Car Dealers - Start up advice?
Discussion
After many months of planning and searching, today i've placed a deposit on a modest forecourt with offices. It's the most I've ever been excited about anything I can remember. Lots of work ahead before i start trading on the 1/1/11.
Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
You may wish to read this guidance on the law so you dont make the same mistakes as a lot of used car dealer
http://www.oft.gov.uk/shared_oft/reports/676408/of...
http://www.oft.gov.uk/shared_oft/reports/676408/of...
1987 said:
After many months of planning and searching, today i've placed a deposit on a modest forecourt with offices. It's the most I've ever been excited about anything I can remember. Lots of work ahead before i start trading on the 1/1/11.
Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
Congratulations on your massive step!!Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
I'm aiming to do similar, but i've taken the approach of doing it part time initially and see how it goes from there. Its working well so far, so i'm going a time and motion study at the moment to see if i were to go full time, would my current margins support me if (a) i could get the stock and (b) i were spending the same amount of time on each car as i do now.
I have a large yard to the rear of our house and a couple of garages for valeting the cars in, but that leads to other problems like you have customers coming to your own home, which isnt ideal.
What previous experience have you had?
1987 said:
After many months of planning and searching, today i've placed a deposit on a modest forecourt with offices. It's the most I've ever been excited about anything I can remember. Lots of work ahead before i start trading on the 1/1/11.
Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
Congrats. What kind of cars will you be selling?Any advice from people who started their own business is welcome. Basically I'm trying not to over look anything and learn from others mistakes before i make them myself in the early months. I think I've got most bases covered but I've never been in this position before so what do i know!
Any stories of your start up would be really interesting and helpful.
I'm very interested in how you'll be financing it in the current climate. Do you have a six figure sum sitting in the bank waiting for a spending spree at the auction or have you managed to arrange stock financing. Very interested to know if it's the latter and under what terms?
First off thanks to D G. Just found your second email in my spam folder! Thanks for your advice and help.
@ deamon I've got 3 years experience selling cars. 1 at a main dealer where you don't learn a lot and 2 years selling used cars for someone else. I'm 23 now and I've been looking at the ins and outs for the last 18 months so I'm prepared as I'll ever be.
@ V8mate. I'll be starting small and building up my stock with profits (hopefully) as I don't want to borrow or use stocking plans. No need for 6 figure sums really. Slow and steady wins the race! ETA I'm going to specialise in small cars.
Thanks for all the encouraging comments and good luck. I'll keep you up dated with how its going.
@ deamon I've got 3 years experience selling cars. 1 at a main dealer where you don't learn a lot and 2 years selling used cars for someone else. I'm 23 now and I've been looking at the ins and outs for the last 18 months so I'm prepared as I'll ever be.
@ V8mate. I'll be starting small and building up my stock with profits (hopefully) as I don't want to borrow or use stocking plans. No need for 6 figure sums really. Slow and steady wins the race! ETA I'm going to specialise in small cars.
Thanks for all the encouraging comments and good luck. I'll keep you up dated with how its going.
Edited by 1987 on Wednesday 10th November 10:56
1987 said:
@ V8mate. I'll be starting small and building up my stock with profits (hopefully) as I don't want to borrow or use stocking plans. No need for 6 figure sums really. Slow and steady wins the race! ETA I'm going to specialise in small cars.
But given you've decided to go straight for a retail site, you must want a fair bit of stock - even 10 cars at £3k a piece - is a reasonable lump of cash. A formal site with only a handful of cars wcould look a bit 'liquidation sale', non?Would be interested to understand how current motor trade margins would support capital growth too; I fear that's a highly incremental approach unless you're not planning to take an income for a year or so.
Just to give you guys that are interested a bit more info. The site is small, holds about 18 cars. I'll be starting with 12ish. I need to sell 2-3 cars a month to break even. Any dealer should be looking at turning over at least 30% of their stock each month.
My approach will be to target new drivers with cheap to run, tax and insure cars. They sell quickly, are cheap to fix and transport. Less part exchanges = better cash flow. Cars will range from £1k to £3.5k to start with. These will provide the highest % of return in terms of profit from investment.
Initial investment around £20k and look to move on if it's successful to a larger forecourt etc. Low risk really.
No Porches or Ferraris I'm afraid.
My approach will be to target new drivers with cheap to run, tax and insure cars. They sell quickly, are cheap to fix and transport. Less part exchanges = better cash flow. Cars will range from £1k to £3.5k to start with. These will provide the highest % of return in terms of profit from investment.
Initial investment around £20k and look to move on if it's successful to a larger forecourt etc. Low risk really.
No Porches or Ferraris I'm afraid.
1987 said:
Cars will range from £1k to £3.5k to start with. These will provide the highest % of return in terms of profit from investment.
Well...whilst £300 profit on a £2k car is a higher % margin than £1k profit on a £10k car, it's much less in real cash. And it's real cash which creates capital growth.Not suggesting you rethink your model, but you're entering the most competitive segment of the market and at the lower price band of it - real cash profit will be small.
Don't be suckered by percentages!
What I'm trying to say is expensive stock doesn't provide greater margins.
We bought an 2002 fiesta last week for £1200 as sold on Saturday for £2995 with 0 reconditioning. I would struggle to buy a £12k and make the same profit in 3 days.
Not saying these happen everyday but margins aren't any larger until your at £20k cars.
We bought an 2002 fiesta last week for £1200 as sold on Saturday for £2995 with 0 reconditioning. I would struggle to buy a £12k and make the same profit in 3 days.
Not saying these happen everyday but margins aren't any larger until your at £20k cars.
I would say that the opportunity on 3k cars is limited if you buy from auction but if you are to purchase privately sold examples with a good provenance (FSH, freshly serviced, etc examples) then you could have a lot more examples like the Fiesta quoted above. Of course, being in the right place at the right time and/or spending hours scanning (and rescanning) the normal websites to catch any bargains before others do is key to this. Desperate sellers of course can be trying to offload a car with problems too, so you have to be wary, but that said sometimes real genuine bargains do appear.
Some used car places tend to specialise in one make or even make and model and by knowing the foibles of a certain type you can maximise opportunities I would think.
Of course, by specialising you also put yourself into a niche.
I've always fancied starting a used car business but with no trade contacts the risk outweighs the potential gain for me as an individual, although I live yards for a major auction site and have a relatively good eye for cars I have little 'hands on' experience. That said, I have a cousin who is a good mechanic (problem is that he lives 300 miles away).
Good luck and let us know how it pans out.
Some used car places tend to specialise in one make or even make and model and by knowing the foibles of a certain type you can maximise opportunities I would think.
Of course, by specialising you also put yourself into a niche.
I've always fancied starting a used car business but with no trade contacts the risk outweighs the potential gain for me as an individual, although I live yards for a major auction site and have a relatively good eye for cars I have little 'hands on' experience. That said, I have a cousin who is a good mechanic (problem is that he lives 300 miles away).
Good luck and let us know how it pans out.
Edited by texasjohn on Thursday 11th November 01:50
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