Starting a Small Used Car Business From Start to Finish

If you’re interested in getting into the automotive business, starting your own used car lot can be a great way to get involved with a clear business plan. This is because it’s likely that you’ve shopped for a new car yourself in your lifetime, so you have a basic understanding of what differentiates a great dealership from a less thrilling option. That being said, starting a small used car dealership does take time, money, and effort if you’re really interested in being successful. Here’s what you need to know in order to get your dealership running. 

For starters, you’ll need to apply for the proper permits and business licenses. Getting licensed to sell cars may have different requirements depending on your locality, so make sure to check with your state and city before launching your company. Some of the paperwork you’ll need involves setting up your business as an LLC or corporation. Other paperwork is more concerned with filing for the right types of insurance. This may include general liability insurance for anyone that visits your dealership, as well as workman’s compensation for employees and insurance on your wares. You’ll also need to pay any licensing fees that accompany registering your business. 

Once you’ve got your paperwork in order, you’ll need to buy some property. Just because the majority of a dealership is a car lot doesn’t mean you won’t need a physical building, too. In fact, you’ll need to have a place to house your offices, and may choose to have a small showroom, too. From providing customers with bathrooms to offering a financial office so buyers can get everything in order, there are a lot of benefits to having your own building. Some dealers choose to construct their own offices after purchasing a plot of land. Others pick a pre-existing property that will only need some work done to retrofit it for their needs. Whichever option you choose, make sure that it’s zoned for the type of business you’re looking to conduct. 

When it comes to finding inventory, looking at online or in-person auctions can be a major boon for new dealers. A simple search for “car auctions near me” will show you dozens of results and clue you in on where to go to get inventory. Best of all, these sorts of auctions offer vehicles in a variety of price points. Since you’re bidding on the vehicles, you’ll be about to get them at very competitive prices, which in turn improves your profit margins. This lets you stock up on inventory without breaking the bank, and ultimately contributes to better curb appeal. 

As you start to house more vehicles, you’re going to need storage for pictures. When it comes to cars, the more photos a customer can look at the better. This is especially true with used vehicles that may have wear and tear but nonetheless be what a customer is interested in buying. If you use a system like ibi, you’ll gain access to powerful cloud storage tools and the ability to categorize and organize photos from multiple users and devices. For a growing car dealership, this kind of platform is game-changing. Don’t underestimate the way that different tech tools can streamline and improve your operations when you’re getting your business off the ground. 

With the information above, it should be easy to start to craft your business plan and determine a budget. Doing your due diligence ahead of time will go a long way when it comes to having a smooth business launch, and may allow you to start breaking even in your first few months. Best of all, a strong plan will show loan officers and potential investors that you have a clear vision for your business, offering them peace of mind as they fund your business venture.