free trial of Sage One please visit http://uk.sageone.com/products/.