One of the greatest and fastest-growing industries is the automotive industry. As many more drivers enter the economy, there is a greater need for more automobiles. We know as people drive cars, the depreciation increases pretty rapidly. Unfortunately, that’s not great for the driver. However, it is great for entrepreneurs who want to start a car dealership. It can be a lucrative idea. You can buy used cars for a fraction of the price, offering people some discounted offers, which obviously benefits you in attracting new and repeat customers. So, let this how to open a new car dealership be a solid guide for you.
If you have ever dreamed of having your own employees with the best modern cubicles, this could be for you. If you have had experience with (or know) auto accident lawyers, they could be added to your business arsenal.
Although this all sounds like a good idea, there are some benchmark steps that you might want to take before you go on this endeavor. We have provided how to open a new car dealership with steps that you can use to guide you through the process of starting your dealership.
Construct a Business Plan
Getting new business ideas is always exciting. Many people love to jump in and go for it and come up with some pretty surprising roadblocks. That is probably due to not discovering how to open a new car dealership in a due diligence kind of way.
The thing that is missing a lot of time is constructing a business plan. You can decide whether you want to run a partnership, a sole proprietorship, or a limited liability company. Depending on the research you do on the market, it could help you decide which one will be best for you.
You don’t want to make the same mistakes as many small businesses and startups do. It is typical for them to experience failure because they don’t do their research on the market and then they don’t set up a business plan. Having a business plan right outside the gate helps to set you up for success when you have figured out how to open a new car dealership.
There will be some costs to be accounted for that are not typically found in other types of business plans. Things like cosmetic work, like stucco repairs on walls. If you want a glowing lot, you’ll want some professional asphalt paving. What about insulation installation?
Another key factor is to always keep an eye out for your competitors. What you observe can help you make some helpful annotations to your business plan, or your marketing plan based upon what you discover from keeping an eye out on your competition.
If you’re bold and clever enough, you can even ask your competition questions about how to open a new car dealership.
Money and Fundraising
After you have completed your business plan and worked out any of the kinks, then it’ll be time to start budgeting for how you will run a car dealership. How to open a new car dealership is obviously the main part of this whole venture. But you will need to keep in mind to help you with your financial assessments to think about the physical location you need. You will need a lot that is somewhere convenient for you. You will also need to figure out which direction you will go in to supply your first stock of vehicles. These two combined efforts are quite an investment.
You will need to factor in how much it will cost to get the vehicles delivered to you, how many employees you will need, and what it will take to have you do a grand opening or a pre-launch. You must also be okay with your profitability coming in a few years. It is typical for any business to just break even for a few years. This is all to be factored in when it comes to how to open a new car dealership.
So you will want to figure out how much of a reserve you will need for operations, and maybe your personal expenses.
No, it is okay to overestimate what you need a little bit, because you may end up spending more than you have planned for. There are some major expenses that could easily push your budget overboard. What if your lot needs a foundation repair service? Let’s not forget that every commercial business needs a fire alarm system. Big, big money! There’s is no doubt that you will at some point need an electrical company.
However, once you are done with your numbers, then it’ll be time for you to fundraise. Fundraising doesn’t have to just be doing something like crowdfunding with friends and family. You can go straight to a business loan for the quickest and most streamlined way to get funding. Depending on the other “how to open a new car dealership” guides you may, they may also encourage this direct route.
When you have the funding ready to go, it’ll be time to lock down the location of your lot and source commercial builders. Depending upon where you live, it is a good idea to have a lot that is central to suburban areas, entertainment centers, or just simple places people frequent often. Though at the same time, when people are in desperate need of a car, they are willing to drive long distances to find what they need.
Purchasing The Right Equipment
How to open a new car dealership definitely includes sourcing the right equipment. You can bet that you will need more than just your fleet of vehicles. Car dealerships have additional equipment that they will need to purchase to run their business effectively. Custom fabrication can be a pretty penny too. One of the most important pieces of equipment you can buy is our quality car covers. They will help to protect your cars against vandalism, insects, and harsh weather. And as you shop around, you will be presented with other types of equipment that can help take your business to the next level.
Develop a Website
If this is not your strong point, of course, you can always have someone launch it for you. A website is important because it’s like your virtual real estate. It is also just part of the process of how to open a new car dealership. It lets consumers know that you are a real and viable car dealership. Having a website can also help you grow your business by having a newsletter they can join. Something where you can send them updates or even specials on what you have to offer.
When a company doesn’t have their own website, they don’t seem as legitimate as someone else does.
Insurance, Licensing, and Bonds
It can be overwhelming how much selling used cars can require much more legal work than anyone could imagine. Many “how to open a new car dealership” guides don’t cover too much. In the beginning stages of your business, it might be a good idea to get some consulting or help with insurance, bonds, and licensing.
Having these in place upfront can help you to avoid some unnecessary woes.
Having some legal experts on your team will be important for every transaction that you do. Why? Because every sale of a car will require an ownership transfer. It can be somewhat complex how to open a new car dealership as part of the process. That means there will be lots of documents that need to be exchanged and signed. Having a legal expert on your side will ensure that you know exactly what you’re doing, and what each document means.
Professional Sales Skills
Now, this doesn’t necessarily have to mean that you went to some formal training to become a skilled salesperson. However, this practical part is huge in how to open a new car dealership to make it successful.
You just need to know and understand the sales sequence that motivates individuals to purchase from you. It can’t be too pushy, but it needs to be from a place where you know how to take them through a sales process, always thinking about their needs.
Here is a process for effective sales for you and your team.
Interview Your Sales Team
When thinking about your team, you want to be sure that they’re not only hard workers and can do some of the cleanup work that maintains your vehicles. You want to know that they are salespeople.
When you interview them you can ask questions like what is the best way for a salesperson to prospect? How do you approach cold leads? What type of process would you take a potential customer through when they have an appointment with you?
Depending on how structured you want to be, you can come up with your language, techniques, and strategies that can be a plan everyone can follow. This ensures people use the same systems.
Create a Sales Road Map
In asking yourself, how to open a new car dealership? Think about having a road map for each of your departments.
The thing about the automobile industry is that customers might need to make multiple visits before they choose the car of their dreams. Having a clear sales road map will be able to keep track of where people are on their sales journey. You wouldn’t want a sales rep coming to someone that’s been there three times, treating them like they are a cold prospect. Having a road map and making notes of where people are on their journey can help complete the sales process when customers are ready.
Discern Your Customers
This means being able to discern where people are at. Some people like a more bold approach, and are told exactly what they need. Others might want to browse around before they get into a conversation with a salesperson. Other individuals might be more inquisitive, and ask you a lot of questions upfront. Though there are different variables for individuals, you can still creatively apply your sales approach to individual personalities and needs.
This might take a little bit more time because you might have to learn some personal things about them to connect on, but it’s worth it. People love to go where they’re appreciated and known. When it’s all about money, it can be a turnoff. If they know that there’s another place where they listen, Karen almost has a friendship they will go there instead. Never neglect the relational dynamics at your fingertips.
Don’t Forget to Follow Up
The one great thing about being a car dealership owner is seeing that people do need cars. And if they’re in a desperate situation, they are likely to buy sooner than others.
However, for some people who may not be on the most desperate end of the spectrum, don’t forget to follow up. Remind them of what was being talked about, and any deals that they can take advantage of during a certain window. Remember to have you or your team set up the next appointment before getting off the phone.
If you have sales skills along with good communication, empathy, boldness, and solutions-oriented, you can do quite well.
Always be sure to do your homework. Do your due diligence and let your research or prove to you that this is a good idea. Plan for the worst. Meaning no and understand what are some of the disadvantages car dealerships face, and then begin to think of your plans to override those disadvantages and create more success for yourself.