There are all kinds of business ventures to go into. But, if you have an interest in cars and want to make big-dollar sales, owning a car dealership could be for you. There are several different ways to go about this process. For example, you could invest in and sell new cars or used cars. Or, you could choose to operate an in-person dealership or one that is strictly online. The choice is yours. And, no matter how you choose to open and operate your dealership, these handy tips can help you get started.
Make a Business Plan
Before you do anything else, you’ll need to come up with an in-depth business plan. Once you’ve decided on your business model and the types of cars you will sell, you’ll have to decide how you want to finance your business. You should also have a clear idea of how much you can expect to spend upfront, your target demographic, and what your initial marketing efforts will be.
As you can see, there’s a lot to think about and plan for. For best results, don’t make all these plans on your own either. Consider working with a mentor who has experience with business ownership. You may also want to speak with a business lawyer or consultant who can help you draft a business plan.
As you construct your business plan, remember that you need to have a specific focus and something that makes you stand out from other car dealers. For example, you might want to sell cars from a particular manufacturer. Or, you might want to specialize in affordably-priced new cars or, at the other end of the spectrum, the hippest, hottest new sports cars.
No matter what your specialty, you need to make sure you understand the financial costs involved. Acquiring and selling used cars, for example, is going to be much cheaper than acquiring and selling new cars. Remember, too, that you can always change your focus once you build up more savings from profit. However, having a clear focus from the beginning can help you set your dealership apart from all the others.
Don’t Forget Your Surety Bond
Most states require a surety bond for car dealers. This bond holds you, as a dealer, to certain standards and also offers protection for your customers. You may also need this bond in order to obtain a license to act as a dealer in your particular state. Check with your state’s Department of Motor Vehicles (DMV) to determine what type of bond you will need. The costs involved may vary significantly based on your business plans and other factors. However, it is imperative that you secure all necessary bonds before you attempt to sell your first car.
Choose A Business Name
In addition to everything else you have on your plate, you’ll need to choose a business name. Try and choose something that distinguishes you from the competition and makes you easy to find in search engine results, as this can improve SEO value. Make sure you are also aware of any regulations pertaining to dealership or business names in your state or area. Once everything looks good, you can officially name your business. For many, this is an important step that can make everything feel much more “real.”
Plan for Taxation
As the old saying goes, you can’t escape taxes. This is especially true for businesses. In order to pay required state and federal taxes, you will need to sign up for an employer identification number (EIN). Keep in mind, too, that the way you have structured your business will affect the types of taxes you will be subject to. This is yet another reason to work with a business consultant or business attorney as you begin your dealership journey.
Select a Business Location
As you get closer and closer to opening your dealership, you’ll have to decide if you want to maintain a physical location, do business solely online, or both. The choice is yours. Of course, operating in person does have some costs and challenges that don’t apply to a solely online operation. But, if you decide it’s right for you, you’ll need to start looking into available properties. For car dealerships, this can be tricky. You need a location with lots of space for stocking your available vehicles. You also have to follow all zoning laws for your state and county.
If that sounds like too much hassle, operating as an online-only dealer may be for you. You can easily build a quality website and sell cars directly from that site. In fact, there are tools, such as the EVOX database, that can provide you with images, spins, videos, and more to help promote the cars you sell online.
Some dealers may have success online and then use the money they’ve earned to open a physical location. Others prefer to operate both online and as a brick and mortar location since this provides them with multiple ways to do business. Only you can decide what’s right for you and your dealership. But, once you do, you’ll have to take steps to put your plan into action.
Keep Your Business and Personal Banking Separate
As you get your plans off the ground, consider opening up a business checking account. Not only does this make for simpler bookkeeping for you, but it can also help protect your personal assets if something goes wrong with your business. Speak with your bank about the process for opening business accounts, and then make a concentrated effort to avoid mixing personal and professional finances.
Find An Accountant
Speaking of finances, tracking how much you’re spending versus how much money you have coming in can be tricky. And, if you don’t keep careful records, you could find yourself in trouble come tax time. So, for best results, find a business accountant you can trust.
These professionals can record profits, losses, expenses, and more. Many will even file your taxes for you and provide general financial advice. Some can also assist you in the event that your business gets audited. Decide how much help and support you require from an accountant and then choose one that can provide all the services you need, ideally someone who has experience working with vehicle dealerships.
Owning a car dealership can be a wonderful way to earn money. However, just like with any business, there is some risk involved. As such, you’ll want to take steps to protect yourself and your dealership. To start with, consider opening and investing in a savings account for your business. This can get you through tough times, such as unexpected shifts in the market.
Similarly, you should also take out business insurance. Every business should have general liability insurance as a bare minimum. Check with a business consultant to determine what other types of business insurance, if any, your dealership will need to stay protected. Then, keep your policies current at all times.
Hire Some Help
No matter how skilled you are at doing business, it’s next to impossible to run a successful dealership all on your own. So, with that in mind, start looking for skilled help early on. In particular, try to find talented salespeople. Look for people who are charismatic, convincing, and committed to helping your customers choose the right vehicles to meet their needs. You’ll also need people to handle paperwork, professionals to design your website, and more. Make a detailed list of the employees you require and the skills they need to have. Then, start your search for the ideal people to help your business thrive.
Market Your Business
When you’ve hired the employees and decided on a business model, you’re ready to start attracting customers. After all, you can’t have a successful dealership without buyers.
There are lots of marketing strategies that can work for modern businesses. For example, you’ll want to design an effective search engine optimized website. You should also work to build your online reputation. Try using major social media platforms, review sites, and Google My Business to your advantage.
You may also want to try some more old-fashioned but still effective marketing techniques, such as direct mail or email campaigns, running sales and specials, and asking satisfied customers to refer their friends and leave reviews.
Get Started Today
As you can see, starting a dealership definitely requires some work. But, fortunately, it’s work that you can do with some effort and determination. Plus, it’s work that will pay off in the end. So, what are you waiting for? Start planning today. The sooner you do, the sooner you can get your dealership off the ground and the sooner the profits can start rolling in.