Thinking About Opening a Collision Repair Shop? What You Need to Know.

Considering opening a collision repair shop? If so, we know it’s an exciting time, and there’s likely plenty of opportunity. 

Vehicles are increasingly complex but accidents are still happening, making the demand for quality collision repair services still a growing industry despite the number of increasing safety features in modern cars. Research estimates that the automotive collision repair service market will continue to boom, growing from $195.27 billion in 2024 to a $272.8 billion by 2034. 

If you’re ready to get your piece of the collision repair pie, we’re ready to help you get started. There’s a lot to consider, especially since collision repair looks vastly different from even a decade ago thanks to more high-tech systems, specialized equipment needs, and potentially evolving business models. 

If you're considering taking the leap into shop ownership, this guide will help you understand what it takes to succeed in today's market. 

The opportunity and challenge of today's collision repair market

Starting a collision repair shop can be extremely rewarding. 

However, the days of opening a shop with just basic tools and a good work ethic are long gone. Modern shops require significant investment, specialized knowledge, and careful planning to thrive in an increasingly competitive market.

The most successful shop owners understand that they need to:

• Deliver exceptional quality work that meets manufacturer specifications.
• Offer specialized services that competitors might not provide.
• Run efficient operations with streamlined processes.
• Maintain excellent customer relationships that will increase retention.
• Adapt to rapidly evolving vehicle technology, especially when it comes to ADAS systems. 

Planning your collision repair business

Before you start ordering equipment or looking at locations, create a comprehensive business plan that addresses a few key considerations. 

1. Market research and concept development

Conducting market research and developing a proof of concept for your business is essential. It can help you put together a clear business plan that will help you determine how to move forward on everything from who you want to service and how you plan to make revenue.

Ask yourself the following questions: 

• Who are your target customers? This can be insurance companies, luxury vehicle owners, fleet operators, or even just “middle-class families.” 
• Who are your competitors, and what are their strengths/weaknesses? Are there any gaps in the market that aren’t currently addressed? 
• What will be your shop's specialty or unique selling proposition?
• What services will you offer initially, and which will you consider adding later?

2. Financial planning and funding

Financial planning is an essential consideration, with estimates putting shop opening requirements at around $100,000 minimum. So, make a plan for the following: 

• Estimates for startup costs that will include expenses like equipment, facility lease, necessary permits, initial inventory, and marketing fees. 
• Operating budget for at least the first year. 
• Projected revenue and timeline to profitability, ideally erring on the conservative side. 
• Funding sources, including loans, partner contributions, investments, and personal savings.

Keep in mind that some business loans require that you’re already in operational for a certain period of time, but some business loans and many personal loans are targeted towards launching a new business. There are also plenty of equipment financing options that can help you get what you need, and which leverage the equipment as collateral. Look at your options to see what’s available to you. 

3. Location and facility requirements

Choosing a location is a big deal— it can influence who comes to your shop, pricing, facility available, and more. Here are a few things to keep in mind: 

• Visibility and accessibility for customers. 
• Space requirements for your services (keeping in mind potential ADAS calibration space requirements). 
• Zoning and compliance considerations.
• Facility that will support a streamlined workflow. 

Look for locations that balance affordability with visibility. While industrial parks offer lower costs, they also limit walk-in opportunities. Consider customer convenience factors such as proximity to major roads and residential areas.

4. Legal structure and requirements

This is perhaps the least fun aspect of starting a new shop, but it’s critically important. Make sure you get all your ducks in a row, including: 

• Business registration, including choosing between structures like an LLC or an S corp. 
• Obtaining the necessary licenses and permits required by your state and local governments. 
• Getting business and liability insurance. 
• Completing any necessary environmental compliance processes required by your state or local government. 

The specific permits required vary by state and locality, but typically include business licenses, environmental permits, and sometimes specialized automotive repair certifications. If you’re unsure of what you need, talk to a local business attorney to get started. 

The ADAS opportunity: A crucial service for modern collision shops

Advanced Driver Assistance Systems (ADAS) represent one of the most significant shifts in the collision repair industry in recent years. These systems—which include autonomous emergency braking, lane departure warnings, adaptive cruise control, and more—are now standard on most new vehicles. They require special handling during repairs and, crucially, precise calibration after any work that might affect their operation.

Why ADAS calibration is essential for collision repair shops

After collision repairs, windshield replacements, or even simple alignment work, ADAS components often require recalibration to ensure they function correctly. Failing to properly calibrate these systems creates serious safety risks for customers and major liability exposure for your shop.

Keep the following in mind: 

• Most modern vehicles (particularly those manufactured since 2018) have multiple ADAS systems that rely on cameras and different types of sensors. 
• Even minor collisions can misalign these sensitive components.
• Manufacturers have specific requirements for calibration procedures following repairs.
• Insurance companies increasingly recognize the necessity of proper ADAS calibration.

Equipment and training needs for ADAS calibration

To offer ADAS calibration services, your shop will need:

1. Calibration equipment: This may include targets, alignment tools, and diagnostic systems. Options range from manufacturer-specific equipment to multi-brand solutions.
2. Software and information resources: Access to OEM repair procedures and calibration specifications is absolutely essential.
3. Trained technicians: Staff must understand both the principles of ADAS technology and the specific calibration requirements for different vehicle makes and models.
4. Appropriate space: Many calibration procedures require specific lighting conditions, floor surfaces, and space dimensions.

The investment in ADAS calibration capability is substantial—potentially $50,000 or more depending on what brands you service. However, this investment creates a significant revenue opportunity and competitive advantage. If you aren’t able to offer ADAS calibrations (or can’t partner with someone to offer them to your customers), you’ll likely lose out on potential repairs in favor of a shop that can do it all. 

OEM-specific requirements for ADAS calibration

One of the most challenging aspects of ADAS calibration is that each manufacturer has its own specific requirements and procedures. For example:

• Some systems require static calibration in controlled environments with precise measurements and target positioning.
• Others require dynamic calibration, where the vehicle must be driven at specific speeds under certain conditions.
• Many vehicles require both types of calibration for different systems.

Proper calibration often requires access to OEM documentation that details the exact procedures required for each vehicle make and model. Attempting calibration without this information creates substantial risk. 

Fortunately, tools like Revv can make this much easier: Simply enter the vehicle’s VIN and instantly gain access to its specific OEM-instructions and identify all billable calibration procedures. 

Keys to success in today's collision repair business

Beyond the technical aspects of repair and calibration, several operational factors will determine your shop's success:

1. Efficient processes

Develop streamlined workflows that minimize cycle time while maintaining quality. This includes clear procedures for vehicle intake, damage assessment, parts ordering, repair execution, quality control, and customer delivery.

2. Customer experience focus

Today's customers expect transparency, convenience, and exceptional service. Invest in systems that allow you to provide regular updates, clear explanations of repairs, and a smooth overall experience.

3. Insurance relationships

While direct customer business is valuable, relationships with insurance companies often provide a steady stream of referrals. Understanding insurance requirements for documentation, especially for ADAS calibrations, is essential.

4. Continuous education

Vehicle technology evolves rapidly. Budget for ongoing training and information resources to keep your team's skills current.

Ready to get started with ADAS calibration?

Offering proper ADAS calibration services is no longer optional for collision repair shops—it's a necessity for safe, complete repairs. However, navigating the complex requirements of different manufacturers can be overwhelming, especially for a new shop focused on establishing its core business.

Revv ADAS helps repair professionals quickly identify required calibrations and access OEM repair procedures in seconds. Our AI-powered software can provide OEM-specific procedures and documentation, helping your team deliver safe, comprehensive, and insurance-friendly repairs to all customers.

Book a demo today to see how we can help you offer safe, compliant, and revenue-boosting ADAS calibrations as part of your new collision repair business.