The recent pandemic has caused so much uncertainty in employment. Many people are being laid off while most people translated to working from home. If you are also looking for a way to earn extra income at this time, you might consider buying and selling cars business. The business is guaranteed to bring enough money for you as profits at the end of every sale.
However, to be successful with such a business, you will need more than the startup capital. You will need some working knowledge about the industry and also understanding how to market cars. Having all these in your arsenal will help you do well in the business – whether you want to sell brand new or used cars. We have written a couple of posts on the platform about starting a car flipping business, and we will be giving you useful tips on how to get this business off the ground too.
Useful Tips to Help With Buying and Selling Cars Business
Let’s learn about “How To Start A Car Selling Business” in detail:
#1: Have Good Knowledge about How the Business Works
This may sound like an obvious fact, but many startups crashed today in the first 2 years because the owners don’t know much about the industry they are going into. So when planning to start a business buying and selling cars, you should be sure you know enough about what happens in the industry and how. Have an understanding of who your target market is, how much money you need to start, how to market, and many more. You can call this your business plan.
How much money can you make from buying and selling cars business?
This is still part of knowing the industry. You should be able to tell how much money you are likely to make after each sale. The amount of money you will make depends on whether you selling new cars or used ones. If used, you should expect to make about $700 to $1000 as profit from each sale. You should expect more if you are going to be buying and selling brand new cars.
What type of cars will you be buying and selling
This means creating a niche for yourself. This will help you know what your target market is and the type of people to expect at your shop. And that will help you know what type of car brands to sell. Will you be targeting average car users or the rich who have enough to spend on exotic cars? Identify who you will be selling to, and that will help you know what type of car brands they will like.
#2: Have an Investment Plan
Buying and selling cars business is one that will require a lot of money. Before going into it, you should have a solid investment plan. You should have enough money to invest. You don’t want your first buyers to come without meeting any cars on the ground. So know how much you will likely need and get a reliable source for such an amount.
How much do you need to start a buying and selling cars business?
This depends on how you want to run the business and the area you intend to open it. However, you should be looking at having at least $4000 to $7000 for a start. That will allow you to buy about two to three cars to kick off the business. It is always better to start this kind of business small. Even if you have the money, it is not advisable you spend too much capital starting out.
#3: Know What the Law Says About Such a Business
As it is for other businesses, there are laws and regulations that also guide running a buying and selling cars business. Furthermore, the law varies from state to state. There is a particular limit to how many cars you can sell. If you will be going more than this number, you will need to get a dealership license. That will allow you to sell as many cars as you want.
However, that also comes with additional responsibility. If you really want to go into this, consult a lawyer or your state’s secretariat office to know what requirements you need to start buying and selling cars business.
#4: Get Enough Space
It doesn’t matter where you choose to operate the business from, you will need enough parking space for your cars. However, you will want to check with your state secretariat to know what the law says about storing cars without license plates. Additionally, make sure there is adequate security for your cars.
#5: Understand the Pricing Structure in the Industry
When it comes to buying and selling cars, having a good understanding of the pricing structure in the industry is very important. You will want to master how to buy your cars at the best price and sell at the most profitable price without ripping off your customers.
So, check what your competitors are offering for the same cars to set a competitive price for it. Learn how to bargain with both your buyers and sellers. Remember, when you are able to buy a car at the lowest price, you will be able to make more money from selling it.
#6: Understand What You Are Looking For In a Car
When going to buy a car to sell to your target customers, you should have a good understanding of what you want. You can make this into a checklist so you don’t fall short on any of them. Some things you might include on your purchasing checklist might include car exterior/interior, mileage, test drive, list of documents to receive, etc.
Having your expectations clearly pointed out will prevent you from making costly mistakes while also allowing you to satisfy your customers with quality cars each time they come.
#7: Check the VIN of the Car
This is very important in buying and selling cars business. You should always conduct a background on every car you want to buy. And checking the VIN of the car is the fastest way to that. You don’t want to buy a stolen car or one that will be repossessed shortly by an insurance company. The VIN of the car will give you all the background details you need about the car you are about to buy.
#8: You Will Need a Reliable Mechanic on Stand By
You will not always buy clean cars. There will be sometimes you will need to make some major repairs on the car you just bought. Having a reliable mechanic in your corner will make this super easy for you. Such a mechanic can also help you conduct a mechanical check on a car before you buy it. He will tell you if it’s going to be a good buy or not.
#9: Get the Necessary Insurance
Anything can happen at any time. Taking such a risk can cost you your business. That is why you need certain insurances to protect your cars and hence, your business. Some insurances you should be eyeing are liability coverage, errors and omissions coverage, and Open Lot coverage.
#10: Create a Solid Marketing Plan for Your Business
To better reach your target customers, you will need to market your buying and selling cars business. Luckily, there are several ways you can make this happen even on a small budget. You can use business cards, free online platforms like Craigslist, and social media to market your business.
Take quality pictures of your inventory, and make people see them on social media. If you have more money to spend on marketing, you can consider using newspapers and media houses to advertise the business. Nevertheless, always listen to your instincts and never be afraid to ask questions.