How to start a used car dealership from scratch: a complete business plan guide
Before opening a car dealership, every entrepreneur should carefully study the niche, compare the advantages and disadvantages of this business, calculate the upcoming costs, and decide on the choice of suppliers, premises and equipment. It is imperative to register, make the appropriate calculations and draw up a business plan.
Dealership: Niche Assessment
The investment required to open a car dealership is quite significant, but quite rewarding. For a business to grow quickly, it is necessary to sell not only cars, but also a variety of accessories and even spare parts. If you have enough money, you can additionally open a car workshop directly next to the car dealership.
It is very profitable to open car dealerships in cities or areas where there are no competitors, or their number is minimized. Today, many car enthusiasts prefer to buy used cars. Therefore, it would be nice to think about providing this service. Moreover, there is no need to make capital investments in this case. If the car service has a regular clientele, you can earn about 100,000 rubles a month (after deducting all expenses), thanks to which you will return the money invested in a few months.
You need to know that in the first 2-3 months your business will not bring the desired result. You might even say that it will be difficult for you to cover the costs. However, do not despair - as soon as sales start, your customer base will increase, and your income will become tangible.
You can learn how to become a real dealer of the automotive industry, determine a niche and what risks you may face in the video:
Advantages and Disadvantages
- good demand for cars, both new and used, as the number of consumers grows;
- if you sell parts and accessories in parallel, you can have additional income;
- you do not need to have special education or experience to start a business;
- high income level;
- by creating decent advertising, you will quickly find new customers ;
- investing a very large amount;
- the return on investment comes only after a few months.
Features of business planning for dealerships
The policy of car concerns is aimed at creating an effective network of dealerships for the sale and maintenance of cars. The company's management clearly calculates how many dealers need to have in a particular territory in order to provide sales and service to car owners and an acceptable profit margin for dealers. At the same time, a number of conditions are put forward for potential dealers on the availability of areas for sale and service, the necessary service equipment, personnel qualifications, etc.
Car manufacturers look at the realism of the business plan indicators, the size of the investment, the payback period, the planned sales and service indicators. It is profitable for large automobile concerns to provide dealerships only to strong financially stable companies that can earn both themselves and the manufacturer, as well as provide a high level of service and create a positive brand image. In the business plan, it is necessary to try to reflect all the advantages that the organization has, applying for the status of a dealer.
It is advisable to make a business plan for obtaining a dealership in an automobile company voluminous in content (from 50 pages or more), present in it the diagrams of the location of the dealership with access routes to it and floor plans of the building. In the business plan, a list of available and planned to purchase equipment for the service should be described. It is also necessary to provide the staffing table of the dealer company, indicating the positions of all specialists and the size of their salaries.
It is necessary to study the local market in detail, describe the competitors and make a forecast for the planned volume of car sales, the list of services that are planned to be provided should be detailed in the business plan, indicating the approximate revenue. A business plan must include a detailed financial plan with the calculation of a monthly cash flow project, a profit and loss plan, a payback period, sensitivity analysis, break-even, calculation of profitability, liquidity, etc.
In general, it can be noted that the more thorough and detailed your business plan is, the more serious the project will look like, which naturally increases the chances of getting a dealership.
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Owning your own car dealership is the dream of many men and women. This branch of business is very interesting, and can bring considerable income, but, unfortunately, when opening a salon, many start-up entrepreneurs face problems associated with a lack of skills and experience in this area. A ready-made business plan for a car dealership can help to cope with emerging difficulties, after reading which you can calculate your actions in the auto business several steps ahead.
Selecting a car brand for the salon
Before opening your own car dealership, you will need to decide on the brand of cars that you want to sell and buy a franchise. A franchise implies a contract in accordance with which you will have to arrange and equip a car dealership according to the company's standards.
Buying a franchise will be convenient for those entrepreneurs who already have premises in which they want to open their salon. Nowadays, many car buyers opt for new cars rather than used ones. While the demand for new cars is not only protected, but also increases, the auto business will be able to bring considerable profit to the entrepreneur who can competently organize a business by arranging supplies and presenting a wide range of relevant models in his salon, excluding low-speed cars from the sale.
Car dealership services
Having decided on the concept of your business and deciding to open a car dealership, you must organize in it not only the sale of cars, but also their repair and maintenance. Additional income can be brought to you by the sale of spare parts and accessories in the salon.
The most optimal approach is to open a car showroom next to a busy highway or motorway. Before opening a showroom, find out which car brand is not yet available for wide sale in your city, and give your preference to it: this will help you attract the largest number of buyers and solve the problem of competition.
When purchasing or renting a building for a car dealership, try to find a large enough room: the minimum size of its area should be 300 square meters. Large panoramic windows should face the roadway, through which the cars put up for sale will be visible to buyers.
If you were unable to find a room with the required parameters, start searching for a land plot to build a new building for a car dealership.
Qualified and well-trained personnel play a huge role in the success of the automotive business, therefore, the selection of salon employees must be approached very responsibly and seriously. First of all, you need to find a good HR manager who will deal with the selection and placement of personnel, as well as establish the rules for working with clients.
You would probably wonder why most people who buy cars for the first time usually buy a used car? The answer is simple and straightforward. This is due to the fact that prices for new cars are usually not available to the average person who wants to own a car, hence the market for used cars in Russia and other developing countries began to develop rapidly.
People often think that starting this kind of business doesn't require any professional skills. How true is this? You still need a good knowledge of cars, you still need good business skills, negotiation skills, and of course, customer service skills if you really want to build a profitable business.
In this article, we'll go through a detailed business plan template for a car dealership by analyzing and developing a sample car marketing plan, backed by marketing ideas, and looking at the requirements for starting a used car dealership. So put on your entrepreneur cape and read on.
What you need to do to successfully start a business without money
One of the important things about the auto business is that you can start this business without money and also make a profit. This is because you can simply convince people who are looking to sell their used car to help them find buyers, then enter into an agreement to get a certain percentage of the deal as soon as you can sell their car.
If you are trustworthy and reliable, it will be easier for people to trust you with their car and wait for you to help them sell it. If the deal goes out, it will be a win-win for both parties. You will receive your profit, and the owner will receive money from his car. In other words, you automatically help people get rid of the car and, in turn, make a profit.
Without a doubt, starting a used car business can be fun, especially if you open your car dealership in a location where you can easily attract low-income people who can't afford new cars. The fact that fairly used cars are very affordable and much cheaper than new cars makes the used car business an easily available and thriving business at the same time.
Finally, getting started with used cars just like starting any other business can be tricky, but one thing's for sure is that it is a direct business that can generate huge and stable profits if they are good located and properly managed.
Used Car Dealership Launch - The Complete Guide
The automotive industry for used car dealers is really thriving simply because more and more consumers are realizing the need to reduce unnecessary costs associated with buying cars, buying insurance policies, and selling used cars as quickly as possible.
Some of the factors and incentives that drive start-up entrepreneurs to open a car store is the fact that the amount required to start a business, especially when you decide to open a small store, is not as big as it might be show up first.
This eases the burden on the entrepreneur who is interested in bringing business into the industry any time they wish; entry barriers are acceptable, and any serious entrepreneur can comfortably raise start-up capital without collecting loans from a bank, especially if they can convince used car owners to help with the sale.
Market Feasibility Study
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Description of the business process of the car dealership
- Description of the car dealership
- General information about the car dealership
- Description of business processes of car accounting
Fig. 1. - Business processes of the car dealership