PDF How to Run A Car Dealership

Be Your Own Boss: 7 Tips for Starting Your Own Car Dealership

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Weatherproof Security Cameras and Environmental Monitoring

Be Your Own Boss: 7 Tips for Starting Your Own Car Dealership.
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In order to help you shift gears and become your own boss, here are seven tips for starting your very own car dealership. Image via Flickr by Emilio Labrador. Before you begin lining up cars on the lot, you have to decide whether you want to deal primarily in used or new car sales.

Starting A Used Car Lot , Profitably

The new or used route will set the framework for the rest of your dealership endeavors. If you choose to start a new car dealership, it's important to keep in mind that the initial investment is substantially higher than a used car dealership. This means you'll likely need an investor or financial backing from a bank. Starting a used car dealership, on the other hand, doesn't require such a large initial investment, but the earning potential is lower. With that said, you'll save money on leasing the dealership property because you'll likely have less used inventory.

Once you decide between selling new or used cars, you'll need to formulate a suitable business plan for your future dealership. This is especially the case if you need to acquire financing. A solid dealership should begin with the vehicles themselves; are you going to sell one brand or multiples? If selling both new and used cars is a possibility, it's also important to include this in the business plan. Other business plan stipulations include determining business equipment costs, researching manufacturer car costs versus used car prices, calculating employee salaries, lease and sales agreement costs, and planning your advertising budget.

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How to Operate a Used Car Business?

All of these factors will help you create a business plan that's anchored in reality. There are a number of hurdles you have to jump before you can begin selling cars, and one of them is obtaining your dealer's license. If you want a full-fledged dealership, then you need a dealer's license that permits you to sell an unlimited number of vehicles a year. A dealer's license is also necessary if you want your sales activities to fall within the Consumer Rights and Safety laws. As for bonding, you'll want a surety bond for your dealership, which protects you from contract defaults with vendors, vehicle suppliers, and wholesalers.

Surety bonds are an effective way to safeguard transactions that take place between your dealership and any outside party you do business with. All car dealerships require comprehensive insurance coverage whether they deal with used cars, new cars, or both.

Car dealerships are one of the few remaining businesses that have yet to be replaced by an ecommerce website. This is due to the fact that. If you've always dreamed of owning your own business and you have a passion for automobiles, then starting your own car dealership might just be a match.

Typical car dealership insurance coverage includes general liability, lot coverage, and comprehensive plans that cover everything from property damage to inventory loss. Just because you have a love for cars doesn't necessarily mean you're an ideal salesman. Retail is a tough nut to crack, and if you don't want to come off as a sleazy car salesman , then you need to hone your sales skills.

It doesn't matter if you're selling used or new cars, your number one goal as a car salesman is upfront honesty. From the condition of the vehicle to following through specific promises during the selling process, letting your customers know exactly what they're getting is the key to success.

Other salesman traits include not being too pushy during a sale, knowing how to handle the negotiation stage properly, and knowing when to give potential buyers some breathing room. Greet the potential customers who come to your used car dealership. Hire assistants and salespeople, if necessary, to help talk with customers and answer the telephones.

Train your salesperson to assist customers and ask questions about what the customer needs. Calculate a "bottom dollar" for each of your used vehicles. This dollar figure represents the minimum amount of money you can sell your cars for without forfeiting profit. Figure this amount by adding a 5 to 10 percent markup to the vehicle's total dealer cost. Carry this minimum dollar total with you when negotiating selling prices with customers.

Weatherproof Security Cameras and Environmental Monitoring

Assign a trade-in dollar value to automobiles that customers are trading in for a new used car. Make customer service one of your top priorities in your used-car business. Follow up with your customers either by direct mail or with a telephone call to thank them for buying from you. Matthew Schieltz has been a freelance web writer since August , and has experience writing a variety of informational articles, how-to guides, website and e-book content for organizations such as Demand Studios.

He plans to pursue graduate school in clinical psychology. Skip to main content. Warning Avoid deceptive advertising and marketing practices in your used car business.

Lastly, provide a standard three-month warranty for any purchased vehicles. It would help to have some background in business, however. Various automotive review sites exist around the web that offer reviews of individual car dealerships, but many customers will prefer to share their reviews directly on your social media page. The department of motor vehicles likely got you started when you opened your doors, but running a popular dealership requires additional evidence of your commitment to the community. Accessed 16 December While some owners may have the personal fortunes to be able to finance the opening of their own dealerships, the truth is that opening a used car lot can require hundred of thousand, or even millions of dollars—which is something that many prospective lot owners simply do not have.

Don't cover up things about the automobiles you're selling. Don't mislead customers by doing things such as setting back a car's odometer.

How to Run a Car Dealership

Tell your customers of every possible mechanical defect and repairs that have yet to be made to automobiles. Guide to Used Car Auto Auctions. AutoCheck Kelley Blue Book: Get Your Used Car Price.

About the Author Matthew Schieltz has been a freelance web writer since August , and has experience writing a variety of informational articles, how-to guides, website and e-book content for organizations such as Demand Studios. Accessed 16 December How to Operate a Used Car Business. Small Business - Chron.