7 Tips on How to Start Your Own Car Dealership


The automotive industry is one of the fastest-growing lines of work out there. As the number of drivers out there grows, the demand for cars grows as well. Still, not everyone can afford a brand new car. Fortunately, the depreciation, while being a term that a lot of people dread, can work to so many people’s benefit. How? Well, by allowing people to buy used cars at a fraction of the price. This is why starting your own car dealership can be such a lucrative idea. For all those interested in this industry, here are seven useful tips for getting started.

#1. Develop a business plan

The first thing that any business needs are a business plan. First, you need to define the structure of your business. Are you running as a sole proprietorship, a partnership or a limited liability company (LLC)? Other than this, you need to clearly state potential success factors and include your research on the market.

The majority of startups and small businesses tend to fail because they do not research the market before setting out. In other words, figure out whether there’s a need in the area for your cars before starting a car dealership.

Keep in mind that doing projections may be somewhat difficult early on, seeing as how you might lack the necessary data. What you need to do is start surveying your competitors and try to figure out their success rate in the neighborhood.

Poor segmentation of the market may indicate that there is a problem somewhere; however, having too many, too strong competitors can make for a hostile business environment, as well. This might not be something that you can affect but it is definitely something you need to be aware of before you decide to go in head-first.

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#2. Do the budgeting and fundraising

Do the budgeting and fundraising - How to Start Your Own Car Dealership

Once you have a business plan, you need to start budgeting the issue. In order to run a car dealership, you need to have a physical location, which means renting out a lot somewhere convenient. Second, you need to start with an initial supply of vehicles, which will require quite an investment on your part.

Then, you need to get these vehicles in order, hire employees and engage in a series of other pre-launch tasks. One more thing you need to bear in mind is the fact that it will take a while for the business to become profitable (your first several vehicles won’t get you to the break-even point). This is why you need to have an operational reserve.

The next step on this path is fundraising. Now that you know how much money you’ll need, it will be the time to finally get it. So, where do these companies get their money from? Well, first of all, the majority of people use personal funds to start their first enterprise.

The problem with applying this solution to the given situation lies in the fact that a car dealership has slightly higher start-up costs. The same rule applies to loans from friends and family. This is why a business loan would probably be your best bet.

#3. Choose a location

Choose a location

The next thing worth considering is the location of the lot. Keep in mind that people are sometimes willing to go a tad further in order to buy an ideal car.

This is due to the transportation and logistical issues. A Sydneysider is not likely to buy a car in Perth, regardless of how much more affordable it is. This is especially due to the fact that the local offer may not be that far off. In other words, you’re likely limited to your own region and you need to take this as your starting point.

#4. Buy additional equipment

One more thing worth taking into consideration is purchasing additional equipment for the car dealership. For instance, you’re unlikely to be able to afford garage capacities for all the vehicles that you’re currently selling.

Such a thing is never cost-effective for a dealership. What you can do, on the other hand, is looking for a suitable alternative. Buying a quality car cover for every vehicle here is definitely an idea worth exploring. This can protect your vehicles from various weather occurrences, vandalism, and insects. There are a lot of similar instances of game-changing equipment that you should definitely consider for your dealership.

#5. Make a website

How to Start Your Own Car Dealership - make a website

The thing that you probably need the most is a website. Why? Well, first of all, your website is going to generate the most sales and the most visitors to your dealership.


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This is why it needs to be made right. Consider making an investment by hiring a professional designer. Other than this, make sure to hire a professional photographer for all of your vehicles.

This is an extra expense but it’s one that could definitely pay off. Lastly, keep in mind that the responsiveness of the site drastically affects the overall user experience.

#6. Licensing, bonds, and insurance

How to Start Your Own Car Dealership - Licensing, bonds, and insurance

Seeing as how selling used vehicles is an industry that requires a ton of legal work, you might want to consider getting some help around licensing, bonds and insurance.

Also bear in mind that every sale that you make needs to be closed with an ownership transfer. This is why collaborating with a legal expert and having all these documents prepared and ready might be the best of ideas. All in all, the faster that this goes, the better.

#7. The skill of a salesperson

At the end of the day, you need to understand that the number of sales that you close may be directly impacted by your prowess as a salesperson.

Naturally, you won’t be the only one working there, which is why you might want to be extra mindful about how you handle the rest of your team, as well.

Networking abilities are what matters the most here, which is why hiring extroverts, empaths, and people who are naturally communicative might be a great starting point.

By getting started in the right way, you’ll prepare your business for future success and make it more resilient towards all sorts of challenges that enterprises encounter in their infancy. Just bear in mind that success requires careful planning and patience.

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