How to Start a Diesel Repair Shop
If you have a passion for big rigs, you might want to open your own diesel mechanic shop. A good diesel mechanic is completely irreplaceable to businesses that rely on functioning heavy-duty vehicles for their revenue. This profession is pretty much recession proof, and according to the Bureau of Labor Statistics, the industry is expected to grow by 5% through 2028.
There's no quick, easy way to start a diesel repair shop. You'll probably want the proper training, which can take a couple of years, and you'll need to raise the capital and write a solid diesel repair shop business plan to get the wheels rolling.
You don’t exactly need to be educated to open a diesel mechanic shop. You can opt to hire a knowledgeable, experienced staff, but most shop owners tend to be mechanics themselves. It’s much easier to have a successful diesel mechanic shop if you know the ins and outs of how diesel vehicles work and what those vehicles need.
You’ll probably want to get a commercial drivers' license since buses, trucks and heavy machinery typically have diesel engines, and you need to know how to operate those kinds of vehicles in order to repair them. You should also pursue higher education. Get either a diesel mechanic certificate (which takes as little as six months to complete) or an associate degree (which takes two years).
After you’ve gained enough experience, you should get your Automotive Service Excellence certification. This isn’t a requirement, but it does help you in crucial parts of your business. Not only does it build customer trust but without it, you’ll have difficulty obtaining affordable liability insurance and the loans you’ll likely need to finance your business. Plus, ASE certification builds customer trust.
To get the certification, you’ll need to have two years of work and educational experience. One of those years has to be obtained on the job.
The first order of business in setting up your own diesel repair shop is to choose the actual business. Do you want to have a full-service auto shop with a storefront, or do you want to have a service truck? Each has its pros and cons.
Starting a service truck business requires significantly less overhead, and let’s face it: Trucks sometimes get stuck in places that aren’t conveniently located next to a mechanic. With a service truck, you can go directly to customers, but a mobile shop can’t make all the repairs that a full-service truck repair shop can perform. You won’t really be able to do anything that requires going underneath a vehicle because you won’t have a lift.
A traditional diesel mechanic shop requires renting or buying a building, and that property has to have enough space to service numerous large vehicles. That’s not cheap, but you stand to pull in more revenue because you can offer more services than if you’re starting a service truck business. In addition, these services can range toward the technical (read: expensive) side versus what you can offer with a service truck.
The second choice you have to make, which should be clearly outlined in your business plan, is whether you’ll primarily be servicing trucks from businesses or individual consumers. The highest-grossing diesel mechanic shops usually slant their business toward dealing with commercial clients, and there’s a very good reason.
Trucks, vans and other heavy-duty vehicles are often critical for the businesses that use them. If they’re not working properly, it’s a safe bet that it will eat into revenue. For this reason, commercial clients tend to service their vehicles more often and have a higher budget for repairs.
As you’re honing in on your ideal consumer, you should also consider whether or not your shop will specialize. You might choose to have a focus on school buses, transit buses, truck equipment, medium to heavy trucks, farming equipment, road construction equipment, marine equipment and yachts or aircraft support equipment. You may also choose to specialize in a certain manufacturer (think: Chevy, Ford and Dodge) which can help bolster your reputation. Just make sure that whatever specialty you pick has a demand in your location.
Location is important when it comes to a diesel mechanic shop. Your business probably won’t do as well as it could if you set up shop in a suburban, residential area where everyone drives SUVs and compact cars. Instead, you should pick a location near a major truck route or industrial area where fleets of heavy-duty vehicles are used.
Before choosing a location, it’s also important to consider if a diesel vehicle can even get to your shop in the first place. There are certain roads that are closed to trucks, tractor trailers and buses. Opening a truck repair shop on a road that trucks can’t use would be a certain death for the business.
Before you open up shop, you need to form a legal business entity. Many auto shop owners opt to form a limited liability company so they’re not personally held liable in the event that their shop is sued, but there are many other structures from which to choose.
Along with this step, you’ll need to obtain a business license from your local government and register your auto shop with the IRS so you can pay taxes. An employer identification number can be obtained for free through the IRS website.
Unless you’ve managed to put away a large chunk of change to open your diesel repair shop, you’re probably going to need funding. It can cost as much as $15,000 a month just to rent a shop with a large-enough lot, and that’s before you consider all the equipment, the diagnostic machines and the insurance. With a detailed business plan, you can apply for a loan through a bank or the Small Business Association.
All businesses need some insurance to operate. Typically, this is limited to a general liability policy and workers' compensation if you have employees. With a truck repair shop, you’ll also want to consider:
- Garagekeepers coverage: This helps pay for repairs if a customer’s vehicle gets into an accident or is damaged in your care.
- Business property insurance: This helps protect your building and equipment.
- Commercial auto insurance: You’ll need this if you’re starting a service truck business.
Shop around for insurance and speak to a number of different agents before settling on a plan.
You’re going to need some equipment for your shop before you can start servicing customers. This part is, unfortunately, not very cheap. At minimum, you can expect to spend $15,000 on tools. Each lift will run around $4,000, and diagnostics machines can cost between $5,000 and $10,000 each.
The average mechanic shop makes most of its money on a select number of services. These include oil and lube services, alignments, diagnostics, brake services, A/C repair, refrigerant recycling/recharging, electronic engine control services, emission control services, spark plug replacement and alternator repair and replacement. Make sure you have the equipment needed to do these specific tasks.
Diesel repair shops or service trucks are totally scalable. You can start off as the sole mechanic and hire additional employees once you’ve started to accumulate customers, or you can hire a staff right from the start. An inexperienced mechanic will put your company’s integrity at risk, so make sure every repair is handled by someone with ASE certification.
Marketing is key to getting your business off the ground. Start by signing up for services like Yelp, Google My Business and Angie’s List.
Consider offering promotions to customers. A coupon for something small, like an oil change, can lead to repeat business. It’s also a good idea to seek out relationships with towing companies because they can refer you to new customers.