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How to Start a Car Dealership Business in 4 Steps

There’s money in selling cars, but to enjoy significant profits, you need to do the business correctly.

Convincing people who just bought a new car to buy another one is not an easy task. That’s why you must focus on your business and establish strong relationships with clients by offering top-notch service that will maintain customer traffic flowing into your showroom.

With the right tips, you can easily start a car dealership business and achieve a profit margin you desire:

1. Know Your Niche

You may have a passion for cars, a knack for sales, and a dream of being your own boss. But if you don’t know what kind of car business you want to run, that’s not going to get you very far.

You’re going to need to find the right niche for you before starting your dealership business. If it doesn’t fit you, it’ll be difficult to get the business off the ground.

To help you find your niche, take a look at your interests, skills and experience. Do you have experience either as an owner or manager in the car business?

Perhaps you’ve been tinkering around with cars for years, so opening up a retail car business would be the perfect fit. You can sell new or used vehicles, import/export cars, or work on only one type of car (like high-end, electric, or antique).

Or perhaps you have a background in marketing. You may have run a business before, so you know how to contact the right people and seal big deals. If you don’t want to start from scratch, check out auto franchise opportunities. The business model already includes marketing, customer support, and financing.

If you don’t have that much experience to begin with, look into car auctions or independent dealerships, where the owner doesn’t need to hold an automotive license.

2. Get the Legal Paperwork Done

Now that you’ve figured out what kind of dealership business you want to run, it’s time to get all the legalities in order. Starting a car dealership business isn’t easy, but if you get this part right from the start, it’ll save you a lot of heartache and money down the line.

First off, make sure your business name is available. You can do a search on the your state website, and you may also need to check with your city government for any local restrictions on car dealership names.

Next, look into the licenses and permits required by your locality. Some places will require special automotive licensing or even zoning laws before you start selling cars.

Get your business operating papers in order. Include any additional licenses and permits you may need for your business model. In addition, if you’re working with a partner or investors, create a contract that outlines how your business is going to work so everyone’s on the same page.

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3. Get the Best Possible Deal on Your Business Location

Once you know what kind of dealership business you want to run and have your legal documents in order, it’s time to find the right location for your business. Especially if this is going to be your first automotive-related business, you want to make sure you get the best possible deal.

One option is to lease your business location, which may be the easiest way to get started. If you’re just looking for a short-term solution or moving into a temporary location, leasing is the way to go.

You could also buy property and build out the car dealership yourself, but it’s expensive. Plus, you’ll need to carry automobile general liability insurance, which can be prohibitively expensive for smaller businesses.

If you’re not looking to buy but want the benefits of owning the property, consider a lease-to-own arrangement. You can negotiate with the owner and sign a contract stating that once your business is up and running, they will sell the property to you for a certain price.

4. Find and Work with the Right People

You’re almost ready to start your car dealership business. But before that happens, there are some important people you need to find and work with. Even though you’ll be in charge once things get going, it’s smart to surround yourself with the best people you can find.

First, hire a good accountant who specializes in the automotive industry. These professionals will have an intimate knowledge of all the business laws and tax codes that apply to your situation. Plus, they’ll be able to help draft contracts with employees and independent contractors, so everyone knows what’s expected of them up front.

You’ll also want to find a good attorney if you’re working with partners, investors, or lenders. The right lawyer can protect your interests by drafting contracts that spell out their roles and responsibilities.

Last but not least, hire an experienced salesperson who already has established connections in the industry. This person can turn novices into natural salespeople, and they’ll also know exactly how to handle each stage of the buying process.

As you might expect, starting a car dealership business is no small task. But before you get discouraged, keep in mind that this can be an exciting adventure if handled correctly.


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