The used car industry accounts for 50 percent of the automobile industry and is the largest commercial sector in the US. Owning your own business can be a very rewarding venture, if done right. You need to know the tricks of the trade and the dos and don’ts. Below are some points to consider for a shot at a successful car lot.
It’s more than just selling cars
The used car business is surprisingly more than just selling cars. Customers purchasing used cars are more often searching for quality at an affordable price. A good number of them will carry out some form of research and arrive at a type of car or brand that they trust. In some cases, they may forego cheaper brands and models for more expensive ones if quality is guaranteed. As a dealer or dealer-to-be, you should carry out your own research to determine what type of cars sell and where they sell the most.
You should also carry out market research to determine the demographic of potential customers in your area, the activities and omissions of other dealers around you, laws and regulations governing dealerships, and more. This data helps you make informed business decisions that determine how far your business will go.
Obtaining all this information and building a plan requires some business knowledge and someone who is accounting savvy. You can either hire someone to help you with a business plan— and incur extra costs, or you could do it yourself by getting an online business degree and save some money. Online degrees are great options for business-oriented individuals, as they offer you the flexibility needed to obtain an education while building a long-standing business.
Take care of the legal stuff
There are laws and regulations that govern dealerships and their operations, and while legalities can be boring, they are very important. If you are unsure what laws you should follow or what licenses you should obtain, you can find out what is needed through online resources. You may also need to obtain surety bonds, dealer forms and other licensing requirements. You’ll also need to register for sales tax and get a seller’s permit, a trade plate (if necessary), and keep up with auto dealer laws.
Handle your inventory
Your inventory is paramount as it is your main product. Your suppliers should be the best of the best— or at least, the best within your price range. If you need to get financing to purchase better inventory, be sure to negotiate the best deal possible. There are also auction sites and companies that supply quality vehicles at an affordable price. The process is as easy as entering cheap cars for sale near me in a Google search. You should know that some used cars are salvaged from accidents, or have had their parts replaced at some point or the other. Make sure you know which is which— auction businesses should be upfront about this. However, it is a good idea to go with a mechanic to inspect vehicles.
You should also determine what type of cars you will be selling. Information from market research can give pointers to what people buy. You should also consider how many cars your lot can fit, providing security for those cars, and insurance.
Be careful with financing
Financing can be very useful and provides opportunities for growth in business— for those who know how to go about it.
When it comes to accounts, you should always separate personal funds from business funds.
When it comes to loans from banks, you should keep in mind that the bank expects remuneration for every car sale you make, so if you plan to provide financing for your customers, you’ll need a way to plan for cash flow for operational costs.
Factors like marketing and advertising can be considered once your business has been set up. Building a website is a wise investment as you can showcase your inventory online, allowing customers to view the car they want then come around to inspect and pick it up. This facilitates smooth sales and saves valuable time.