How to Start a Dent Repair Business

Overview

How to Start a Dent Repair Business

Do you have experience doing vehicle bodywork? If you’re looking to start your own and have experience or interest repairing dents and dings, a paintless dent repair (PDR) business may be a great option for you.  PDR is an inexpensive new type of repair that has been growing in popularity in recent years.

Read on for an overview of what you need to know about starting a PDR business and becoming your own boss.

Business Overview

A paintless dent removal business repairs dents on vehicles from hail damage and parking lot dings. They sometimes repair dents on other metal items like appliances out of a repair shop or as a mobile service.  Paintless dent repair is very popular because it is inexpensive and can make a huge improvement to how a vehicle looks.

Industry Summary

According to Global Market Insights, the automotive collision repair industry was a $304.9 billion market in 2019 and projected to grow 3.3% per year through 2026.  Increasing traffic and the greater potential for collisions has driven the growth.   The industry is sensitive to economic fluctuations because dent repairs are not a necessary expense, as opposed to mechanical repairs.

 

Paintless dent repair is very popular because it is inexpensive and effective.  It is used for minor dents where the paint itself has not been damaged from things like hail or door dents.  The industry, in general, will always see demand because vehicle dents are extremely common, caused by a variety of factors, not just collisions.

Target Market

Your target market will be anyone with a motor vehicle, particularly those with disposable income.  Lower-income or owners of older vehicles may be more likely to live with minor dents to avoid the expense of repairs.

Additionally, car dealerships, rental agencies, and company fleets are common accounts for dent repair businesses as well.

Skills, Experience, and Education Useful in Running a Dent Repair Business

There are several specific skills that you will need to open a PDR business.

  • Experience.  Experience is critical in a dent repair business.  You need to have the right skills to do quality repair work.  You don’t necessarily need to be a certified auto body technician, but it would add to your credibility with customers. If you don’t have expreience, consider signing up with a pdr training school, so you can quickly get up to speed. 
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • Customer service. You’ll need to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.

Checklist for Starting a Dent Repair Business

If you’re thinking about starting a dent repair business, it’s important to do your research first. Here is a checklist to help you get started.

Step 1: Write a Business Plan

After coming up with the idea, the next step in starting your dent repair business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect dent repair business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a dent repair business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

Since a dent repair business typically performs the service at the customer’s location, a mobile service can operate out of the home, saving on rent costs.  If you have a shop, consider being located in a convenient location with high visibility.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

While there aren’t specific licensing requirements for a dent removal business, some general local, state, and federal registrations a dent repair business may need could include a sales tax permit and an Employer Identification Number.

Related: What licenses does a dent repair business need?

Step 6: Find Financing

Outside of a company vehicle, a large investment isn’t necessary for this business. If a loan is needed, the borrower(s) will need to have good credit and invest 15-25% of their money towards the total start-up costs.  Some entrepreneurs use their own funds, a home equity loan, or credit cards, but you are putting your funds at risk and will have payments that may or may not be more than those of a business loan.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

A dent repair business will need to set aside a budget to cover promotion costs on a continuous basis. Common marketing techniques for a dent repair business include social media marketing and online advertising, as well as flyers and postcard mailers.  

Related: Low-cost ideas to market a new business

One important marketing task is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a dent repair business. A few of these include:
General liability insurance can help protect you from third-party claims of bodily injury and property damage.  This may be expensive due to the potential for injuries.
Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

The cost to insure a dent repair business will vary based on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hire Employees

You may choose to hire PDR techs to help you run your dent repair business, particularly if you build a large customer base.  Technicians are typically paid a base salary and commission.

In addition to wages, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your dent repair business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a dent repair business?

Here are some of the typical costs you will face when you open a dent repair business.

– Dent repair tools $1,000
– Vehicle (if providing a mobile service) $10,000 +
– Shop space deposit – $1,500 – $3,000 per month
– Liability insurance, worker’s comp, property-casualty insurance $600–$1,000

How much does a dent repair business owner make?

Prices for dent repair can vary greatly depending on the size of the dent.  A mobile service has a much higher profit margin than a shop.  You could make anywhere from $25,000 – $100,000 or much more if you’re very successful.

Peak demand typically occurs during hail season, which runs between April and September in most areas.  While living on the road can be tough, a mobile dent repair business chasing hail storms can be very profitable.

Are there grants to start a dent repair business?

It’s extremely rare to find a grant to start a dent repair business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a dent repair business?

The NAICS code for a dent repair business is 311811.

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 and how to find yours

What is the NAICS code for a dent repair business?

The NAICS code for a dent repair business is 811118.

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 and how to find yours

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