The auto repair industry is growing fast. It’s now valued at about $880 billion , and generates $64 billion a year. Aging vehicles are helping ensure that it continues to grow long into the future. A 2015 article in USA today reported that there are about 14 million vehicles 25 years or older still in operation, and 44 million vehicles between 16-24 years old.
The average age of working vehicles is increasing, meaning that more cars than ever will be requiring repairs now and in the future. The aftermarket is expected to soar past $1 trillion by 2022 , as drivers and auto repair specialists seek out replacement parts for aging vehicles across any of about 16,000 auto repair establishments in the U.S.
With an expected 2.6% annual growth rate, there’s no time like the present to launch or grow your auto repair business. Here’s what you need to know.
Strategies for growth
Business owners and entrepreneurs looking to grow a new or existing business often turn to time-tested strategies. Here’s a brief look at popular growth strategies.
Purchasing an existing auto repair business gives business owners a firm foundation to build on, and a key way to grow their operations. But it can require a lot of capital to get started. Acquisition costs often include things like legal fees, associated commissions to real estate agents, equipment costs or repairs, installations and more.
- Product expansion
Innovation is vital to business growth. Small businesses can often increase sales and profits by expanding product and service offerings to their customers within their existing market.
- Market expansion
When profits stagnate, business owners often begin to think outside of the box to determine what new markets can utilize their existing products and services. Tapping into new markets can increase your sales and profits without opening a new auto repair shop.
SBA loans can be a vehicle for making your growth goals a reality.
As a small business owner, getting approved for a traditional loan can often be a challenge. But SBA loans are designated for small business owners, backed by the guarantee of the federal government’s Small Business Association.
- SBA 7(a) loans
These loans are the most popular for small business owners. They provide funding for working capital, revolving funds, purchasing equipment and refinancing debts.
- SBA 504 loans
Unlike the SBA 7(a),SBA 504 loanscan’t be used for working capital. However, the funds can be used for major fixed-assets, like equipment, property, buildings and more.
- USDA rural loans
Backed by a guarantee by the USDA, these loans often provide better pricing and terms than conventional loans. With longer terms and negotiable interest rates, these loans can help rural auto repair shops launch, grow and expand their business.
A certified SBA lender can help navigate the sometimes murky waters of financing options for auto repair businesses, and help you determine which loan type is best for your auto repair shop’s growth goals. Ready to take the next step to determine which loan is right for you? Get your free quote now.