Starting a new business is an exciting time. It’s a big leap to go from working for an employer to owning your own business. There’s lots of possibility, but there’s also a lot of additional responsibility and risk.
As a business owner you won’t just be doing repair work; you’re running a business ,which means you need to know about marketing, finance, legal issues, business licences and employing people.
This information has been compiled by the Motor Trade Associatin of WA (MTA WA) to assist people in starting an automotive mechanic repair workshop. The information is general in nature and you should seek advice for your specific circumstances.
You can download the information sheet HERE or read the information below.
Plan, Plan, Plan
Before you make the leap into a new business, do your research, make a plan and make sure it’s viable. Consider:
- Market research; make sure you’re going to have enough customers and demand for your product and services.
- Do a business plan; you’ll need it to apply for finance and it will help you clarify your business ideas.
- Buying a business? Do your due diligence and ensure you know what you’re buying. Make sure there are no hidden catches.
Once you’ve decided that you’ve got a viable business idea you’ll need to decide what business structure is right for you. The most common structures are:
- Sole Trader
In the automotive industry it’s very common for business partnership’s to be done on a ‘handshake’. MTA WA recommends that any business agreement is made in writing through a formal contract.
This will protect all parties in the agreement and clearly outline all of the responsibilities, obligations and entitlements of everyone involved.
There are three (3) options for commercial premises; operate from home, buy premises or lease. Most automotive repair shop lease commercial premises.
Rent payments are a major contributor to business costs so ensure that you’ve got a lease agreement that works for you. There can be catches for the unwary and inexperienced; always get professional advice before signing a commercial lease.
When considering any property for your business whether it’s your home or commercial premises, it’s your responsibility to ensure that it meets all regulatory requirements and recieves council approval.
There are many ways that you may choose to finance your business venture; all fall into two categories debt finance (money borrowed from external lenders like a bank) and equity finance (investing your own money or other stakeholders).
Examine all of your finance options and choose the mix that works for you. Talk to your accountant or financial advisor on the best solution for your business.
The licences that you require for your business vary depending on the type of work you intend to do and the local council that you operate in.
It is your responsibility as a business owner to educate yourself as to the licences that you require. Conduct a licence search through the Small Business Development Corporation at www.smallbusiness.wa.gov.au
Licences you require may include, but are not exclusive to:
- Motor Repair Business Licence
- Light vehicle modification approval
- Refrigerant Trading Authority
- Motor Vehicle Repairer’s Certificate
- Approval to discharge trade waste
- Approval to erect a commercial advertising sign on a road or highway
- Building Approval Certificate or Building Permit
- Home Occupation Approval
- Occupancy Permit
Be aware that fees may apply to acquire some licences.
Talk to the regulating body about requirements and fees for specific licences
All motor repair businesses must have this licence. The category and cost of the licence will vary depending on your circumstances.
To secure this licence you must meet all requirements including employing qualified and certified technicians to carry out repair work.
The MTA WA does provide prospective members with assistance in applying for this licence.
The automotive industry is highly regulated from both an environmental and health and safety perspective. Ensure that you are aware of your obligations and responsibilities, as audits are regularly held by regulating bodies including WorkSafe, Environmental Protection and local councils.
MTA WA provides assistance in meeting your regulatory responsibility through the GreenStamp Program and Occupational Health and Safety advisory service.
Australian Business Number
Businesses must have an ABN when dealing with other businesses and the government.
While it is not mandatory, businesses dealing with you are legally required to withhold tax (at a rate of 49 per cent) from any payments they make to your business if you do not quote an ABN on your invoice.
You can operate multiple businesses under one ABN (i.e. a sole trader can run a mechanical repair workshop and a body repair shop with just the one ABN).
You can obtain an ABN online for free from the Australian Business Register at www.abr.gov.au
Register Your Business Name
Choose a business name that reflects major elements of the identity and image of your business. It should also allow you to take advantage of changes in market trends.
If you decide to use your personal name eg: John Smith, there is no need to register it. However if you say “John Smith & Co.” you will need to register, as “& Co.” is a part of your name.
To register your business name go to the Australian Securities and Investment Commission website at: www.asic.gov.au
You will need to visit the Australian Tax Office website at www.ato.gov.au to register for the following.
- Tax File Number
- Goods and Services Tax (check the threshold)
- Pay As You Go (PAYG)
In Western Australia the only compulsory insurance for small businesses is worker’s compensation. It is up to you, based on your business needs, as to the other types of insurance you may require.
There are various types of insurance to protect your business which can be divided into three main categories:
- Assets and revenue
MTA Insurance is a specialist automotive business insurer who can assist you with all of your business insurance needs. Contact MTA WA for more information or call 1800 MTA INS (682 467)
There are many things to consider when deciding to employ staff; they can make a big impact both positive and negative on your business.
As an employer there are also legal requirements that you must comply with. You will need to determine the industrial relations system that covers your business - State or Federal.
Talk to the MTA WA Industrial Relations team for expert advice and assistance on employing within the automotive industry.
Get a Support Team
For many skilled tradespeople, starting their own business is a big leap and they quickly need to learn a variety of business skills. Understanding a Balance Sheet and determining labour rates isn’t commonly covered in a technical apprenticeship!
It can be overwhelming for a new business starter which is why it’s a good idea to surround yourself with trusted advisors who are experts in business. Your support team could include a lawyer, accountant, business coach, marketer and the Motor Trade Association of WA.
Join the Motor Trade Association of WA
For many automotive business owners the MTA WA provides an extensive support network of industry and business experts.