Do you want to start a smog check business? If YES, here is a complete guide to starting a smog check business with NO money and no experience. If you are enthusiastic about cars and you are thinking of which business to start that will generate revenue and let you maximize profit, while also helping the environmental cause, then you ought to think of starting a smog check business.
A smog check business is very important because smog has been detected as one of the many causes of air pollution and the level of toxicity that it produces makes it poisonous for not only humans but also plants. According to studies, smog has negative effects on certain materials by reducing its strength and quality such as textile, rubber and dyed fibers.
Smog is a problem in industrialized cities especially as there will always be a lot of vehicles on the streets. This reason is why some industrialized states ensure that strict laws are implemented when issuing licenses and permits to car manufacturers. If you are looking to start your smog checking business in any state, ensure that you know what processes you will need to follow as well as how long it will take before you can get the necessary license that will enable you start your smog checking business legally.
While this might seem like a lucrative business, it is important that you realize that a smog checking business cannot be compared to other kinds of businesses as you will be needed to meet certain requirements and have certain equipment before you can be given a license to operate your business legally, and these processes differ from state to state. For instance, while certain states might need you to submit the Automotive Repair Dealer Registration (ARD) form, others might require that you submit other forms before you can be given your license.
Due to how peculiar the smog check business is, starting the business on your own might be very challenging. In order to know the workings of this kind of business, it is best that you work for a smog check shop and then see if this is the business for you. If you do not however have the time to go and work for someone else, ensure that gather as much information as you can in order to not only start the business but also to sustain it.
writing a business plan for your smog check business is very important as you will need all the guides you can get especially when you will need to make certain decisions or take certain actions.
17 Steps to Starting a Smog Check Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
California as a state had its first major update for smog check programs in 2010 since it began the program in the mid 90s. Smog checks are taken very seriously in California as there are laws and processes guiding smog stations. The smog check program has been overhauled in a way that will save vehicle owners both time and money. As pollution data can now be checked by onboard diagnostic systems that new vehicles now have.
Older cars will however have their cars checked at smog stations that have been specially certified by the state and owners will have to pay more.
It is expected that the new diagnostic system of smog checking will have lower prices due to the fact that cheaper equipment are being used and the technicians will therefore spend less time in performing the test which will invariably lead to more intense competition.
Using the diagnostic system onboard these vehicles mean that smog check stations will need simple equipment such as a specialized software, plug-in cable and computer and rely on the vehicle’s system. According to estimation from analysts, owners of newer vehicles will end up saving $64 million per annum. The state is also expected to be more stringent as regards fraudulent rigging of smog tests results as a 2009 study found that half of the cars that had been tested should have flunked.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demography and psychographic composition of those looking to engage the services of a smog check business are those that have cars, trucks, auto body shops and car manufacturers. Therefore, if you are looking to define the demography for your smog check business, you should know that if you are in a city with lots of cars, then you might try to make it as all encompassing as possible.
3. Decide Which Niche to Concentrate On
Even though the smog shop is regarded as a simple business due to the fact that it has no inventory and also has a guaranteed market due to the requirement by the state for vehicles to have their smog checked every once in a while, this doesn’t then mean that you cannot come up with niche ideas that will enable your business stand out from similar smog check businesses in the area.
Whatever niche idea you are looking to go into, ensure that you have taken a thorough research so that you do not end up wasting time and money on an idea that will not generate revenue for your business. Below are some of the niche ideas that are available within this particular business that you can specialize in;
- Smog Checking
- Auto Repairs
- Auto Detailing
- Oil Change
- Gas Station
The Level of Competition in the Industry
Smog checking is part of the government’s regulations for cars especially in industrialized cities because they have a lot of cars, which means they are more likely to emit smog that will not only affect the environment but also the health of humans and even plants due to the level of toxicity that smogs emit.
What the government and regulatory authorities expect is that sincere smog checks be carried out on vehicles. What customers expect from a smog check businesses is that they are not given huge bills and that the process is transparent enough.
The fact that this kind of business is backed by the government means that there are a lot of smog check businesses in existence especially in industrialized states all offering basically the same services and so your business will basically not be different from the rest of them which means you might need to engage in distinct activities so that your business can stand out.
4. Know Your Major Competitors in the Industry
The smog check industry revolves around the state of California and so most popular ones can be found there. All smog check stations are expected to be certified under the STAR program and so the only way they can stand out from others is through customer service, response rate, response time and promotional campaigns.
Below are some of the well-known brands in the industry;
- Union Smog
- Santiago Smog Test Only
- 415 SF Official Star Smog Check Station
- Smog Queen
- 19th and Taraval Smog Test
- Clean Air Smog STAR Station
- Westlake Smog Check STAR Certified Station
The smog check program is dominant in states that are highly industrialized because of the number of cars that emit toxic smog. Smog stations are expected to meet various requirements before they can be licensed; they are also expected to adhere to the requirements while being licensed.
There are three standard smog stations in existing, those that repair alone, those that only test and those that test and repair.
5. Decide Whether to Buy a Franchise or Start from Scratch
There are different processes that are involved in starting a smog check station especially depending on the state where you are looking to start the business in. Because the industry has no franchise opportunities, if you are looking to start the business, you either start from the scratch or you can buy off an existing business.
Either option has its pros and cons and while starting from scratch might be overwhelming for some entrepreneurs especially with all the stringent processes involved before you can get the license needed to start the business, it might be ideal for entrepreneurs who want to start small and control the pace of their business.
Buying off an existing business is an option that is often preferred by some entrepreneurs because it saves them the cost of looking for a location, buying equipment and inventory. However, before you buy off an existing business, conduct your research in order to find out why the business is being sold off so that you do not end up buying a business that will tie your capital down.
6. Know the Possible Threats and Challenges You Will Face
When looking to start any business, it is important that you are aware of the threats and challenges that your business is likely to face so as to be duly prepared. There is no business, no matter how well you have made your plans, that will not encounter challenges at certain points either when starting the business or whilst running the business and therefore if you are not prepared, you are likely to find your business failing.
Some of the threats and challenges that you are therefore likely to face when starting your smog check business are; having to deal with already existing competition, having to create strategies that will allow your potential target market to be aware of your business, and having to deal with changing industry trends and government regulations.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Whatever business that you are looking to start, choosing a legal entity is one of the most important decisions that you will ever have to make. The importance of a legal entity is such that it can have a great impact on your business by either allowing your business to achieve its full potential or limiting how your business can grow and achieve its intended goals and objectives, which is why it is a decision that has to be taken seriously.
As one who has conducted appropriate research about the business you intend to go into, it is important that you know what legal entity other smog check stations in the area are using or if you are still confused, engage the services of an attorney who understands the business to help you out. It is important to note that there is no perfect legal entity as they all have their pros and cons and all you can do is choose the one that is most appropriate for your business.
The three legal entities that are available for a smog check business are; sole proprietorship, partnership and corporation. The sole proprietorship kind of legal entity is one where there is no stringent requirement in registration as all you have to do is either use your name or an assumed name. The business and the owner are regarded as one single entity and the disadvantage in this is that, should any losses occur to the business, the owner bears full responsibility.
If you do not have the funds or skills with which to run the business alone, then it might be necessary for you to get a business partner. Going into partnership means that you have agreed with those – either one or more persons – you intend to run the business with how the business will be run and what the different roles of each partner plus financial contributions will be. The partnership kind of legal entity is also very flexible and tax is paid on the personal income returns of the owners.
A corporation kind of legal entity means that the business is seen as a separate legal entity from the owners and therefore can be sued in its own rights. A corporation is however more stringent to register and operate because of the too many procedures that has to be followed.
The good thing about this sort of legal entity is that should the business incur any losses, your personal assets are protected. However, except you are going to be running your smog check station on a large scale where you will offer other services, it might be best to stick to a sole proprietorship or a partnership legal structure.
8. Choose a Catchy Business Name
When looking to start your business, it is important that you choose a name that is not only catchy but one that will allow your business stand out from others in the same industry. A business name is just like an individual name, the more unique and pronounceable it is, the more people are likely to remember.
It is important that you have two or three suggested names so that if you find that one of the chosen names is being used by another, you can easily use another. Below are some of the catchy business name ideas that are suitable for your smog check business;
- Grinch Smog Check Station
- Wrench Smog and Auto Repair
- Auto 557 – Smogs Only
- Quaint Smog
- Squeaky Smog Station
9. Discuss with an Agent to Know the Best Insurance Policies for You
When looking to start any business regardless of whether you have inventory or not, it is always best you have a safeguard in place, which means that you should ensure that you are not bearing the risks of your business alone.
According to statistics, most entrepreneurs who do not insure their businesses and encounter a risk, always find it hard to bounce back, and if you have mortgaged your house or spent your savings to start a business; shutting down because of an incident is likely to deal a blow to you psychologically and so to avoid this, it is best you engage the services of an insurance agent to help you purchase the insurance policies that you will require.
Some of the insurance policies that you will therefore need to purchase are;
- Auto Business Insurance
- General Liability Insurance
- Property Insurance
- Workers’ Compensation Insurance
- Employee Dishonesty
- Casualty Insurance
- Commercial Property Insurance
- Burglary & Robbery
- Umbrella Policies
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
A smog checking station is a regulatory business that is strictly guided by the government and other regulatory agencies, as your duty will be to check smog in vehicles and issue a certificate and so there is no need to apply for an intellectual property protection.
However, you can choose to apply for IPP for the name of your company, the logo and any other materials you deem necessary but it is worthy to note that entrepreneurs in this industry do not consider this a priority.
11. Get the Necessary Professional Certification
It is important that you have the technical skills needed to start and run your smog check station successfully especially as you do not require any sort of professional certification for the business.
However, most smog check stations are STAR certified which means that they cannot perform below a certain standard, and while some smog stations are licensed to test or repair only, others have the license to check and repair.
12. Get the Necessary Legal Documents You Need to Operate
The smog check business is filled with regulations and processes and so there is no way you can start the business without having all the needed documents in place. Knowing what documents you will need is very important as not having all will mean that you cannot run the business. You might need to engage the services of an attorney to help you out with the documents that you will need to start your smog check station.
Below are some of the legal documents that will be required of you;
- Smog Test Shop Business License
- Smog Test Shop Doing Business As (DBA) Certificate Or Certificate of Incorporation
- Employer Identification Number (EIN)
- Smog Test Shop Seller’s Permit
- Business Plan
- Business Insurance
- Tax Identification Number (TIN)
- Employer Agreement
- Business Permit
- Contract Documents
13. Raise the Needed Startup Capital
When sourcing for finance to start and run your smog check business, it is important that you take certain factors into consideration such as how much the equipment you intend to buy will cost, how many people you are going to recruit and how much you will expend in salary, as well as where you are going to locate your business.
Sourcing for finance is not a task that entrepreneurs are enthusiastic about but as long as they are serious about the business they intend to start, then it is necessary that they create a comprehensive business plan that will help them convince intending investors on the need to invest in the business.
Some of the financing options that are available for your smog checking business include;
- Generate part of your startup capital from savings or from sale of property or stock
- Get a business partner to split start-up capital with you
- Apply for loan from a commercial bank
14. Choose a Suitable Location for your Business
Regardless of whatever business you are looking to start, being at the most appropriate location is vital for the success of the business. If you handle this aspect wrongly, it can have a huge negative impact on your business especially as you will have committed resources into it.
This is definitely not a business that can be run from home and so it is necessary that you lease a place to run your business. The location you choose and the size of the facility will be determined by how much you have. Therefore, if you have more funds at hand, you are more likely to lease something bigger and in an appropriate location than if you were constrained of funds.
When choosing a location, ensure that you have reached an agreement with the owner regarding the release clause so that if you find that you are not generating enough revenue where you are located, you can get part of your money back and move to another location.
Ensure that you engage the services of a real estate agent or broker when looking to lease a location as they would know which locations would be more appropriate for your business.
15. Hire Employees for your Technical and Manpower Needs
The major aim of a smog business is to ensure that the emission of poisonous substances have been drastically reduced in the atmosphere. According to environmentalists, the odd variations that we are getting in the weather and the fast depletion of the ozone layer is due to dangerous activities such as the terrible emissions that are being pumped into the air. Vehicles that use fossil fuels are majorly culpable and so certain cities especially those that are highly industrialized have made it regulatory that vehicles be checked within a particular period for smog.
Laws usually differ between states on when it becomes mandatory for a smog check to be done. However, all vehicles that have been manufactured from a particular year are being required to undergo a smog check every two years. Vehicles that are newer are expected to undergo a check after the first 6 years.
In California for instance, non-resident vehicles and diesel vehicles that were registered from 1998 are expected to undergo a smog check. Before this business can however be started, a stringent process has to be undergone before licenses can be issued.
It is expected that any smog check station should have all the required testing equipment and reference materials which to assess all affected vehicles. The equipment that are supposed to be in place include; an ignition timing light, a hand vacuum pump, basic hand tools, software to retrieve trouble codes and define the codes found, low-pressure fuel evaporation test equipment, a dynamometer, a tire pressure gauge, a compression tester, a dwell meter, propane enrichment kit, an ammeter, and digital volt. Other equipment and tools needed are office supplies.
It is expected that you build a solid business structure for your smog check station so that tasks can be carried out efficiently. Ensure that you hire those that are very proficient and also align with your core goals and objectives. Therefore, those that you will need to hire for your smog check station are; trained smog check technicians, office managers, customer service rep, marketing manager and accountant.
From the above analysis, you will require about 5 key people if you intend to run your smog check station effectively.
The Service Delivery Process of the Business
The processes involved in a smog check involve a compliance order of notice within 3 months being sent out to a vehicle owner. The vehicle owner then within the stated period presents the car for a smog check.
Vehicle owners that do not comply will not have their vehicle registration papers renewed. After a smog check has been conducted, the vehicle owner is then being issued a certificate stating whether the vehicle has passed or failed the check. If the vehicle has failed the smog check, it is expected that the owner carry out the necessary repairs. Vehicles that are in a bad shape, following the test are either acquired by the state or taken to the scrap yard.
16. Write a Marketing Plan Packed with ideas & Strategies
Any entrepreneur just starting out a business knows that marketing is one of the most difficult and challenging part of running the business and this is due to the fact that marketing a new business is more difficult than marketing an already existing business.
Not only is marketing a new business difficult, it is also very time consuming, which is a luxury that most entrepreneurs just starting out their business do not have. Also, as one who is just starting out, the luxury of outsourcing this particular aspect to professionals might not be there.
However, regardless of how challenging marketing can be, it is also very important as this is one major way by which customers become aware of a business and then seek to patronize the business. Another thing that marketing does whilst creating awareness is to help you penetrate the intended target market and then through this get a fair share of the market for your business regardless of how stiff competition is.
Asides from how time consuming marketing is, it also requires a lot of finance and so it is important that before you begin your marketing campaigns that you have a laid down plan as to what you intend to achieve and how you intend to achieve them. Also, a marketing plan will take cognizance of your overall goals and objectives and will ensure that whatever strategies are created are in line with your goals and objectives.
The internet has made it very possible for entrepreneurs to market their businesses more effectively. Even though there are various means that the internet provides, it doesn’t mean that you cannot advertise your business via other offline means as well. The important thing is to ensure that your strategies are constantly reviewed so that you can remove or modify ones that are not so effective.
Below are some of the marketing ideas and strategies that are available for your smog check station;
- Ensure that you create local awareness for your smog check station by gaining coverage in local newspapers and related magazines
- Make use of email marketing in order to increase lead generation as well as customer engagement
- Leverage on social media platforms such as Facebook, Twitter, Instagram and Linkedin to market and promote your smog check business
- Pass out handbills and fliers in strategic locations in order to increase awareness about your business
- Ensure that your smog check station is listed in local directories and online directories as well
- Ensure that you place flexi banners in strategic locations in order to create awareness for your business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
It is important that you develop strategies that would boost awareness for your brand and also create a corporate identity for your business regardless of how much similar services you are offering. In fact, if you do not create the strategies that will boost your brand, you are likely going to have customers come in every once in a while which would mean that you do not get to generate revenue for your business as expected. It is therefore important that you take the publicity strategies for your business very seriously.
One good thing with publicizing your business is that not only do you get to generate awareness for your business; you also get to generate revenue as well. Another advantage to ensuring that your intended target market is aware of your business is that it allows you to penetrate your intended market and then get a fair share of the market for your business. This is why established and even successful businesses do not joke with promoting their brand to their target market.
Like all decisions that you will be making when looking to start your business, it is important that you conduct a thorough research about the strategies you intend to use and what effect they are likely to have on your business. Doing this will enable you know who your target market is and what they are likely to expect from your business in terms of creating the necessary awareness. You will also know who your competitors are and what strategies they are using that are effective and which are not.
Having promotional strategies will ensure that you are aligned with the core goals and objectives of your business. Also, it will determine how much you will need to set aside in order to achieve your goals and objectives. Below are some of the strategies that you can use to boost awareness for your brand and also create a corporate identity;
- Ensure that you place adverts about your smog check station in local newspapers and magazines as well as on radio stations
- Create a professional website and use this to promote your services there
- Advertise your smog check station on popular automotive forums and blogs
- Create social media platforms such as Facebook, Twitter, Instagram and a Linkedin page in order to promote your business
- Install flexi banners and attractive signage in order to create awareness for your business
- Encourage your loyal customers to help spread the word about your business