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Start a small engine repair business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your small engine repair business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a small engine repair business?
Costs to start this business can be extremely low. You likely already have the space and tools you need to get started — especially if you don't have a large client base as of yet. Owners should also consider buying additional liability coverage for their business. Anything from human error to natural disasters can destroy a small engine and the owner would be financially responsible for replacing any damaged machinery.
What are the ongoing expenses for a small engine repair business?
Expenses are typically on the low side for small engine repair businesses, but owners should factor in the cost of insurance, employees, and continuing education. They may also need to rent or buy additional space as their business continues to grow.
Who is the target market?
The target market can be anyone in the area with a small engine. From Go-Karts to wood chippers to chainsaws, there are plenty of machines that can fall under this category. Potential clients can include those from industrial, commercial, or personal applications.
How does a small engine repair business make money?
Owners make money by charging for their time and skill level. They’ll need to base their prices on the actual tools they use to repair the engines, plus the demand and the original cost of the item. For example, few people will pay $80 to repair their old lawn mower if a brand-new mower costs $100.
How much can you charge customers?
Customers will typically pay based on the type of machine and the extent of the damage. Most owners will charge for cost-of-labor plus parts. The average cost for a lawn mower repaired is about $60, which will likely be an hour’s worth of work or less.
How much profit can a small engine repair business make?
Small engine repair businesses can be extremely profitable, but they will need a high volume first. An owner would need to repair 6 – 8 lawn mowers a day at a $45 profit to make $90,000 a year.
How can you make your business more profitable?
Small engine repair owners may want to branch out to offer large engine repairs if they’ve noticed a heavy demand for it. They can also offer more general types of repairs to machinery to better serve their client base.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your small engine repair business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a small engine repair business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A small engine repair business is generally run out of a garage. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a small engine repair business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your small engine repair business will be in compliance and able to obtain a CO.
Labor Safety Requirements
In performing small engine repair, you and your employees will be working with various types of machines and engines. Work of this nature carrys various safety hazards, so it is important to ensure that your business follows all labor safety requirements which can be found here.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a small engine repair business
The best way to promote yourself depends on where you’re located. If most people in your town are tech-savvy, then you may want to look at community websites such as Craigslist or Nextdoor to start drumming up support. If not, then concentrate on paper flyers, newspaper ads, and general word-of-mouth.
How to keep customers coming back
Owners need to produce long-lasting repairs to keep customers coming back. Customer service will be important, but it won’t be as crucial to getting repeat business. Most people can put up with a little gruffness to save themselves from having to buy a new machine (or do the repairs themselves.)
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Small Engine Repair Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is excellent for someone who enjoys working with their hands and working with a variety of tools. They must be excellent at taking apart machinery to understand how it works and flexible enough to handle new technology they may not have seen before. Owners should enjoy solving problems and experimenting with new ways to repair stubborn or severe breaks.
What happens during a typical day at a small engine repair business?
Most of the day will be spent working on the actual engines, though owners will need to devote time to marketing their services and working with clients as well. They may need to practice simple project management to ensure that all repairs can be completed on time for their customers.
What are some skills and experiences that will help you build a successful small engine repair business?
Those who open this business should either be a professional repair person or a very skilled hobbyist. Ideally, they should have experience working with a wide variety of engines so there’s less of a learning curve when they step into the position.
What is the growth potential for a small engine repair business?
There are plenty of small engines in any given neighborhood, which should give owners a fairly steady stream of work. This is a local skill that would be difficult to outsource, so the growth potential can be substantial. The biggest hurdle is generally dealing with direct competitors located near you.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a small engine repair business?
Most small engine repair owners will start off fixing engines for other people as a side business to build up a clientele. They will need a substantial, consistent volume of customers to justify jumping to full-time immediately. To save on the cost of parts, consider buying up old machinery at garage or yard sales or cruising around the neighborhood on trash day to collect old lawn mowers, leaf blowers, etc. No matter how broken they may be, owners can still extract parts from them to use for their own repairs.
Owners also need to concentrate on appealing to their target base. There are plenty of small engine repairs that people can complete on their own, but they often don’t have the time to devote to it. Amateurs can actually inadvertently make the issue worse without meaning to. When marketing the business, concentrate on how you can actually save people money and increase the longevity of their expensive machinery.
It’s also important to research the competition to find out more about their reputation. Owners don’t have to disparage other businesses, but they may be able to find an angle that isn’t currently being served. For example, maybe the competition works on vacuum cleaners but not on home generators. Understanding the popular machines in an area will give you a good base of how to distinguish yourself.
Finally, owners should consider taking classes to improve upon and develop new skills both before getting started and as they're building their business. As new machinery debuts, small engine repair owners may be asked to complete ever-more complex requests. Understanding the new additions to the market will give owners a better idea of how their current skills can be adapted to fit the technology changes of tomorrow.
How and when to build a team
Most small engine repair owners will start off alone. If the orders start to reach critical capacity, consider hiring a secretary before hiring another technician. This way, you can free up your own time to concentrate on completing the actual repairs. If you do need to hire a technician, make sure that you have the space and the resources to help them thrive first, and give each candidate several repair tests before deciding to take someone on.