Whether you have a genuine love and knowledge of cars, or are simply trying to capitalise on the demand for new and used vehicles and turn a fast profit, then starting a car dealership could be a great idea. However, just like any business, there are some things you’ll have to know about the industry before you start. There are also some common obstacles and important decisions that you’ll need to make along the way that could affect the future of your business. Here are a few things that you’ll need to consider before starting a car dealership.
Where your dealership will be located will affect you in many ways. First, you want a location that will give you a lot of visibility. But you also want to set your business up in a locality that offers good incentives, like low average payroll fees for employees, low property taxes, and affordable lots.
If you live straight in the middle of the city, it could be a good idea to consider surrounding localities as well. You could find a market that offers the same opportunities, but will allow you to save on property and have less competition.
Motor Trade Insurance
We strongly suggest that you start looking at insurance before you even start, especially motor trade insurance, as you won’t be able to operate without it. A good car traders policy will cover you and your employees when moving and storing cars. It will cover you in case any damage happens to the cars while they’re in your custody.
If you want to save on insurance and find the best coverage possible, it would be a good idea to use a comparison service that will allow you to find great cheap motor trade insurance. Quotezone, for example, will allow you to get quotes from insurers from all over the country and find one that fits your operation and budget. All you have to do is complete a simple form and you’ll get quotes from multiple insurance providers all in one place.
Once you’ve found a provider, there are some things you have to be aware of though. For one, it’s important that you don’t lie or purposely omit to mention some information in an attempt to get a better deal. If they eventually find out, they could void your policy. This means that you could be on the hook for any outstanding claim and have to pay out of pocket. This is definitely not worth the risk.
There are tons of different ways that you could go with this. You could start a used car dealership, or you could open a new car dealership and buy wholesale from manufacturers. Or you could become a franchisee. All of these options are very different, and have their own pros and cons.
You could also decide to specialise yourself. You could sell exclusively luxury cars, or electric cars. Depending on the niche, this could actually help you stand apart and satisfy a demand. Another thing you’ll have to consider is if you’re going to have a garage as well. Offering service and maintenance could be a great way to squeeze more money out of your dealership, but it’s also a bigger investment.
Whatever your decision, know that it will eventually affect the course of your business. Starting a new car dealership, for instance, will require much more capital, while running a used dealership will require spending a bit more on inspections and making sure you buy vehicles that are in demand and allow you to make a decent return.
Your Business Plan
Drafting a good business plan is essential for any car dealership business. In your business plan, you’ll have to lay out what will be the organisational structure of your business, its short-term and long-term objectives, what will be your product range, a SWOT analysis, a marketing plan and budget, number of employees, etc.
Building a solid business plan will not only help you give it direction, but will also be essential when trying to get some financing, investments, or partnerships.
Start Looking at Marketing Strategies
Marketing will be a crucial part of your business and you should start looking at what methods you can use to get your name out there once starting. One of the things you should consider is setting up a tent sale. Dealerships use tent sales to gain more visibility and attract business through discounts. These are usually conducted off site. However, make sure that you know the rules and regulations surrounding tent sales in your area as they may differ depending on the jurisdiction.
Starting a car dealership can be a great and exciting venture for people who love to be and work around cars. Just make sure that you know what to expect, and do your homework before you set your first stone.