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How To Start A Small Engine Repair Business

How To Start A Small Engine Repair Business

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How To Start A Small Engine Repair Business

How To Start A Small Engine Repair Business

Small engine equipment is everywhere, from the lawn mower that homeowners use each summer to the chainsaws and weed whackers that landscaping companies rely on almost daily. When those engines break, most people turn to a specialist to help with the repair. If you’re experienced in working on small engines, opening up your own repair business could be a lucrative business venture.

This article aims to provide an in-depth guide on how to start your small engine repair business, including an overview of the industry, necessary steps to get started, and answers to common questions.

Business Overview

Starting a small engine repair business involves diagnosing and fixing problems in small engines, including lawn mowers, snowmobiles, motorcycles, chainsaws, and more. This line of business doesn’t necessarily require a huge initial investment, especially if you start on a mobile basis or from your home.

These businesses diagnose, repair, and often maintain 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. Many of these businesses work out of shops, though some may offer deliveries and drop-offs, while others may offer mobile services.

A small engine repair shop can earn revenue in many ways. The first revenue stream comes from repair services, whether the business is working with professional service providers, homeowners, or both. A business can establish a second revenue stream by buying broken equipment, repairing it, and selling it for a profit. A reputable small engine repair business can contract out its services to manufacturers in need of 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.

When starting a repair business, it may be tempting to venture into all types of small engine repairs. This can backfire, though. With such a wide array of machines, a business will need to learn many different systems and repair techniques and will need to establish vendor accounts with many different parts suppliers. By specializing in certain types of engine repairs, a business can establish itself as being the best resource around and more efficiently diagnose and repair the products that are brought in.

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.

US industry data is hard to find, however 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 5 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 workers.

In recent years, several noteworthy trends have shaped the small engine repair business landscape. One of these is the increasing shift toward environmentally friendly and fuel-efficient engines, necessitating repair businesses to familiarize themselves with the evolving technology.

Moreover, there is a rising DIY culture driven by widespread internet access and a wealth of online resources, compelling businesses to diversify their service offerings and focus more on supplying parts and repair tutorials.

Another key trend is the growing preference for local repair shops over major manufacturers for post-warranty repairs, owing to cost-effectiveness and personalized customer service. This trend bodes well for small, local businesses looking to establish themselves in the market.

Also, according to Contractor Equipment, more products now have integrated internet functionality for easier diagnostics and performance monitoring. This higher-tech design captures more data, so repair technicians who know how to interpret that data can more quickly diagnose and repair the equipment. Available fuel options are also expanding, and equipment using gas, diesel, or propane is now commonplace.

There’s also been growth in electric tools. Battery technology continues to expand, as do hybrid engines. This increase in different power types means that repair technicians will need to be versatile to meet the market’s changing demands.

Target Market

The target market for a small engine repair business is quite broad and diverse, encompassing both residential and commercial customers who use equipment powered by small engines. Here are some specific segments of the market:

  1. Homeowners: These are individuals who own power equipment like lawn mowers, leaf blowers, chainsaws, snow blowers, and other garden or yard maintenance equipment. They require regular servicing and occasional repair of these machines, especially in the change of seasons.
  2. Landscaping companies: These businesses heavily rely on small engine-powered equipment for their services. They typically require frequent maintenance and repair services to keep their operations running smoothly.
  3. Construction companies: Many construction tools are powered by small engines. Companies in this industry often need timely repair services to avoid costly downtime.
  4. Recreational users: This segment includes individuals who own motorcycles, ATVs, snowmobiles, or watercraft, which often run on small engines and require regular servicing and repair.
  5. Farmers and agricultural businesses: Farming equipment like tillers, tractors, and generators use small engines. These customers require regular servicing and repair to keep their operations running.
  6. Retailers and rental services: Businesses that rent out power tools and other equipment often need maintenance and repair services to keep their rental items in top condition.

In essence, any individual or business that relies on small engine-powered equipment for personal use or to carry out their operations can be a potential customer for a small engine repair business. The breadth of this market provides ample opportunity for a new business to find a niche and build a loyal customer base.

Checklist To Starting A Small Engine Repair Business

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If you’re thinking about starting a small engine repair business, it’s important to do your research first. The journey of a thousand miles begins with a single step. So, to help you get started, here is our checklist.

Step 1: Research the Industry

Anyone interested in starting a small engine repair business should begin by extensively researching the industry.

Start with online resources like industry reports, articles, forums, and blogs related to small engine repair. These sources can provide a wealth of information on recent trends, challenges, and opportunities in the industry.

Also, consider joining industry associations like the Outdoor Power Equipment Institute (OPEI) or the Equipment & Engine Training Council (EETC). These organizations provide valuable resources, training, and networking opportunities.

For hands-on experience, working at a small engine repair shop can be invaluable. This real-world exposure will help you learn the ropes, understand the common problems and solutions, and gain insights into customer service and business operations.

For education, look for technical programs or courses in small engine repair. Community colleges, vocational schools, and some high schools offer such programs. For instance, programs like Penn Foster’s Small Engine Repair classes provide a comprehensive overview of small engine mechanics and there are also inexpensive online classes through Udemy.

Certification is another important step. While not mandatory, it adds credibility to your business, provides professional development, and signals your competence to customers. The EETC offers several certification exams covering different types of small engines.

The more knowledgeable and prepared you are, the better positioned you’ll be to avoid common pitfalls and succeed in your small engine repair business.

Step 2: Assess Market Potential

Before investing a lot of time and money, understanding market demand is an important step in starting any business, including a small engine repair shop. By gauging demand, you can avoid costly mistakes and ensure there is a sufficient customer base to support your business. It also allows you to identify your potential customers, understand their needs, and shape your services to meet those needs. It also helps you make informed decisions about the location of your business, pricing, and marketing strategies.

To assess the demand for a small engine repair business, here are some suggestions on how to start your research:

Local analysis: Take note of the number of similar businesses in your area. Too many might indicate saturation, while too few could suggest unmet demand. Consider the types of small-engine equipment commonly used in your area, such as lawn mowers in suburban neighborhoods or snowmobiles in colder climates.

Surveys and interviews: Conduct surveys or interviews with potential customers. This could primarily include landscaping companies, or other businesses that use small-engine equipment. Ask about their current repair services, their satisfaction level, and what they might want from a new provider.

Online analysis: Use tools like Google Trends and Keyword Planner to understand the volume and trend of search queries related to small engine repair in your area. This can offer insights into local demand.

Local authorities and trade associations: Local authorities, chambers of commerce, and trade associations can provide helpful demographic data and economic forecasts. This can help you assess the potential growth of your target market.

Observation: Simply observing the number of homes with yards, the presence of recreational parks, local businesses that use power equipment, and even weather patterns can provide useful insights into potential demand.

Competition analysis: Look at online reviews and social media activity for competitors in your area to understand how well they’re meeting customer needs and where gaps may exist.

Starting a small engine repair business without assessing demand could result in wasted resources and a struggling business. With proper research, you can validate your business idea, identify your target customers, and lay the groundwork for a successful venture.

Step 3: Write a Business Plan

Writing a business plan for your small engine repair business is an indispensable step on the path to starting a successful business. A business plan is not just a document to get funding; it’s a tool that helps you think through every aspect of your business, foresee challenges, devise solutions, and plan for growth.

For a small engine repair business, certain sections of the business plan hold particular significance, especially when seeking funding:

Market analysis: This section details your understanding of the industry, target market, competition, and demand. It shows lenders that you’ve thoroughly researched your market and are aware of the opportunities and threats. Detail your unique selling proposition – what sets you apart from the competition? Include the results of your market research, highlighting the need for your business.

Marketing and sales strategy: Clearly outline your plans to attract and retain customers. Show how you intend to position your small engine repair business in the market and describe your pricing strategy. This section should also include your advertising, promotion, and customer retention strategies.

Financial projections: This is crucial for securing funding. You need to give a clear picture of your business’s financial outlook. Include income statements, cash flow statements, and balance sheets for the next three years. Use your market analysis data to create realistic revenue projections. Highlight the break-even point and when you expect to start making a profit.

Creating a comprehensive business plan not only impresses lenders and investors but also provides you with a clear vision and actionable strategy for your small engine repair business. The act of writing the plan forces you to consider every aspect of your business, anticipate problems, and formulate strategies, paving the way for a successful enterprise.

Related: How to write a business plan

Step 4: Secure Funding

Securing adequate financing is a critical step when starting a small engine repair business. While the costs to start such a business can be relatively low compared to other industries, there are still significant expenses like equipment purchases, rental costs, and working capital for day-to-day operations.

Primarily, there are three common ways to secure funding for a small engine repair business:

Personal savings: Many small engine repair businesses are started with the owner’s funds. The benefit is there are no monthly payments, however, make sure you have a cushion on hand in case things don’t go exactly as planned.

Loans: If personal savings aren’t enough to get started, the next most common source is small business loans. Banks will evaluate the business plan and may fund themselves. Certain lenders who see the loan as too risky due to factors such as a low credit score, not enough collateral, etc. can utilize Small Business Administration (SBA) loan guarantees. Should the borrower default on an SBA loan, the government will pay the the bank a portion of loan, which takes most of the risk off of the bank.

Lenders will typically require the owner invest 15%-25% towards the total cost of the project.

Related: Small business grants: Myth vs reality

Microloans: A funding source that isn’t as well known, are microloans. These are community-based programs that provide a low amount of funding to entrepreneurs who are unable to get the funding they need to start a business.

Regardless of the type of funding you seek, be prepared to show your business plan, your personal and business credit history, and financial projections.

Related: Sources of funding to start a business

Step 5: Register the Business

With the funding out the way, the next step is to make sure the business is legal to operate. Every state will have different requirements, but here are the common types of registrations:

Choose a business structure: The type of business entity you choose has a significant impact on how your business is taxed and your level of personal liability. The most common forms are sole proprietorship, partnership, LLC (Limited Liability Company), and corporation. For small engine repair businesses, the sole proprietorship and LLC are the preferred choices.

The sole proprietorship is the easiest and least expensive to start, while the LLC provides personal liability protection and potential tax savings. However, your individual circumstances might lead you to choose a different structure, and you should consult with a business advisor or attorney to make the best decision.

Related: Comparison of business structures

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming a small engine repair business

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).

Another requirement you may need to be aware are any state environmental regulations if you handle fuels or other hazardous substances.

Related: State guides for general business licensing

Please note that each state has its own rules and regulations for starting a business, and the specifics can vary. It’s recommended that you consult with a business advisor, attorney, or accountant to ensure you’ve met all the legal requirements to start your business. Following these steps will help ensure your small engine repair business is legally compliant and ready to operate.

Step 6: Find Financing

Securing a location for your small engine repair business is the next step to tackle.

The “location” doesn’t necessarily need to be a commercial space; many successful small engine repair businesses operate right in the owner’s garage. Starting a small engine repair business from your garage has its advantages, such as lower overhead costs and the convenience of working from home. However, whether you’re setting up shop in a garage or a commercial space, thoughtful planning and organization can set the stage for the success of your enterprise.

Here’s some tips on how you can set up your garage or commercial space for your small engine repair business:

Decide on the location: If you’re starting out in your garage, the first step is to clear enough space for your work. You’ll need areas for customer reception, performing repairs, and storing equipment and parts.

Zoning: An often-overlooked yet crucial aspect of starting a small engine repair business, especially from your home garage, is checking the zoning laws in your area. Zoning laws determine what kind of activities can take place in specific areas or zones within a city or county. Ignoring these regulations can lead to significant issues down the line, including fines, forced relocation of your business, or even closure.

Design the layout: Plan out your workspace to enable smooth operations. Your workflow should transition seamlessly from customer reception to repair work and finally to job completion. Observing other successful businesses, even if they are based in commercial locations, can give you insights into efficient workspace layouts.

Prepare your workspace: Depending on whether you’re using your garage or a commercial space, you may need to make some modifications or renovations. This could involve setting up workbenches, arranging storage for tools and parts, or establishing an office space for administrative tasks.

Step 7: Purchase Equipment

With the funding and legal obligations out of the way and your location is coming together, it’s time to start purchasing equipement.

If you haven’t already done so, the initial step would be to assess your needs, which would typically encompass a variety of hand and power tools, engine hoists, diagnostic equipment, and safety gear. Next, you’ll need to decide whether to buy new or used equipment. While new tools may come with warranties and the latest features, used equipment could be a cost-effective alternative if purchased wisely.

Once you’ve identified what you need, it’s time to research different suppliers. Comparing prices, warranty offerings, and customer reviews can help you make an informed decision. Furthermore, building relationships with suppliers can provide you with insights into the latest tools and industry trends, flexible payment options, and even customer referrals.

When starting out, it’s advisable to keep your inventory of parts and supplies lean. Start by purchasing only the essential items, and then gradually invest in more advanced or specialized tools as your business grows and you get a better handle on what you need. An inventory management software system could be a valuable tool to track your equipment, parts, and supplies, ensuring you don’t overstock or run out of necessary items, but isn’t often a necessity when starting out.

Step 8: Get Your Marketing Plan in Place

Marketing is a vital aspect of starting a small engine repair business, just as it is for any venture. Even with the best equipment and services, you won’t gain traction unless potential customers know you exist and understand the value you offer. With the right marketing strategies tailored to the small engine repair industry, you can effectively create awareness and build a strong customer base.

To get the word out about your new business, here are a few suggestions:

Start by identifying your unique selling proposition (USP) – what sets your business apart from other similar businesses in the area. It could be your extensive experience, exceptional customer service, competitive pricing, or even your location. Communicate your USP consistently in your marketing messages.

Next, invest in building a professional looking website. Many customers start their research to find a small engine repair business online, and a well-designed website can make a powerful first impression. Services like Wix or Squarespace offer low cost, and in some cases free websites. Include information about your services, prices, contact information, and customer testimonials. Optimize your website for search engines (a process known as SEO) to improve its visibility on platforms like Google.

List your business in online directories and on Google Business Profile. This makes your business more visible to people searching for engine repair services in your area. Encourage your customers to leave reviews on these platforms, as positive reviews can significantly boost your business’s reputation.

Also, consider leveraging social media platforms like Facebook, Instagram, and Twitter to connect with your community. Post content that adds value to your followers, such as maintenance tips, behind-the-scenes looks at your shop, or special promotions. Remember to engage with your followers by responding to their comments and messages.

Consider traditional marketing methods too. Flyers and local newspaper ads can be effective, particularly if your target market is older and prefers these channels. Sponsor local events or community teams to increase your visibility and goodwill in the community. Some shops will also build relationships with commercial accounts such as lawn mowing companies and landscapers.

Finally, provide exceptional service to every customer. Word-of-mouth referrals are incredibly valuable over the long term, and can only be earned by exceeding your customers’ expectations.

Related: Low-cost ideas to market a new business

Step 9: Prepare to Open!

As we’re wrapping up our guide, there are likely some steps that we haven’t covered to ensure your small engine repair business is ready for its grand opening. Every business will have unique needs, so this list is not exhaustive. However, these are some common elements you need to consider to start a small engine repair business.

Business insurance: It’s imperative to protect your business with the right insurance coverage. Given the nature of the small engine repair business, you should consider liability insurance to cover any injuries or damages that might occur on your property, as well as property insurance to protect your equipment and premises. If operating the business on your personal property, it’s likely that homeowner’s insurance won’t cover any business-related claims or loss of equipment or inventory.

We recommend getting at least three quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.

Setting up bookkeeping: Efficient bookkeeping is crucial for managing your finances and for tax purposes. Whether you decide to do it yourself or hire a professional, make sure your system can track income, expenses, invoices, and payroll. Software like Wave Accounting (FREE) or Quickbooks can make this process simpler.

Hiring employees: While many small engine repair businesses are owner operated, if your plans include hiring a small engine mechanic or other employee, there are legal obligations as an employer to consider, including employment taxes, workers’ compensation, and more.

Related: State guides for hiring your first employee

Contracts: Your business will need contracts for various purposes. For example, you might need service agreements to define the scope of your work and protect both you and your customers.

RocketLawyer and Law Depot have free and inexpensive templates that may be helpful, but it’s still recommended to have these reviewed by a lawyer to ensure they’re legally sound and cover all potential scenarios.

Opening a bank account: A dedicated business bank account is essential to separate your personal and business finances, making tax time much easier.

Setting pricing: Research what similar businesses charge for their services to get a sense of the market rate. From there, you can set competitive prices that also cover your costs and provide a profit.

Accepting credit cards: In addition to cash, consider accepting credit card payments for convenience. Services like Square or Stripe can take care of credit card processing.

Preparing for the grand opening: Plan your grand opening carefully. This could involve advertising, sending out invites, preparing special offers, or organizing an event to attract potential customers.

This material is property of StartingYourBusiness.com

Greg’s Tip: Some established small engine repair shops will have equipment and spare parts that only certified dealers can get. Make sure you are aware of the competition in your area and what they offer.

Greg's Business Tip

Small Engine Repair Business FAQs

How much does it cost to start a small engine repair business?

Starting a small engine repair business can have a wide range of costs, primarily depending on the size and location of the operation. Generally, you can expect the initial costs can range anywhere from $10,000 to $50,000. The costs typically include:

Business registration and licenses: Depending on your state, the cost of registering your business can range from $100 to $500. Licenses and permits, such as a small engine repair license or a general business license, may also be required.

Equipment and tools: To properly service small engines, you’ll need a variety of tools and equipment. This could include workbenches, engine hoists, diagnostic tools, and a range of hand tools. Expect to invest between $5,000 to $15,000 in quality equipment. Used equipment or equipment you already own could help reduce this cost.

A mobile small engine repair service will need to budget for a vehicle.

Location costs: If you choose to rent a commercial space rather than operate from a home garage, this cost can vary widely based on size, location, and local market rates. The cost could be anywhere from $500 to $5,000 per month. If leasing, an initial deposit will need to be budgeted for.

Insurance: Initial insurance costs might include down payments on policies. For a small engine repair business, you should consider liability insurance and property insurance. The initial cost can range from $500 to $1,000.

Marketing: Initial marketing efforts might include designing and launching a website, creating business cards, or running local advertisements. You might want to budget around $1,000 to $2,000 for initial marketing costs.

Operating expenses: It’s crucial to have a financial buffer for operating expenses, such as utilities, rent, supplies, and employee wages, if applicable. A recommended buffer is three to six months of operating expenses. Depending on the size and operating costs of your business, this could range from $5,000 to $30,000.

Remember, these are approximate figures, and your actual startup costs could be higher or lower. It’s always a good idea to thoroughly research and plan for these costs in your business plan to ensure financial sustainability as you launch and grow your small engine repair business.

How much can a small engine repair business owner make?

Many factors will determine a small engine repair business’ profitability. The business’ revenue will depend on the types of repairs made, its location, its profit margins, reputation, and much more. A business owner can maximize its 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 business’ 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 for 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. If we assume 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 is working 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 not only repairing equipment for customers but also by buying 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.

What skills are needed to run a small engine repair business?

Starting a small engine repair business doesn’t require a business degree, but certain skills and experiences will be helpful.

Background in mechanics: A mechanical background and experience in repairing engines is essential. Previous experience working in a repair shop setting will prepare a business owner for the challenges that come with running this type of business. Even if you do not have previous small-engine repair experience, numerous schools offer in-class and correspondence small-engine repair training that can lead to certification.

Troubleshooting abilities: Creativity and troubleshooting abilities can help a business owner to navigate any problems that may arise.

Attention to detail: Attention to detail is essential in this industry, and a business owner will use this skill in everything from diagnosing an issue to ordering the right replacement parts.

Organization talents: A repair business owner will need organizational talents for everything from keeping track of parts to tracking which machine belongs to which customer.

Customer service skills: Strong customer service skills can help a repair business owner create positive experiences for customers, encouraging valuable repeat business.

What is the NAICS code for a small engine repair business?

The NAICS code for a small engine repair business is 811411.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

How To Start A Small Engine Repair Business

How To Start A Small Engine Repair Business

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