Small Engine Repair Business Overview

A small engine repair business diagnoses, repairs, and often maintains two-stroke and four-stroke engines from manufacturers such as Briggs & Stratton, Honda, Kohler, and Generac. These small engines will be found on all types of equipment like ATVs, dirt bikes, snow blowers, lawnmowers, leaf blowers, snowmobiles, motorcycles, pressure washers, outboard boat motors, chainsaws, and more.

Common business models in this industry include:

• Brick-and-Mortar Shop: Operating from a dedicated repair facility where customers bring their equipment for service and repairs
• Mobile Repair Service: Traveling to customer locations to perform repairs and maintenance on-site
• Combined Parts and Service: Running a repair shop that also sells parts, accessories, and sometimes new equipment

Related: Checklist To Start A Business

A small engine repair shop can earn revenue in many ways. The first revenue stream comes from repair services, whether the business works with professional service providers, homeowners, or both. Another common revenue stream is buying broken equipment, repairing it, and selling it for a profit.

A reputable small engine repair business can also contract out its services to manufacturers needing local repair services to fix products that are still under the manufacturer’s warranty. A business can also offer additional services, like equipment rentals, to generate year-round and reliable revenue.

How Do Small Engine Repair Shops Make Money?

Small engine repair shops generate income through various service offerings and product sales. The combination of repair work, maintenance services, and parts sales can create multiple streams of income for these businesses.

The main ways a small engine repair business brings in revenue can include:

• Repair Services: Diagnosing and fixing problems with small engines makes up about 60% of revenue for most shops because residential and commercial customers regularly need repairs for their outdoor power equipment. This work includes carburetor cleaning, replacing broken parts, and engine rebuilds.
• Maintenance Services: Regular tune-ups, oil changes, and seasonal preparation services help keep equipment running smoothly. These services often lead to ongoing relationships with customers who return multiple times per year.
• Parts Sales: Selling replacement parts, filters, spark plugs, and other components needed for repairs. Customers often purchase parts directly from the shop during service visits.
• Equipment Sales: Some shops sell new or buy and refurbish equipment. This includes lawnmowers, trimmers, and other outdoor power tools.
• Pick-up and Delivery: Transportation services for customers who cannot bring their equipment to the shop. This service is particularly valuable for larger items like riding mowers.
• Commercial Contracts: Ongoing maintenance agreements with landscaping companies, property management firms, and other businesses that use multiple pieces of equipment.

Industry Summary

The small engine repair industry has seen steady growth over the years, driven largely by the increasing number of power tools, outdoor equipment, and recreational vehicles that utilize small engines.

While details on small engine repair are hard to find, the global small engine market was valued at $6.9 billion and is expected to grow 4.6% annually to reach $10.3 billion by the end of 2031. Another data point provided by the United States Bureau of Labor Statistics projects the employment of small engine repair mechanics is projected to grow 4 percent from 2021 to 2031, which indicates a healthy industry.

The increase in demand for outdoor power equipment in both the residential and commercial sectors is a significant factor fueling this growth. The industry is also resilient, offering services that are consistently in demand irrespective of economic fluctuations. Also, as engines for boats and outdoor power equipment have become more sophisticated, repairing and maintaining them requires more parts, technical knowledge, and people to work on them.

Also See: Ideas for Naming a Small Engine Repair Business

Costs To Start a Small Engine Repair Business

Starting a small engine repair business can range from $2,000 to $30,000. Here are some of the main costs to expect when starting a small engine repair business:

Tools and Equipment: A complete set of professional-grade tools and diagnostic equipment forms the foundation of the business. This includes specialty tools for different engine brands, air compressors, workbenches, and testing equipment. The total investment for tools and equipment typically runs between $1,500 and $6,000.

Shop Space: For a commercial repair shop location, costs include the first month’s rent, last month’s rent, security deposit, and basic renovations like ventilation systems, lighting, storage setup, and workstation installation. The total upfront cost for a commercial space could range from $7,000 to $15,000. A home-based shop might only need minor modifications to an existing garage or shed.

Parts Inventory: Having common replacement parts on hand allows for quick repairs and additional sales opportunities. An initial parts inventory, including belts, filters, spark plugs, and basic engine components, usually costs between $500 and $2,000.

Service Vehicle: For those needing a dedicated service vehicle equipped with tool storage and equipment transport capabilities, the cost typically ranges from $5,000 to $25,000.

These estimates represent general ranges, and actual costs will vary. Some repair businesses might start with lower costs, while others require higher investments.

How much can a small engine repair business owner make?

Many factors will determine a small engine repair business’ profitability. The business’s revenue will depend on the types of repairs made, its location, its profit margins, reputation, and much more. A business owner can maximize profits by identifying a niche with plenty of local demand, offering complimentary services like maintenance and cleaning, and even offering delivery and pickup for an additional fee to expand the potential customer base.

A typical small engine repair shop might charge around $50 to $75 per hour for labor plus the cost of parts. If the shop is open 40 hours a week and averages 30 billable hours, that’s weekly revenue of $1,500 to $2,250, or $78,000 to $117,000 annually.

The primary ongoing expenses for such a business include rent or mortgage (if not working from home), utilities, insurance, salaries (if employees are hired), and the cost of parts. Assuming monthly expenses of $3,000 (which includes an approximation for part costs), that’s $36,000 per year.

Subtracting this from the gross revenue gives a net income before taxes of $42,000 to $81,000.

However, keep in mind that these are estimates, and actual results can vary. It’s also important to consider that this doesn’t include the owner’s salary if the owner works in the business. Owners typically pay themselves out of net profits, so that would reduce the net income figure.

Additionally, these estimates don’t account for other sources of revenue. Some repair businesses have increased their revenue streams by repairing equipment for customers who buy used or broken equipment and repairing it to resell. This strategy can help expand the business’s customer base, reach customers looking to buy equipment, and convert them into returning customers when they bring their products in for maintenance or repair.

Another potential profit center is selling parts and consumables such as spark plugs, filters, and blades.