How to Start a Custom Car Shop

Part 1 - How to start a Custom Car Shop business - Background

This business is needed because of the large demand for vehicle customization. Since all jobs are customized or fabricated on-site, the complexity of each job varies with the customer and request. The market for this business consists mostly of automotive enthusiasts.

Our guide is in 3 parts:

• Part 1 - How to start a Custom Car business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a custom car shop?

Costs for starting a custom car shop vary and generally depend on location. However, basic costs include:

• Air compressor – range from $100 used to $2,000 new

• Refrigerated evaporating system – $1,500 to $3,500

• Jitter bugs, dual-action sanders – $200

• Sanding blocks – $0.50 to $1 each

• Masks and paint suits – $250

• Cabinet (for solvents, paints, and cleaners) – $80 to $2,500

• HVLP guns of different sizes – $500 to $1,000 each

• Lift – $1,500 to $3,000 each (you will need between 3 and 5 of these)

• Air tools (like impact, air nozzle, etc) – $60 to $200 each

• Tools to stock boxes – $150 for basic 50 to 100-piece mechanic’s tool set; $40,000 for a 1,390-piece comprehensive set

• Parts washer – $100 to $200

• Diagnostic machine – $3,000 to $4,000

• Rebuilding counters – $400

• Woodworking tools – $200 for a basic set

• Fiberglass tools – $100 for a basic set

• Electrical tools for stereo and complete body wiring – $150 to $300

These are basic costs. Total costs may be higher, depending on the specific needs of your business.

What are the ongoing expenses for a custom car shop?

Ongoing expenses after initial overhead include insurance, rent, and labor costs.

• Rent – $1,500 to $15,000 per month, depending on location

• Insurance – $4,000 per year

• Labor – $20,000 to $45,000 per year, per employee

• Supplies – Vary based on job

Who is the target market?

Custom vehicles appeal to the automotive enthusiast crowd, which is a subset of the general population. Most jobs are sold retail to customers. Some shops, however, do work with corporation or governments, offering fleet work for these organizations.

How does a custom car shop make money?

This business depends on consumers coming into the shop, requesting custom work on their vehicle. The shop is paid a fee for this service. Generally, the fees are variable and depend on the job being performed. Some fees are flat or fixed-rate, while others are variable and billed by the hour.

Customers pay the shop and the shop pays the mechanic for the work performed.

How much can you charge customers?

Custom car shops charge customers market labor rates of at least $100 per hour or a flat rate for specific services. Clients typically pay for parts upfront and labor when the job is completed.

How much profit can a custom car shop make?

Shop owners typically make an average income of between $50,000 and $100,000 per year. The shop itself may bring in several hundred thousand or a million dollars in revenue.

How can you make your business more profitable?

Custom car shops can make more money by branching out and offering basic maintenance. In today’s economy, the market for customization is smaller than it was just 10 years ago. However, costs for customization have risen. This means work may bring in good revenue, but jobs may be sparse. Filling in with routine maintenance can help boost revenue.

Day-to-Day and Growth

What happens during a typical day at a custom car shop?

Custom car shops appeal to entrepreneurs who are automotive enthusiasts and love engineering and designing. As a custom car shop owner, you need to be willing to work long hours, manage a team of technicians, and love working with your hands. You also need to have a passion for the automotive enthusiast community, which tends to have its own unique culture apart from the general population.

If you have a team of mechanics, you also need to manage your crew. If your mechanics are on a flat rate flag system, you must set up jobs for them throughout the day.

What are some skills and experiences that will help you build a successful custom car shop?

ASE certifications are great to have for a business like this because it shows professionalism. However, you’ll also need extensive experience and training in the specific types of customizations your shop will perform.

Opening a custom car shop requires familiarity with building and rebuilding, repairing vehicles, and experience with customizing various makes and models. This experience is best developed working for an existing successful custom car shop. Customization of automobiles is also driven by trends. So, you need to keep your finger on the pulse of the market and follow the current trends.

It’s also important to pay attention to regulations, since modifications must comply with local, state, and federal law. Some customizations, like window tints, may be restricted or illegal and exhaust pipes need to comply with EPA regulations.

What is the growth potential for a custom car shop?

It is difficult to run a custom car shop out of a small location. Usually, a large warehouse (40’ x 80’-100’) with at least 8 service bays is required. This is because at least one bay will be needed for a paint booth, while two more are needed at prepping and staging areas for the mechanics to prepare a vehicle for paint (if you offer these services).

The remaining bays are for non-body work and maintenance work.

However, some custom shops do specialize in certain kinds of customizations (e.g. custom stereo installation). These shops can be run out of a large garage.

Custom car shops can expand to service more customers, even opening multiple locations should demand exceed the capabilities of the first shop.

What are some insider tips for jump starting a custom car shop?

Getting started in this business is expensive. A few ways mechanics get around this is to start working in someone else’s shop, leasing space. You could also lease a smaller building and specialize in one or two different areas of custom work. Grow as finances allow.

How and when to build a team

While some shop owners are “one man shops,” this is a difficult business to do alone. Consider hiring a crew immediately. At minimum, you will want one mechanic to take over day-to-day service so you can run the shop and perform all managerial duties.

Part 2 - Is a Custom Car Shop business the right fit for you?

Part 3 - Action plan to launch your Custom Car Shop business in 90 days