If you’ve got a passion for cars and you’ve been dreaming of running your own business, then setting up a dealership could be the way to go. People always need cars, and owning a dealership presents plenty of opportunity for growth and professional development. You may be raring to go, but before you rush into this big decision, here are some important things to consider…
New or Used?
Before you start drawing up a budget and organising meetings with lenders, you should decide whether you want your dealership to deal primarily in new or used sales. This simple decision will create a structure for all your decisions as you move forward. If you want to focus on new cars, then you should bear in mind that the initial investment is going to be a lot higher than if you were starting a used dealership. When dealing in new cars, you’ll be pretty hard-pressed to come up with a business plan that will impress prospective lenders. Starting a used dealership doesn’t take much capital, but the earning potential will be significantly lower. Do your research on the risks and rewards, and take your time before coming to a decision.
Bonding, Licensing and Insurance
There are a number of regulatory hoops that you need to jump through in order to get a new car dealership off the ground. One of the most fundamental is getting your dealer’s license. There are a range of options here, but unless you’re going to be dealing in classics or specialist vehicles, you’ll probably want a license that allows you to sell an unlimited number of cars a year. All dealerships will also need comprehensive coverage from an insurer like Think Insurance, whether they deal in used cars, new cars or both. You may also want to look into getting a surety bond for your new business. This can protect you from contract defaults when dealing with vehicle suppliers, wholesalers, and vendors. Hopefully, your business will be able to run its course without you ever having to lean on one of these. However, it’s better to have one and not need one, than to need one and not have one.
Learning to be a Good Salesman
Car salesmen, particularly in the used niche, have quite a reputation these days. With everyone so suspicious of the selling tactics used at car dealerships, it’s more important than ever to be a great salesman when running a dealership. This particular retail niche is a tough nut to crack, even if you have a lot of experience in the upper echelons of any other business. The trick is being able to shift cars off the lot effectively, without coming off as the archetypal sleazy salesman. From the condition of the vehicle all the way to making specific promises in the selling process, you need to tell your customers exactly what they’re getting into, avoid being too pushy, and handle every part of the negotiation stage properly. Selling cars is a delicate balancing act, and something you’ll need to learn quick if you want to beat your competitiors.