Is Buying an Auto Repair Shop Right for You?

Posted 04-15-2016 10:04 am by



If you have been watching my show on YouTube, you know that I currently own eight companies, seven of which are run without my having to be there on a daily basis.  In fact, these businesses pretty much run without me and I spend less than five hours a week monitoring them.  People often ask me how I manage to do what I do.  Today, I want to share with you the story of one of the earliest businesses I purchased – an auto repair shop.

Before I became a business broker (boy, that was a long time ago), I was looking for good businesses to buy.  I had just been through a business failure, and was reflecting on the lessons learned.  You see, I had owned a business in the service industry before, and done really well.  Thinking I could do no wrong, I got into a business in the retail industry.  I learned the hard way that it was a lot more difficult to be profitable in the retail industry than it was in the service industry.  The reason was simple.  In the retail industry, it was easy for the consumers to compare apples to apples.  Unless you sell a product that is not sold at the big box retailers (which mine wasn’t), the customers could simply drive over to the big retailers like Wal-Mart, Home Depot, etc. and buy the exact same product for less.  As a small business, it was really difficult to compete against the big boys.  In the service industry, it was much easier for a small business to survive because consumers cannot easily compare apples to apples.  In my experience, people are willing to pay for good service.  That’s why service businesses could often achieve profit margins of 15% to 20% while retail businesses could only achieve 10%. 

Having just walked away from a retail business failure, I knew I wanted to buy a service business.  I didn’t know what kind of service business I wanted to get into at the time, but I was approached by a business broker offering an auto repair shop for sale.  The first concern I had was the fact that I am not a mechanic.  I had no idea how to fix cars.  I had toyed around with cars in high school, but trust me, you don’t want me fixing your car.  The business broker said, “Aaron, the seller of the auto repair shop had owned it for 16 years, and he is not a mechanic either.”  This caught my attention.  So it is possible to be the owner of an auto repair shop without knowing much about cars?  “That’s right!” The business broker said.  “Think about plumbing companies, for instance.  You don’t need to know how to fix a toilet – that’s what the plumbers you hire are for.  As the business owner, your job is managing the business, not fixing toilets or fixing cars.”

Long story short, I bought the auto repair shop, and it was one of the best investment decisions I had made.  I noticed the seller wasn’t very friendly to the customers.  I made sure everyone at the counter was friendly to the customers, and even put up a banner that read “New Management, Friendly Service”.  I increased revenues by 75% in my first year, systemized the business, and became a lifestyle business owner after 12 months.  The business ran without me but revenues continued to grow.  In fact, revenues doubled again over the next few years.  I still own the auto repair shop till this day, and it provides a very steady source of income for my family.

In my opinion, auto repair shops are excellent businesses to buy because there are millions of cars on the road.  People need cars to get to work whether the economy is doing well or not.  People may be able to put off car repairs for a while, but they can’t put them off forever.  In fact, putting off car repairs just leads to more expensive car repairs down the road.  As the owner of an auto repair shop, I feel very secure knowing there is a steady group of customers who need their cars serviced and maintained on a regular basis.  What’s more, the gross profit on each job is good compared to some of the other service businesses I see.  The auto repair industry is a $58 billion a year industry, and is expected to grow.  As the per capita disposable income grows, more and more people choose professional car repair over doing it themselves.  As people trade in their older cars for newer ones, the new vehicles have complex computer systems that make it difficult for people to fix the car themselves, meaning they need to bring the car to a professional auto technician.  Last but not least, approximately 10,200 people are moving to the Puget Sound Region every month based on data from the Washington Department of Licensing, which leads to more cars on the road and more demand for auto repair services.

I had such a positive experience buying the auto repair shop that I decided to become a business broker so I could share my knowledge and help more people find good businesses to buy.  The Business Brokerage Press has recognized me as an industry expert in the automotive industry, which I am grateful for.  If you are considering buying or selling an automotive repair shop, let’s chat.  I would love to answer your questions and help you where I can. 

Aaron Muller is a serial entrepreneur and business broker who has personally sold over 130 companies and facilitated over 45 SBA loans for his clients.  He is the owner of 8 companies, including an auto repair shop.  For a free business buyer or business seller consultation, please contact aaron@acbrokersinc.com or (425) 766-3940.


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