If you love the idea of being a salesman, working in a car dealership may be a good fit for you. With the boom of services like Uber and Lyft (not to mention the everyday needs of commuters and families) the demand for dependable vehicles is high.
If you’re looking to capitalize on the growing demand by opening your own car dealership, there are a few things that you will want to make sure you have in place. Here is a quick rundown of the steps you should take to get started as a car dealer.
To operate any business, you will need to have the correct licenses and permits. This is especially true for car dealerships—you may also need to get specific insurance policies. For example, a liability insurance policy would be a great idea if you have vehicles in the showroom or are planning on letting individuals test drive cars before making a purchase. Getting a certain amount of insurance to protect your wares is also a good idea since replacing a car if it gets damaged in an act of God can be expensive.
Running a car dealership also requires you to have a property with a lot to hold your cars in. The good news is that these sorts of properties generally cost less than other empty lots because you do not need to spend money developing the entire lot. Instead, you only need to develop a small portion to house the buildings that will comprise your offices and showroom. Beyond that, a parking lot will suffice as customers can walk up and down the rows of cars to take a look at what you are offering.
Of course, inventory is a major expense for any car dealership. When getting your funding in order, make sure that you are budgeting a large percentage of your expenses towards this cost. One way to save money when you buy used cars is to go through an automotive auction or buy salvage vehicles and rebuild them from scratch. Both of these methods require a little bit more time and patience, but can ultimately pay off by increasing your profit margins considerably.
Beyond saving you money, buying vehicles from an automotive auction can also increase the diversity of cars on your lot and means that you don’t need to deal with private, in-person sales as often. It may be worth looking into private money lenders in Texas or whatever state you’re located in to find the right financing for your inventory. A hard money loan from a financial institution like Bay Mountain Capital can give you a loan secured with your property value.
While you may be a great salesman, you must have a team helping support your work in any car dealership. This can include a variety of roles, from salesman to financial experts who help with financing or leasing your vehicles to customers. It’s also a great idea to have a legal team to review all of your contracts so that all of your agreements with customers are legally binding and in accordance with local and national laws.
Marketing is also an important part of your car sales operation. You may associate car dealership advertisements with cheesy, low-quality advertisements on local network television, but you don’t have to fulfill that stereotype. Modern technology affords car dealers a variety of tools to use, including display advertising and remarketing. Both of these concepts ensure that anyone who has shown interest in shopping for a new car will receive your ads. Best of all, these sorts of ads can be geographically targeted so that you don’t need to worry about your advertising dollars reaching customers too far away from your location to make a sale.
Starting any business can be challenging, especially a car dealership. Even so, if you have a strong work ethic and a will to succeed, you will be able to find success. Keep the above ideas and tips in mind as you begin to plan for your dealership launch and you will be able to face any challenge that might come your way.