Car Dealership Business Plan: Complete Guide
- January 11, 2023
Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your car dealership, you will need to prepare a solid business plan.
In this article we go through, step-by-step, all the different sections you need in your car dealership business plan. Use this template to create a complete, clear and solid business plan that get you funded.
1. Executive Summary
The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.
If the information you provide here is not concise, informative, and scannable, potential lenders and investors may lose interest.
Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire business plan below.
Why do you need a business plan for your car dealership?
The purpose of a business plan is to secure funding through one of the following channels:
- Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
- Obtain private investments from investment funds, angel investors, etc.
- Obtain a public or a private grant
How to write an executive summary for your car dealership?
Provide a precise and high-level summary of every section that you have included in the business plan. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately. Also make sure that the executive summary doesn’t exceed 2 pages.
The executive summary usually consists of the 5 main paragraphs:
- Business overview : introduce your car dealership: what is your business model (franchise vs. independent business ; new vs. used car dealership), how many cars will you have in inventory? Are you partnering with any car manufacturer(s)? Where would your store be located? Etc.
- Market overview : briefly analyze the car dealership industry in your area (market size and growth), your competitors and target customers: average income of your target audience, demographic distribution, customer preferences etc.
- Management & people : introduce the management team and their industry experience. Mention your business partner(s), if any. Also give here an overview of the different teams, roles and their reporting lines
- Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? Also include here a small chart with your key financials (revenue, net profit )
- Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last? How will you spend the money?
Car Dealership Business Plan + Financial model
30+ slides Business plan template
5-year Excel Financial model
2. Business Overview
In the business overview section of your car dealership business plan, you should expand on what your company sells, to whom, and how it is structured. A few examples of questions you must answer here are:
- The history behind the project: why did you choose to open a car dealership today?
- Your business model : Are you franchising or is this an independent store? Are you selling new or used vehicles?
- Products & services : What vehicles / brands do you plan to sell? Are you planning to add any additional services (e.g. car repair & checkups, etc.)
- What is the legal structure of your company? Who are the directors / shareholders?
a) History of the Project
Briefly explain how did you come up with the plan to start a car dealership business. What motivated you to get into this business venture?
Also try to demonstrate to investors your interest and passion for the car industry and car dealership in general.
For example, you might have worked in a car dealership and/or at a car manufacturer sales department in the past, and found immense growth potential for this type of business in your area.
b) Business Model
Explain in this section what business model you chose for your car dealership. Here are a few questions you must answer:
- Will you start an independent dealership, franchise model, chain store, etc.?
- Will you open a brand-specific dealership?
- Would your car dealership deal in new cars, used cars, or both?
- Do you plan to open an online dealership?
- Would you offer service and repairs in your car dealership?
c) Products & Services
Now that we have briefly introduced what your business model is, you must explain in detail what exactly you intend to sell. There are 2 things here:
- Products (cars): what vehicles and brands do you intend to sell? Why did you choose these vehicles / brands?
- Services : if you offer additional services (e.g. car repairs, checkups), explain what they are
In addition to the products and services, you should also include a list of prices for each. Of course, this doesn’t need to be exact. Car prices fluctuate based on various factors. Yet, you must be able to provide a range of prices for each category (e.g. sedan, luxury cars, vans, etc.).
If you specialize in a specific brand, you can provide a list of prices per model in appendix as well.
The prices are important as they will allow investors to tie your product offering with your financial projections later on.
d) Legal Structure
Explain the legal structure of your nursing home in this section. Are you starting a corporation, a limited liability company, or a partnership? Who are the investors? How much equity do they actually own? Is there a board of directors? Do they have prior industry experience?
3. Car Dealership Market Overview
A complete understanding of the car dealership industry is important for the success of your business.
Therefore, you must cover here 3 important areas:
- Status quo : how big is the car dealership industry in your area? How fast is the market growing? What are the trends fuelling this growth (or decline)?
- Competition overview : how many car dealership competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
- Customer analysis: what are your target customers? What are their customer preferences?
a) Status quo
When looking at the car dealership industry, try to start at the national level (US) and narrow it down to your service area (a city for example). You should answer 2 important questions here:
How big is the car dealership industry in your area?
How fast is the car dealership industry growing in your area, how big is the car dealership industry in the us.
The auto parts and car dealership industry in the US is huge: it was worth $1.18 trillion in 2021 as per the National Automobile Dealers Association . As per the same report, there were 16,676 light vehicles car dealerships in the US in 2021 which generate an average revenue of $71 million.
Sales are divided between new (52%) and used vehicles (37%) as well as services and parts (11%).
After the US, assess the size of the car wash industry in your city or area. Focus on the zone where you plan to offer your services.
Naturally, you might not be able to get the data for your specific city or region. Instead, you can estimate the size of your market, for more information on how to do it, read our article on how to estimate TAM, SAM and SOM for your startup .
Luckily, NADA publishes statistics per state so you can narrow it down easily. For your city instead, you will need to do work out some estimates. To give you an example, let’s assume you plan to operate in an area where there are already 30 car dealership businesses (in a 25 miles radius for example).
Assuming our business is based in Connecticut, we can use the state’s average annual turnover of $49,661 : we can reasonably assume that the car dealership industry is worth $1.5 million in your area . In other words, there are over 35,100 light vehicles (new and used) being sold in your area each year (assuming the average retail price of $43,000).
Now that we know your area’s market size, let’s look at growth instead.
Fortunately, you can use NADA’s number again as they publish annual reports. Just use your state’s market size growth, and explain the growth (or decline). This can be due to average car prices, or volume.
b) Competition overview
You should discuss both your direct and indirect competition in your business plan. Other car dealerships in the region will be your immediate competitors. Internet auctions, individual dealers, etc., will be your indirect competitors.
In this section, you should also discuss the essential components of the business models of your main competitors. Your research should be focused on their clientele, the kinds of cars they offer, and their strengths and weaknesses.
A thorough competitive analysis is crucial as it may allow you to discover and address a customer need or preference that none of your rivals is addressing today.
Here are some of the questions that you must answer in this section:
- How many competitors are there in the area where you want to open your car dealership?
- Are they franchises or independent stores?
- Do they partner with specific car manufacturers?
- What type of cars do they offer (luxury, economy, used, new, etc.)?
- What is the average price range of the cars they sell?
- How many employees do they have?
- Do they offer services and repairs?
- Do your competitors offer buyback on the cars sold by them previously to the client?
- What type of offers and discounts do they offer to attract customers?
- How many cars / vehicles do they sell on average per month?
c) Customer analysis
Now that we have a good idea of the car dealership industry in your area as well as competition, now is time to focus on your target audience: customers.
Knowing your customer is extremely important before you get into any business. This is all the more relevant for car dealership where customer preferences and tastes are very different.
For example, if you are planning to get into a luxury car dealership business, you should look into:
- The estimated population of high-income people in your area
- Types of luxury cars that are in demand (hatchback, sedan, SUV, etc.)
- Shopping preference of your target customers (online or offline)
- How frequently do they buy (or exchange) new cars?
- Is their buying decision influenced by offers or discounts?
- What features do your target customers want in their new luxury cars?
- What type of additional services do they expect from their dealers?
4. Sales & Marketing Strategy
This is the section of your business plan where you outline your customer acquisition strategy. Try to answer the following questions:
- What are the different marketing strategies you will use?
- What are your Unique Selling Points (USPs)? In other words, how do you differentiate from your competitors?
- How do you intend to track the success of your marketing strategy?
- What is your CAC or customer acquisition cost?
- What is your marketing budget?
What marketing channels do car dealerships use?
A few marketing channels that car dealership businesses typically use are:
- Signage, billboards
- PPC ads, Facebook ads, etc.
- Print media
- Loyalty programs
- Online local listing (Google Business)
- Content marketing (share content like vehicle maintenance tips, safe driving tips, etc.) on platforms like blogs, social media, etc.
- Word of mouth, recommendations
You must have a fair and nearly accurate estimate of your marketing budget. Therefore, make sure to budget for marketing accordingly in your financial projections.
What are your Unique Selling Propositions (USPs)?
In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.
A few examples of USPs are:
- Products: you may be the exclusive distributor or a car make in your area for example
- Services : you may offer repairs and regular checkups for your customers
- Location : you store is closer to a busy road and/or to where your customers live
Your USPs will depend on your business model, competitor analysis, and target audience. Whatever your USPs are, it should appeal to your potential customers and attract them.
5. Management & People
You must address 2 things here:
- The management team and their experience/track record
- The organizational structure: the different team members and who reports to whom
Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your car dealership.
Describe their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.
Even if you haven’t already hired a VP of sales, sales managers, support staff and any other relevant staff members, you must provide a chart of the organizational structure outlining the different teams, roles and their reporting lines.
6. Financial Plan
The financial plan is perhaps, with the executive summary, the most important section of any business plan.
Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your car dealership is an attractive investment.
There should be 3 sections to your financial plan section:
- Your historical financials (only if you already operate the business and have financial accounts to show)
- The startup costs of your project (if you plan to start a new car dealership, or purchase new inventory, expand your store, etc.)
- The 5-year financial projections
a) Historical Financials (if any)
In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.
If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.
b) Startup Costs
Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a car dealership, startup costs are all the expenses you incur before you open your shop and starting making sales. These expenses typically are:
- The lease deposit for the commercial space you rent (if you don’t buy it)
- The design and renovation of the existing facilities
- The inventory costs (the initial stock of vehicles you must buy to sell them at opening)
For example, let’s assume you want to buy 30 light vehicles as a start for inventory, and you take on a loan where you need to put down 15% upfront. Now, assuming these vehicles each cost $50,000 on average, this means you must put down $300,000 yourself. This comes in addition with any other startup cost mentioned above (lease deposit, renovation costs, etc.).
c) 5-Year Financial Projections
In addition to startup costs, you will now need to build a solid 5-year financial model as part of your business plan for your car dealership.
Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.
As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.
Your financial projections should answer at least the following questions:
- How much revenue do you expect to generate over the next 5 years?
- When do you expect to break even?
- How much cash will you burn until you get there?
- What’s the impact of a change in pricing (say 20%) on your margins?
- What is your average customer acquisition cost?
You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:
- The number of vehicles you sell over time ;
- Your expected revenue ;
- Operating costs to run the business ;
- Any other cash flow items (e.g. capex, debt repayment, etc.).
When projecting your revenue, make sure to sensitize pricing and the number of customers as a small change in these assumptions will have a big impact on your revenues.
7. Funding Ask
This is the last section of the business plan of your car dealership. Now that we have explained what type of vehicles your company sells to whom and at what price, but also what’s your marketing strategy, where you go and how you get there, this section must answer the following questions:
- How much funding do you need?
- What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
- How long will this funding last?
- Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)
If you raise debt:
- What percentage of the total funding the loan represents?
- What is the corresponding Debt Service Coverage Ratio ?
If you raise equity
- What percentage ownership are you selling as part of this funding round?
- What is the corresponding valuation of your business?
Use of Funds
Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.
Will you spend most of the loan / investment to acquire the cost for the inventory (the vehicles)? Or will it cover mostly the cost of buying the land and building the store?
Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our car dealership financial model template , you won’t have any issues answering these questions.
For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.
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Opening a car dealership can be a risky venture without effective planning. It requires a large amount of overhead costs to acquire inventory, insurance coverage, pay structure for salesmen among other things. You’ll likely find yourself looking to apply for a loan to get your business off the ground, which can be difficult to do without a thorough business plan to use in your pitch.
Luckily we have sample business plans to help you get started and successfully launch your new car dealership.
If you’re looking to develop a more modern business plan, we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance to help you develop the perfect plan.
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Car Dealership Business Plan Template & Guidebook
If you are looking to start a car dealership, you have come to the right place. With the #1 Car Dealership Business Plan Template & Guidebook, you will have all the resources necessary to create a successful business plan that will help you launch your car dealership with confidence. This comprehensive guidebook provides an extensive template for developing the perfect car dealership business plan that will help you with everything from setting up your organization to finding the best financing options for your dealership. Read on for more details about this incredible resource.
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How to Write a Car Dealership Business Plan in 7 Steps:
1. describe the purpose of your car dealership business..
The first step to writing your business plan is to describe the purpose of your car dealership business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.
It also helps to include a vision statement so that readers can understand what type of company you want to build.
Here is an example of a purpose mission statement for a car dealership business:
Our mission at ABC Car Dealership is to provide quality vehicles and a superior customer experience by becoming the dealership clients turn to for their automotive needs. We strive to create a warm and welcoming environment, personalized service, and one-stop convenience from sales to service. Our team of highly trained professionals will work hard to ensure our clients receive the highest quality product as well as the best car buying experience possible.
2. Products & Services Offered by Your Car Dealership Business.
The next step is to outline your products and services for your car dealership business.
When you think about the products and services that you offer, it's helpful to ask yourself the following questions:
- What is my business?
- What are the products and/or services that I offer?
- Why am I offering these particular products and/or services?
- How do I differentiate myself from competitors with similar offerings?
- How will I market my products and services?
You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.
3. Build a Creative Marketing Stratgey.
If you don't have a marketing plan for your car dealership business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals.
A good marketing plan for your car dealership business includes the following elements:
- Who is your target market?
- What do these customers have in common?
- How many of them are there?
- How can you best reach them with your message or product?
- Who are your current customers?
- Where did they come from (i.e., referrals)?
- How can their experience with your car dealership business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?
Product or service description
- How does it work, what features does it have, and what are its benefits?
- Can anyone use this product or service regardless of age or gender?
- Can anyone visually see themselves using this product or service?
- How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?
- Which companies are competing with yours today (and why)?
- Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
- What specific advantages does each competitor offer over yours currently?
- Which marketing channel do you intend to leverage to attract new customers?
- What is your estimated marketing budget needed?
- What is the projected cost to acquire a new customer?
- How many of your customers do you instead will return?
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4. Write Your Operational Plan.
Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations.
In it, you should list:
- The equipment and facilities needed
- Who will be involved in the business (employees, contractors)
- Financial requirements for each step
- Milestones & KPIs
- Location of your business
- Zoning & permits required for the business
What equipment, supplies, or permits are needed to run a car dealership business?
- Car sales license
- Business permit/registration
- Financial documents and records
- Computer software programs for tracking inventory, sales, and customer data
- A display area and other fixtures for displaying vehicles
- Desks, phones, printers, and other office equipment for customers and sales people
- A website or online presence to market and sell cars across the internet
- Automotive lifts, tools, and other equipment for servicing vehicles
- Advertising materials such as flyers, posters, banners, and television commercials
5. Management & Organization of Your Car Dealership Business.
The second part of your car dealership business plan is to develop a management and organization section.
This section will cover all of the following:
- How many employees you need in order to run your car dealership business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
- The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
- How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!
6. Car Dealership Business Startup Expenses & Captial Needed.
This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.
Typically, expenses for your business can be broken into a few basic categories:
Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a car dealership business varies based on many different variables, but below are a few different types of startup costs for a car dealership business.
Running & Operating Costs
Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.
Marketing & Sales Expenses
You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your car dealership business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.
7. Financial Plan & Projections
A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your car dealership business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses.
Here are some steps you can follow to devise a financial plan for your car dealership business plan:
- Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
- Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
- Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
- Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
- Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
- Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.
Frequently Asked Questions About Car Dealership Business Plans:
Why do you need a business plan for a car dealership business.
A business plan for a car dealership business is important in order to set goals and objectives, define strategies, develop an operational plan, identify your target market, and determine the financial resources needed to get started. It also serves as a roadmap for the direction of the business and helps you stay on track with your long-term vision.
Who should you ask for help with your car dealership business plan?
You should ask an experienced financial planner or accountant for help with your car dealership business plan. Additionally, you could consult with a business coach, business consultant, or mentor who has experience in the automotive industry. It is also a good idea to speak to entrepreneurial experts or other successful car dealerships owners who can provide valuable insights on the business.
Can you write a car dealership business plan yourself?
Yes, you can write your own car dealership business plan. Writing a business plan for a car dealership is like writing any other business plan. It should include your mission, market analysis, financial projections, competitive analysis and marketing strategy. Additionally, researching the car dealership industry in your area can help you tailor your plan and make it more specific to the local market. With a bit of research and preparation, you can develop a comprehensive business plan for your car dealership.
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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.
Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.
From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.
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Car Dealership Business Plan
A car dealership is a company that sells new or used vehicles to the general public under the terms of a dealership agreement with a carmaker or its sales subsidiary. Car dealerships are rewarding because they are connected to both the wholesale and retail markets.
Are you looking to start writing a business plan for your car dealership business? Creating a business plan is essential to starting, growing, and securing funding for your business. We have prepared a car dealership business plan template for you to help in start writing yours.
Free Business Plan Template
Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!
- Fill in the blanks – Outline
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How to Write a Car Dealership Business Plan?
Writing a car dealership business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:
1. Executive Summary
An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:
Start with a brief introduction:
Market opportunity:, mention your services:, management team:, financial highlights:, call to action:.
Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.
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2. Business Overview
Depending on what details of your business are important, you’ll need different elements in your business overview. Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:
About the business:
Provide all the basic information about your business in this section like:
- The name of the car dealership business and the concept behind it: new car dealership, used car dealership, small car dealership, luxury car dealership, private seller, online retailer, or something else.
- Company structure of your car dealership business whether it is a sole proprietorship, LLC, partnership firm, or others.
- Location of your car dealership and the reason why you selected that place.
Business history:, future goals:.
This section should provide an in-depth understanding of your car dealership business. Also, the business overview section should be engaging and precise.
3. Market Analysis
Market analysis provides a clear understanding of the market in which your car dealership business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:
Market size and growth potential:, competitive analysis:, market trends:, regulatory environment:.
Some additional tips for writing the market analysis section of your business plan:
- Use a variety of sources to gather data, including industry reports, market research studies, and surveys.
- Be specific and provide detailed information wherever possible.
- Include charts and graphs to help illustrate your key points.
- Keep your target audience in mind while writing the business plan.
4. Products And Services
The product and services section of a car dealership business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:
List the product and services:
- Create a list of the services that your car dealership will offer, which may luxury cars, new cars, used cars, maintenance, repairs, etc.
- Describe each product and service: For each service, provide a detailed description of what it entails, and the qualifications of the professionals who will provide the service.
Emphasize safety and quality:
Overall, a business plan’s product and services section should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.
5. Sales And Marketing Strategies
Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:
Develop your unique selling proposition (USP):
Determine your pricing strategy:, marketing strategies:, sales strategies:.
Overall, the sales and marketing strategies section of your business plan should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.
6. Operations Plan
When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:
Operational process:, inventory management:.
By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your car dealership business.
7. Management Team
The management team section provides an overview of the individuals responsible for running the car dealership business. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.
Organizational structure:, compensation plan:, board of advisors:.
Describe the key personnel of your company and highlight why your business has the fittest team.
8. Financial Plan
When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.
Profit & loss statement:
Cash flow statement:, balance sheet:, break-even point:, financing needs:.
Remember to be realistic with your financial projections, and to provide supporting evidence for all of your estimates.
When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.
- Include a table of contents for the appendix section to make it easy for readers to find specific information.
- Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
- Provide market research data, such as statistics on the size of the industry, consumer demographics, and trends in the industry.
- Include any legal documents such as permits, licenses, and contracts.
- Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
- Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.
Remember, the appendix section of your car dealership business should only include relevant and important information that supports the main content of your plan.
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This car dealership business plan sample will provide an idea for writing a successful business plan, including all the essential components of your business.
After this, if you are still confused about how to write an investment-ready business plan to impress your audience, then download our car dealership business plan pdf.
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Frequently asked questions, why do you need a car dealership business plan.
A business plan is essential for anyone looking to start or run a successful car dealership. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.
Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your car dealership business.
How to get funding for your car dealership business?
There are several ways to get funding for your car dealership business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are:
- Bank loan – You may apply for a loan in government or private banks.
- Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
- Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your car dealership, usually online.
- Angel investors – Getting funds from angel investors is one of the most sought options for startups.
Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.
Where to find business plan writers for your car dealership business?
There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your car dealership business plan and outline your vision as you have in your mind.
What is the easiest way to write your car dealership business plan?
A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any car dealership business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.
About the Author
Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more
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How to write a business plan for a car dealership?
Whether you are starting up a new dealership or looking to grow and improve the profitability of an existing one, having a well-crafted and comprehensive business plan is essential.
In this guide, we will cover why it's important to write a business plan for your car dealership, what information you need to include in it, the structure and format of such plans, as well as the tools that can help you create one quickly and easily.
With these resources at hand, you'll be able to confidently start or grow your own car dealership with success!
In this guide:
Why write a business plan for a car dealership?
- Information needed to create a business plan for a car dealership
- What goes into your car dealership's financial forecast?
- The written part of a car dealership business plan
- What tool should I use to write my car dealership business plan?
Writing a business plan for your car dealership forces you - the entrepreneur - to think critically about your objectives over the next 3 to 5 years, and create actionable plans to achieve them.
The business plan, therefore, serves as the roadmap for the expansion of your car dealership.
Once the plan is in place, you can compare your financial performance to what was planned and recalibrate your financial forecast as time goes by in order to maintain visibility on your future cash flows.
This process is crucial in helping you ensure that you know where the business is headed and have sufficient capital to fund operations and expansion.
Additionally, having a comprehensive car dealership business plan is mandatory if you need to attract potential investors (or lenders) who can provide vital capital to accelerate growth.
Investors will be looking for evidence that investing in your car dealership can generate a good return on investment. Therefore, they will want to see healthy growth, profitability and cash generation outlined clearly in the business plan.
Similarly, banks will use this document to assess whether or not you have what it takes to repay their loan and ensure that your dealership succeeds.
Now that we know why writing the business plan matters, let’s have a look at the information needed to assemble it.
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What information is needed to create a business plan for a car dealership?
Carrying out market research for your car dealership.
Carrying out market research is an essential step prior to drafting any car dealership business plan.
It helps identify target markets and understand customer needs, and allows you to evaluate the competitive landscape and develop strategies for positioning your dealership in a way that will give it a competitive edge in the marketplace.
Having this data is key in order to accurately forecast potential revenues, and to present a compelling commercial opportunity in the written presentation of your business plan.
Developing the marketing plan of your car dealership
Creating a sales and marketing plan is another prerequisite that ensures that your financial forecast includes an accurate budget for sales and marketing expenses.
This budget should include specific details regarding costs associated with advertising, promotions, sponsorships, and incentives in order to maximize the dealership’s sales.
The staff and equipment required for your car dealership
Comprehensive recruitment and investment plans also need to be outlined prior to writing your business plan as they will be needed when creating your financial forecast.
You will need to think thoroughly about how many staff members are required for the business to operate and what equipment will need to be purchased, and cost it all as accurately as possible.
Once you have gathered the necessary information for creating a business plan for your car dealership, it is time to move on to developing the financial forecast.
What goes in the financial forecast for a car dealership?
The financial forecast of a car dealership includes a Profit and Loss (P&L) statement, a Balance Sheet, a Cash Flow Statement, and Sources and Uses table.
Let’s have a look at each of these financial tables in a bit more detail.
The projected P&L statement of your car dealership
The projected P&L statement for a car dealership shows how much growth and profit are expected in the years to come.
The projected balance sheet of your car dealership
The balance sheet is an important financial report that provides insight into the overall financial health of a car dealership.
It includes all assets owned by the dealership, such as cars, inventory, buildings and equipment, as well as liabilities such as accounts payable, loans and other debt.
This document gives an overview of what the company owns and owes at any given time, and how much your equity is worth.
The balance sheet is especially useful for lenders and investors, who want to understand the solvability and liquidity of the car dealership. It provides insight into how much money is available to pay creditors or invest in new projects.
For example, if there are more liabilities than assets on the balance sheet, it could signal that the business is over-leveraged or that there is a need for more capital.
On the other hand, if there are more assets than liabilities, the dealership may have enough money to invest in new projects and give lenders peace of mind.
For car dealership owners, the balance sheet can be used to identify potential risks, gauge financial performance and make plans for future growth. It provides an overall picture of the dealership’s financial health and can help owners understand if their business is on track or needs to be improved.
The projected cash flow statement of your car dealership
A forecasted cash flow statement for a car dealership is a document that shows how money comes in and out of the business.
It is useful because it helps people understand how much money the dealership makes and spends, which helps make decisions about financing.
The initial financing plan
An initial financing plan is like a money map that shows where the money at the beginning of your car dealership business plan will come from and how it will be used.
It is important to have an initial financing plan when starting a car dealership so you can make sure you have enough money to cover all of your initial investments.
The plan should include information such as the total cost, who will provide the funds, what kind of loans or investments are needed, and other sources of capital such as grants or credit from suppliers.
Having this information in advance helps ensure that there are no financial surprises down the road.
Now that you have a better idea of what goes in the financial forecast for your car dealership, it is time to look at what goes in the written presentation which provides the context needed to understand how these projections were made and how they fit into the larger picture.
The written part of a car dealership plan
The written part of a car dealership plan is composed of the 7 main sections:
- The executive summary
- The presentation of the company
- The products and services section
- The market research analysis
- The strategy section
- The operations section
- The financial plan
Let’s dive into each section!
1. The executive summary
The executive summary of a car dealership plan should include the following key points: business overview, market overview, key financials, and the “ask” i.e. how much funding is required.
The business overview section should provide an overall description of the business, including its vision and objectives.
This includes information about the size of the dealership, type of vehicles sold, and any unique features the dealership may offer.
The market overview should include information about the size of the addressable market, current trends in the vehicle industry, and how the car dealership’s offerings intend to meet customer demand.
Next come the key financial highlights where you will include a brief description of the dealership’s financial situation and any expected future profits or losses.
Finally, the “our ask” section should include a thorough explanation as to what you are looking for from the reader of your plan. It is also important to detail how these funds will be used and what kind of return on investment can be expected.
2. The presentation of the company
The presentation of the company should start with detailed information about the structure and ownership of the company.
You should clearly explain what legal entity has been created to run the business, and who owns what percentage.
Additionally, it is important to state the exact location of the dealership, as well as give details about the management team that will be responsible for the day-to-day operations and implementation of the business plan.
3. The products and services section
When writing the products and services section of a car dealership's business plan, it is important for you - the business owner - to provide detailed information about the types of vehicles you offer, along with any additional services such as repairs or financing.
The goal of this section should be to show potential investors or lenders that customers will have access to quality cars, parts and service at competitive prices.
The type of vehicles offered by the car dealership should be clearly outlined in the business plan. This includes identifying which makes and models are available, as well as whether used cars are also sold.
It is also helpful to include information on who supplies these vehicles so investors can assess their reliability and reputation in the marketplace.
Additionally, if there are special features that make certain vehicle models stand out from competitors, those details should be included in this section as well.
4. The market analysis
The presentation of your market analysis should include information about demographics and segmentation, target markets, competition, barriers at entry, and regulation.
This will help provide potential investors or banks with an understanding of the size of the local market and how your car dealership is best positioned to capture market share.
The demographics and segmentation section will focus on the demand side, explaining how many customers are in the local market and what their expectations and preferences are.
In the target market section you will explain who you are targeting and why your offering fits the needs of these customers.
The competition part will focus on your competitors and you will explain how and why customers will prefer your dealership over theirs.
You will then explain what barriers at entry exist on the market, if any. This could include licensing requirements with car manufacturers or an important upfront investment to enter the market.
5. The strategy section
When crafting the strategy section of your car dealership's business plan, you should focus on the following key elements in order to appeal to potential investors or lenders: competitive edge, pricing strategy, marketing plan, milestones and risks and mitigants.
Having a unique competitive edge is essential for success in any competitive industry. This could include offering special promotions or services that are not available from competitors.Or you could benefit from territorial exclusivity with a car manufacturer preventing other competitors from selling the same vehicles you offer.
A clear pricing strategy should also be outlined as well which details how prices will be set and adjusted over time based on market conditions.
Your marketing plan will then outline how customers will learn about the dealership’s offerings and how customer loyalty can be maintained over time.
Finally, you should outline achievable milestones as well as strategies for dealing with potential risks or issues that may arise during operations.
Addressing these topics within the strategy section of your business plan will help demonstrate to lenders and investors your knowledge of the industry as well as show the steps you’ve taken to reduce risk associated with running your business.
6. The operations section
The operations section of your car dealership business plan should include detailed information about the staffing team and roles of staff members, recruitment plan, opening hours, key assets and intellectual property that the business needs to operate, as well as the suppliers it plans to work with.
When detailing the staffing team and roles of staff members, the plan should include information about the number of employees, their job titles and descriptions, as well as any qualifications needed for each position.
Additionally, it should include a recruitment plan that outlines how new staff members will be hired and onboarded into the business.
The operations section should also outline the opening hours of the dealership: when it opens and closes, as well as any special operating hours for specific services.
Furthermore, the plan should include information about key assets and property needed to run the business, such as a dealership license, customer databases, technology platforms or software licenses. Finally, it should list all of its suppliers that are critical to the running of the dealership.
By having a comprehensive operations section, the business owner can show potential lenders or investors that they have planned ahead and are well-prepared to successfully run their dealership.
7. The presentation of the financial plan
The financial plan section is where you will show the financial forecast that we talked about before.
Now that we have an understanding of the content a car dealership business plan should include, let's take a look at the tools and resources available to help us create one.
What tool should I use to write my car dealership's business plan?
In this section, we will review the different solutions for creating a business plan for your car dealership, including using Word and Excel, hiring a consultant or using an online software.
Create your car dealership's business plan using Word or Excel
Using Excel and Word to write a car dealership business plan can be an effective solution for some, but it should not be the first choice.
While Excel is cheap, creating a financial forecast without expert accounting knowledge is challenging to say the least. Creating a financial forecast on excel is often long and tedious and difficult to keep updated.
Using Word can help to create a plan from scratch, but it is time consuming as you have to start from a blank page and it requires hours of formatting the document once written.
Hire a consultant to write your car dealership's business plan
Outsourcing your car dealership business plan to a consultant or accountant is another potential solution.
Consultants are experienced in writing such plans and accountants are knowledgeable about creating financial forecasts that are accurate and free from errors though they may lack the industry expertise to forecast sales with precision.
The main drawback of outsourcing a plan though is the steep cost. Budget at least $2,000 (or £1,500) for a first iteration, more if revisions are needed after initial meetings with lenders and investors.
Overall, this is a good solution if you need your plan fast and are trying to raise a significant amount of capital.
Using a business plan software to write your car dealership business plan
Another alternative is to use online business plan software . There are several advantages to using specialized software:
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can be inspired by already written business plan templates
- You can easily make your financial forecast by letting the software take care of the financial calculations for you without errors
- You get a professional document, formatted and ready to be sent to your bank
- The software will enable you to easily track your actual financial performance against your forecast and update your forecast as time goes by
If you're interested in using this type of solution, you can try our software for free by signing up here .
We hope that this article has helped you to better understand how to write the business plan for a car dealership. If you still have questions, do not hesitate to contact us.
Also on The Business Plan Shop
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Used Car Dealership Business Plan Template
Used car dealership business plan.
You’ve come to the right place to create your Used Car Dealership business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Used Car Dealerships.
Below is a template to help you create each section of your Used Car Dealership business plan.
Reliable Motors is a used car dealership located in Portland, Oregon. We specialize in offering a wide selection of high-quality used vehicles to customers in our local area. With a focus on exceptional customer service and competitive pricing, we aim to become the preferred choice for individuals looking to purchase reliable pre-owned vehicles.
Reliable Motors is run by Otto Masterson. Otto has 12 years of experience in vehicle sales and dealership operations. His customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.
Reliable Motors offers a diverse inventory of used cars, trucks, SUVs, and vans from various makes and models. Our selection includes vehicles that are carefully inspected, tested, and certified to meet our stringent quality standards. We also provide vehicle history reports and offer extended warranties for added peace of mind. Our knowledgeable sales team is committed to assisting customers in finding the right vehicle that suits their needs and budget.
Our primary target market includes individuals and families in Portland, Oregon who are looking to purchase a reliable used vehicle. We will cater to customers with various budgets, offering a range of price points to accommodate different financial situations. Additionally, we will also establish partnerships with local businesses, such as car rental companies and auto repair shops, to provide them with fleet vehicles and maintenance services.
Reliable Motors’ most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a strong base of repeat customers, many of whom have stated that they will buy their next car from Reliable Motors once the company is established and running. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.
Reliable Motors will achieve success by offering the following competitive advantages:
- Quality Inventory: We will ensure our inventory consists of well-maintained and reliable used vehicles that meet our strict quality standards.
- Competitive Pricing: We will offer competitive prices to attract customers and provide value for their money. Our pricing strategy will consider market trends, vehicle condition, and fair market value.
- Exceptional Customer Service: We will prioritize customer satisfaction by providing a personalized and hassle-free buying experience. Our knowledgeable and friendly sales team will assist customers in finding the right vehicle that meets their needs and budget.
- Transparent Processes: We will establish trust by providing accurate vehicle information, pricing details, and facilitating open communication.
- Strong Industry Partnerships: We will collaborate with reputable suppliers, finance institutions, and service providers to enhance our offerings and provide additional benefits to customers.
Reliable Motors is seeking $1,000,000 in funding to establish and grow the business. The funds will be allocated as follows:
- Inventory acquisition: $800,000
- Renovation and setup of the dealership facility: $100,000
- Marketing and advertising expenses: $50,000
- Working capital: $50,000
The projected financials indicate steady revenue growth and profitability within the first three years of operation
Who is reliable motors.
Reliable Motors is run by Otto Masterson, a 12 year veteran in vehicle sales and dealership operations. After working for several dealerships around town, he surveyed his most loyal customers to see if they would be willing to switch to his new dealership once it is established. Most of his customers responded enthusiastically, which motivated Otto to finally launch his business.
Reliable Motors History
Once he canvassed his loyal customer base and located a potential location, Otto Masterson incorporated Reliable Motors as an S-Corporation in April 2023.
The business is currently being run out of Otto’s home office, but once the purchase of the dealership location is finalized, all operations will be run from there.
Since incorporation, Reliable Motors has achieved the following milestones:
- Found a location and made an offer of purchase
- Developed the company’s name, logo, and website
- Hired an architect to design the lot, the service area, and the office building
- Determined equipment and fixture requirements
- Began recruiting key employees
Reliable Motors Services
Reliable Motors will provide the following services to its customers:
- Vehicle Sales: offer an inventory of used cars, trucks, SUVs, and vans, catering to various customer preferences and budgets.
- Financing Assistance: assistance with financing options through partnerships with local banks and financial institutions.
- Trade-ins: Customers will have the option to trade in their current vehicles, allowing them to apply the value toward their purchase at Reliable Motors.
The used car industry is experiencing steady growth, driven by factors such as rising new car prices, improved vehicle reliability, and a growing preference for cost-effective transportation options.
The used car industry is expected to grow over the next several years. According to a recent report by IBISWorld, the used car dealerships industry is expected to grow at a CAGR of 1.2% from now until 2028. This growth is due to increasing environmental consciousness, which has caused many consumers to avoid purchasing new automobiles. This increase in demand and industry growth ensures that Reliable Motors will achieve success.
This industry presents a significant opportunity for Reliable Motors to cater to customers seeking quality used cars at competitive prices.
Demographic profile of target market.
Reliable Motors primarily targets individuals in the Portland area who are in the market for a reliable and affordable pre-owned vehicle. By understanding our customers’ needs and providing a personalized buying experience, we aim to build long-lasting customer relationships.
Reliable Motors will primarily target the following customer profiles:
- First-time car buyers
Direct and indirect competitors.
Reliable Motors faces competition from both direct and indirect competitors in the used car dealership industry. Direct competitors include other local dealerships offering similar vehicle options. Indirect competitors include online marketplaces and private sellers.
AutoWheels is a used car dealership that carries a large variety of used cars, trucks, SUVs, and vans. Their line of car brands include Chevrolet, Dodge, Ford, Jeep, and Toyota. AutoWheels’ focus is offering clean, newer model used cars with affordable monthly payments. The dealership offers flexible financing approval for buyers with any credit score or financial situation.
AutoWheels partners with Portland Precision Auto Care for its automotive maintenance and repair needs. This partnership enables AutoWheels to offer services that include Car and Truck care, Electronic Services, Electrical Services, General Services, Heating and Cooling Services, Engine & Transmission, Miscellaneous Services, Transmission Services, Undercar Services, and Brakes.
James Rivers Automotive Outlet
Located in Portland’s Sellwood-Moreland neighborhood, James Rivers Automotive Outlet is a member of the James Rivers Family-Owned and Operated group of dealers in Portland. The dealership carries a large inventory of new, certified pre-owned, and pre-owned line of cars, trucks, SUVs, and vans. Their line of vehicles are in all price ranges and body types. James Rivers Automotive Outlet also offers trade-in evaluations at their other franchised stores – James Rivers Honda, Acura, and Toyota. The dealership also offers affordable financing options.
Eastside Used Cars
Established in 2011, Eastside Used Cars is a family-owned used car dealership. The dealership is fully internet based and all sales are by appointment only, in one of two locations: Sandy and Gresham. The dealership claims to have the best prices in the market, offering wholesale prices to the public. Customers may also expect to receive top dollar for their trade-ins.
The dealership currently offers an inventory of 175 vehicles, ranging in price from $6,990 to $60,800. It offers a variety of finance options for consumers with all levels of credit, but outside financing is welcomed.
Reliable Motors holds the following advantages over the competition:
- Rigorous Vehicle Inspection : Each vehicle in our inventory undergoes a thorough inspection to ensure its mechanical and cosmetic condition, providing customers with peace of mind.
- Customer-Centric Approach : We prioritize customer satisfaction by offering personalized assistance, transparent pricing, and a hassle-free buying experience.
- Extensive Inventory : Our diverse inventory caters to various customer preferences and budgets, ensuring a wide range of options to choose from.
Brand & value proposition.
Reliable Motors will offer a unique value proposition to its clientele:
- Client-focused automotive sales, where the customer is treated fairly, with transparent pricing and a variety of financing options
- Service built on long-term relationships
- Top-quality automotive repair and maintenance, at competitive prices
The promotions strategy for Reliable Motors is as follows:
Reliable Motors understands that the best promotion comes from satisfied customers. The Company will encourage its customers to refer other businesses by providing economic or financial incentives for every new customer produced. This strategy will increase in effectiveness after the business has already been established.
Reliable Motors will invest heavily in a social media advertising campaign. The company will create social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Reliable Motors will invest heavily in developing a professional website that showcases current inventory, and provides valuation tools for potential trade-ins. It will also invest heavily in SEO so that the firm’s website will appear at the top of search engine results.
The following will be the operations plan for Reliable Motors. Operation Functions:
- Otto Masterson is the Owner of Reliable Motors. In addition to providing inventory management and sales, he will also manage the general operations of the business.
- Otto Masterson is joined by a full-time administrative assistant, Mandy Bobo, who will take charge of the administrative tasks for the company. She will also be available to answer incoming calls and make service appointments.
- As the company builds its customer base, Otto will hire more sales professionals to grow our business further.
Reliable Motors will have the following milestones completed in the next six months.
- 6/2023 Finalize location purchase
- 7/2023 Design and build out Reliable Motors
- 8/2023 Hire and train initial staff
- 9/2023 Kickoff of promotional campaign
- 10/2023 Launch Reliable Motors
- 11/2023 Reach break-even
Reliable Motors’s most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a loyal customer base, many of whom have stated that they will switch to Reliable Motors when it comes time to purchase a new vehicle. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our dealership is successful.
Though he has never run his own business, Otto Masterson worked his way up from automotive sales associate to sales manager, where he gained an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry. He also already has a starting customer base that he served while working for other auto dealerships. He will hire several other employees who can help him run the aspects of the business that he is unfamiliar with.
Key revenue & costs.
Reliable Motors’s revenues will from vehicle sales, with additional income generated through financing options and after-sales services. Key costs include
The notable cost drivers for the company will include inventory acquisition, overhead expenses, marketing expenses, personnel costs, and facility maintenance.
Funding Requirements and Use of Funds
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.
- Number of clients:
- Year 1: 400
- Year 2: 500
- Year 3: 750
- Year 4: 1000
- Year 5: 1250
Income statement, balance sheet, cash flow statement, used car dealership business plan faqs, what is a used car dealership business plan.
A used car dealership business plan is a plan to start and/or grow your used car dealership business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Used Car Dealership business plan using our Used Car Dealership Business Plan Template here .
What are the Main Types of Used Car Dealership Businesses?
There are a number of different kinds of used car dealership businesses , some examples include: Franchised dealership, Independent dealerships, and “Bad Credit” dealerships.
How Do You Get Funding for Your Used Car Dealership Business Plan?
Used Car Dealership businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Used Car Dealership Business?
Starting a used car dealership business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Used Car Dealership Business Plan - The first step in starting a business is to create a detailed used car dealership business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your used car dealership business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your used car dealership business is in compliance with local laws.
3. Register Your Used Car Dealership Business - Once you have chosen a legal structure, the next step is to register your used car dealership business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your used car dealership business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Used Car Dealership Equipment & Supplies - In order to start your used car dealership business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your used car dealership business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful used car dealership business:
- How to Start a Used Car Business
Growthink's Ultimate Business Plan Template
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Car Dealership Business Plan Template
The world’s #1 car dealership business plan template — it’s the quickest and easiest way to create a winning car dealership business plan, period.
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It Took Us 17 Years to Create the Ultimate Car Dealership Business Plan Template for You
Hi, I’m Dave Lavinsky, the co-founder and President of Growthink.
I’m honored and flattered to have been recognized as the world’s foremost business planning expert by BusinessWeek, Forbes and others.
Seventeen years ago we started writing business plans for entrepreneurs, executives and business owners like you.
During this time, we’ve helped over 100,000 entrepreneurs and businesses achieve great success.
Using this vast experience, we have created and constantly refined Growthink’s Ultimate Car Dealership Business Plan Template to be the hands-down quickest and easiest way to create a professional Car Dealership business plan that allows you to raise capital and build a strategically sound business.
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You can finally create a professional Car Dealership business plan in less than 1 day thanks to these powerful features of Growthink’s Ultimate Car Dealership Business Plan Template:
Simply Fill in the Blanks
We’ve created simple, fill-in-the-blank exercises that guide you through all the key questions your Car Dealership business plan must answer.
And we give you samples for every section of your plan.
Just type your answers directly into our template and you’re done!
Simply type in some numbers, like your salary and expected growth, and our template automatically calculates your complete 5-year financial projections.
You’ll have your Income Statement, Balance Sheet, Cash Flow Statement, and multiple charts and graphs completed in minutes.
Turn Your Ideas to Reality
If you don’t have an action plan for executing on your ideas, they’ll never materialize.
That’s why Growthink’s Ultimate Car Dealership Business Plan Template includes an Operations Plan section.
This section takes you through our proven and proprietary process for creating an Operations Plan that will transform your ideas into reality.
Improve Your Strategy
Growthink’s Ultimate Car Dealership Business Plan Template helps you build a strategically sound business.
It guides you through key questions about your company, marketing and operations strategies, and gives you tons of ideas for improvement.
For example, in the Marketing Plan section, you’ll see several of the best marketing tactics to get new customers.
Our Ultimate Car Dealership Business Plan Template “Members Area” gives answers to all your questions, plus access to our amazing customer support team.
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Frequently Asked Questions
Below are answers to your most frequently asked questions:.
Immediately upon purchasing Growthink’s Ultimate Car Dealership Business Plan Template, you will be taken to our Member’s Area where you can instantly download our template and begin working on your business plan.
If for any reason you are not delighted with our product, simply contact our friendly support desk and you’ll be issued a full refund. You have an entire year to request a refund if desired.
Unlike other software that charges you a fee month after month after month, you only pay once for Growthink’s Ultimate Car Dealership Business Plan Template and you own it.
You can create an unlimited number of business plans with Growthink’s Ultimate Car Dealership Business Plan Template. Once you purchase it, you have lifetime access to use it for any business in which you’re involved, now or in the future.
Yes, Growthink’s Ultimate Car Dealership Business Plan Template works flawlessly on both PCs and Macs.
Growthink’s Ultimate Car Dealership Business Plan Template is designed for both established Car Dealerships and startups.
Yes , you can! Anyone can easily follow our basic instructions and create a great business plan quickly and easily. Plus, my expert team is available to help you if you have any questions.
Even more feedback from the over 100,000+ customers who love growthink’s ultimate car dealership business plan template & other business plan templates.
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How to write a business plan for your car dealership business.
Starting a car dealership business is a great idea because it is a profitable venture and it provides a valuable service to the community by offering a large selection of vehicles to choose from.
Additionally, it offers a great opportunity to build relationships with customers and provide them with excellent customer service.
Don't start without having built a business plan though.
Writing a business plan before starting a new project is essential as it provides a clear roadmap of the project and outlines the goals and objectives that need to be achieved. Additionally, it helps to identify potential risks and opportunities that may arise and can be used as a reference throughout the project.
In short, a good business plan will help ensure the profitability of your car dealership business .
What should you include in the business plan for a car dealership business? What is the best way to structure it? What financial numbers should be included? How can I write a business plan quickly and effectively without sacrificing quality?
All these questions will be answered in detail here!
Moreover, bear in mind that it is up to you whether you choose to start your business plan from scratch.
Instead, you can download our comprehensive business plan for a car dealership business and adjust it to match your preferences.
Drafting a business plan for a car dealership business
Is it worthwhile to invest time in a business plan for your car dealership business.
Yes, you should invest time in a business plan for your car dealership business to ensure successful operations.
Developing a robust business plan will enable you to:
- learn about the car dealership market
- keep up with the latest trends and incorporate them into your project
- establish what makes a car dealership business successful
- understand customers' car preferences and budgetary considerations to help them find their ideal vehicles
- find a unique value proposition for your auto sales dealership
- investigate competitor customer retention strategies
- find relevant competitive advantages for your car dealership business
- find a business model that delivers consistent positive financial outcomes
- design and implement a robust and strategic action plan for business advancement
- identify potential risks specific to a car dealership business, such as inventory management, customer financing, and market demand
Our team has created a business plan for a car dealership business that is designed to make it easier for you to achieve all the elements listed.
How to outline a business plan for a car dealership business?
Your business plan will have a lot of information, content, and numbers. It should be arranged in a way that makes it simple to read and comprehend.
When we built our business plan for a car dealership business , we ensured it was organized correctly.
The material is divided into 5 sections (Opportunity, Project, Market Research, Strategy and Finances).
1. Market Opportunity
The opening section is labeled as "Market Opportunity."
In this section, you will find valuable data and insights about the car dealership industry, helping you understand the market landscape and consumer behavior.
We strive to keep this section constantly refreshed with the latest data.
2. Project Presentation
Within the "Project" section, provide details about your car dealership business, such as the range of vehicles, financing options, exceptional customer service, and emphasize the unique value proposition for car buyers.
At the end of this section, provide a brief introduction about yourself and your passion for cars.
Explain your range of vehicles, your commitment to quality and customer satisfaction, and how you plan to create a professional and enjoyable car buying experience for customers at your car dealership. Highlight your knowledgeable sales team, your financing options, and your dedication to helping individuals find the perfect car that meets their needs and preferences through your car dealership business.
We composed text for you in our business plan. Modify it as necessary to fit your concept.
3. Market Research
Moving on, there's the "Market Research" section.
This section provides a description of the market segments for your car dealership business.
It includes an analysis of competing car dealerships and highlights your dealership's unique inventory and competitive advantages. A customized SWOT analysis is also included.
Within the "Strategy" section, a detailed plan spanning three years is outlined, specifying the necessary initiatives to make your car dealership business highly profitable.
Furthermore, there is a marketing strategy for a car dealership business, a way to manage risks, and a completed Business Model Canvas included in this section.
Lastly, the section called "Finances" is where you can present all the financial information for your project.
How to elaborate an Executive Summary for a car dealership business?
The Executive Summary is a brief and condensed overview of the business plan of your car dealership business.
Make sure it doesn't exceed 2 pages, including only the most significant points.
It's the initial section that a bank will read when you bring them your business plan. It should make them interested and want to read the rest of the plan.
In the Executive Summary of your car dealership business, provide answers to these questions: what are your project's strengths? who are your customers? have you researched the competition? do you have any competitive advantages? who are you? what will you do with the cash you're asking?
How to do the market analysis for a car dealership business?
The market study of your car dealership business helps you understand external factors such as customer demands for automotive sales and services, competition within the automotive industry, and emerging trends in vehicle technology.
By conducting a comprehensive market analysis, a car dealership business can understand customer preferences, offer a diverse selection of high-quality vehicles, optimize pricing strategies, and execute targeted marketing campaigns, ultimately leading to a loyal customer base, increased sales, and a prominent position in the local automotive market.
Here is what you can expect to find in the "Market Research" section of our business plan for a car dealership business :
- interesting data points and trends in the automotive market, including sales performance, popular models, and consumer trends
- a list of potential customer segments for a car dealership business
- the competitive review
- the potential competitive advantages for a car dealership business
The key points of the business plan for a car dealership business
What's the business model of a car dealership business, business model of a car dealership business.
A car dealership business's model revolves around selling new or used vehicles to consumers or businesses. Revenue is generated through vehicle sales, financing options, trade-ins, and potentially offering additional services such as maintenance or warranties.
The business model focuses on maintaining a diverse inventory, providing exceptional customer service, offering competitive pricing and financing options, effective marketing and lead generation, and building relationships with automotive manufacturers and suppliers.
Success depends on maintaining a strong reputation, effective sales techniques, staying updated with industry trends and regulations, and building long-term customer loyalty through trust and customer satisfaction.
Business model vs Business plan
Be clear on the difference between a "business plan" and a "business model."
A business model describes how a company generates income and operates successfully.
In a business plan, you employ the Business Model Canvas as a practical tool to outline the key aspects of your business model.
Rest assured, there is a Business Model Canvas (already completed) in our business plan for a car dealership business .
How do you identify the market segments of a car dealership business?
Segmenting the market for your car dealership business involves categorizing your potential customers into different groups based on their preferences, demographics, and needs.
These categories may include factors such as budget-conscious buyers, luxury car seekers, families in need of spacious vehicles, or individuals looking for eco-friendly options.
By segmenting your market, you can offer a diverse inventory of cars and services that cater to each segment's specific requirements. For example, you might provide a range of affordable and reliable vehicles for budget-conscious buyers, showcase luxury cars with high-end features and finishes for discerning customers, or offer hybrid and electric options for eco-conscious individuals.
Market segmentation allows you to target your marketing efforts, deliver personalized recommendations, and provide an exceptional car-buying experience for each customer segment.
In the business plan for a car dealership business , you will get a detailed market segmentation, helping you understand your target audiences and their needs.
How to conduct a competitor analysis for a car dealership business?
It's clear that you won't be the only car dealership business in your market. There are other dealerships offering a range of vehicles to customers.
Your business plan must incorporate a thorough examination of your competitors, including their characteristics, strengths, and weaknesses.
Identify their weaknesses (such as pushy sales tactics, lack of transparency in pricing, or poor after-sales support).
Why should you focus on these elements? Well, these weaknesses can hinder the car buying experience for customers at car dealerships. By addressing these aspects, you can offer a diverse selection of vehicles, provide exceptional customer service, and create a seamless buying process, establishing your car dealership business as a trusted destination for purchasing automobiles.
It's what we call competitive advantages—work on developing them for a distinct business identity.
Here are some examples of competitive advantages for a car dealership business: extensive inventory of new and used vehicles, competitive pricing and financing options, knowledgeable sales team, exceptional customer service, after-sales support and maintenance services, strong relationships with manufacturers and suppliers.
How to draft a SWOT analysis for an auto body shop?
A SWOT analysis can help identify strengths, weaknesses, opportunities, and threats to maximize success when starting a car dealership business.
As you can guess, there is indeed a completed and editable SWOT matrix in our business plan for a car dealership business
The strengths for a car dealership business
S represents Strengths in SWOT, highlighting the project's internal factors that give it a competitive edge.
For a car dealership business, potential strengths include knowledgeable staff, a large inventory, competitive pricing, and convenient location.
The weaknesses for a car dealership business
W represents Weaknesses, which are the areas or aspects of the project that require some work.
For a car dealership business, potential weaknesses could include lack of customer service, limited inventory, high overhead costs, and difficulty competing with online sales.
The opportunities for a car dealership business
O stands for Opportunities in SWOT, indicating the external factors that can be capitalized on by the project.
In the case of a car dealership business, potential opportunities could include offering extended warranties, increasing online presence, offering financing options, and providing value added services.
The threats for a car dealership business
T stands for Threats in SWOT, indicating the external factors that can hinder or negatively affect the project.
How to elaborate a marketing strategy for an auto body shop?
A marketing strategy is a crucial part of a business plan as it outlines how a business will attract customers and generate sales.
Developing an effective marketing plan will help your car dealership business reach potential buyers in search of reliable and stylish vehicles.
Car buyers won't choose your dealership business without proper promotion; showcasing your inventory and competitive prices is necessary.
Have you considered implementing effective marketing strategies for your car dealership business? You could host test drive events, leverage online car listings, and collaborate with local influencers to attract potential buyers.
It's perfectly fine if you're not well-versed in marketing and communication – don't let it discourage you.
How to make financial projections for an auto body shop?
A successful business plan requires comprehensive financial data in order to accurately forecast future performance.
Obviously, you should estimate the projected revenue for your car dealership business.
To make a lasting impression on investors, it is essential to incorporate a revenue forecast that is relevant and credible into your business plan.
Our financial plan for a car dealership business is user-friendly, providing automated validations that allow you to rectify any assumptions swiftly. This guarantees the creation of credible projections with ease and assurance.
No doubt, you'll have to establish an initial budget for launching your car dealership business. Don't overlook any expense. By the way, we've listed them all in our financial plan!
Including the break-even analysis in your financial plan is important as it shows whether your car dealership business will be profitable or not.
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How to Start a Used Car Business
Written by Dave Lavinsky
ON THIS PAGE
How to start a used car business.
- How To Start a Used Car Business FAQs
Additional resources in the used car dealership industry.
Starting a used car business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn how to start a used car dealership successfully.
Importantly, a critical step in starting a used car dealership business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Used Car Dealership Business Plan Template here.
Download our Ultimate Used Car Dealership Business Plan Template here
16 Steps To Start a Used Car Business
- Choose the Name for Your Used Car Business
- Develop Your Used Car Dealership Business Plan
- Choose the Legal Structure for Your Used Car Business
- Secure Startup Funding for Your Used Car Business (If Needed)
- Secure a Location for Your Business
- Register Your Used Car Business With the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Used Car Business
- Start Building Your Used Car Inventory
- Buy or Lease the Right Used Car Business Equipment
- Develop Your Used Car Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Used Car Business
- Start Building Your Team
- Open for Business
1. Choose the Name for Your Used Car Business
The first step to starting a used car business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own dealership:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your used car business.
2. Develop Your Used Car Dealership Business Plan
One of the most important steps in going into business as a used car dealer is to develop your used car dealership business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your used car business.
- Company Overview – this section tells the reader about the history of your used car business and what type of used car business you operate. For example, do you only offer used car sales or do you also have a service department?
- Industry Analysis – here you will document key information about the used car industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? What is there income level? What do they find important when purchasing used cars?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Product : Determine and document what products/services you will offer
- Prices : Document the prices of your products/services
- Place : Where will your business be located and how will that location help you increase sales?
- Promotions : What promotional methods will you use to attract customers to your used car business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your used car business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
Finish Your Business Plan Today!
3. choose the legal structure for your used car business.
Next you need to choose a legal structure for your used car business and register it and your business name with the Secretary of State in each state where you operate your dealership. Below are the five most common legal structures:
1) Sole Proprietorship
A sole proprietorship is a business entity in which the owner of the used car business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a used car business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a used car business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a used car business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your used car business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Used Car Business (If Needed)
In developing your used car dealership business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a used car business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a used car business that they believe has high potential for growth.
5. Secure a Location for Your Business
Having the right physical location can be important for your used car business is important. You will need enough lot space to showcase your inventory, as well as office space for your team. Finding a location that will bring in customers is also key.
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
6. Register Your Used Car Business With the IRS
Next, you need complete business registration with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your business name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your used car business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build good credit which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
Every state, county and city has different business license and permit requirements.
Nearly all states, counties and/or cities have license requirements including:
- General Business License – You need a license to operate almost any type of business, including one to sell cars. Check your local guidelines for licensing requirements.
- Seller’s Permit – A seller’s permit is needed to sell vehicles. The requirements for getting a seller’s permit vary from state to state.
- Dealer’s License – Getting a car dealer license is important if you plan on buying or selling more than five cars in a year. These licensing requirements also vary depending on your state.
Depending on where you launch your used car business, you will have to obtain the necessary state, county and/or city licenses.
10. Get Business Insurance for Your Used Car Business
Business insurance policies that you should consider for your used car business include:
- General Liability Insurance – You will need to purchase general liability insurance in order to protect your business from potential lawsuits. This type of insurance will cover damages that may occur as a result of your business operations.
- Business Liability Insurance – In addition to general liability insurance, you will also need to purchase business liability insurance. This type of insurance will protect your business from potential lawsuits that may arise from injuries that occur on your premises.
- Commercial Property Insurance – You will need to purchase commercial property insurance if you own a used car dealership. This type of insurance will protect your business from potential damages that may occur to your property as a result of your business operations.
- Workers’ Compentation Insurance – You will need to purchase workers’ compensation insurance if you have employees working for your used car dealership. This type of insurance will protect your business from potential lawsuits that may arise from injuries that occur to your employees while they are working for your business.
- Product Liability Insurance – You will need to purchase product liability insurance if you sell used cars that are under warranty. This type of insurance will protect your business from potential lawsuits that may arise from damages that occur to a customer’s vehicle as a result of a defect in the vehicle.
- Garage Keeper’s Insurance – This type of insurance will protect your business from potential lawsuits that may arise from damages that occur to a customer’s vehicle while it is in your care.
- Dealer’s Open Lot Insurance – This type of insurance will protect your business if a vehicle is damaged while being driven by an employee or test-driven by a customer.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Start Building Your Used Car Inventory
The most common way to build inventory for a used business is to attend auctions where used cars are being sold. Just register with your local auction houses to receive notifications when new auctions are happening.
You can also find used cars for sale through online classifieds and social media. Just be sure to research the vehicles and their value, including how much you could make from selling them, before you buy.
12. Buy or Lease the Right Used Car Business Equipment
A used car business needs a lot of equipment in order to run successfully. Some of the most important pieces of equipment are computers, printers, and a fax machine. It’s also helpful to have a cash register, as well as racks or shelves to store the cars. Be sure to also have a phone system able to handle multiple calls.
Additionally, you might need office furniture and supplies for your team, as well as reception furniture for your customers. Many used car dealers offer vending areas or free refreshments such as coffee to waiting customers.
13. Develop Your Used Car Business Marketing Materials
Marketing materials will be required to attract and retain customers to your used car business.
The key marketing materials you will need are as follows:
- Logo – Spend some time developing a good logo for your used car business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website – Likewise, a professional used car business website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you. Update your website regularly if you plan to showcase your inventory online.
- Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your used car business. Social media platforms are also great places to share new inventory and deals, market to past customers, and bring in new customers.
- Ad Materials – Many used car businesses run ads in local newspapers and on TV and radio stations. Be sure to have your ad materials ready to go.
14. Purchase and Setup the Software Needed to Run Your Used Car Business
A used car business needs software that can help them manage their inventory, track sales and purchases, and manage customer information. Some popular software options for used car businesses include Microsoft Dynamics GP, QuickBooks, and CarLotz Manager.
15. Hire and Train Staff
Your used car business will need employees who can sell inventory, help your customers with financing, and service vehicles.
The sales team should be knowledgeable about cars and able to provide excellent customer service. They will be responsible for helping customers find the right car for their needs and negotiating a fair price.
A good finance team should be able to work with different lenders to secure financing options for customers. They will also need to be able to explain the different warranty and protection plans available.
Your service technicians should be Automatic Service Excellence (ASE) certified and able to perform basic maintenance and repairs on the cars in your inventory.
To find the right candidates, consider posting job openings in local newspapers or online. You might also reach out to existing connections.
16. Open for Business
You are now ready to open your used car business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
How to Finish Your Used Car Dealership Business Plan
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Is It Hard To Start a Used Car Business?
The answer is both yes and no. It all depends on how you approach it and what your goals are.
If you're just looking to make a quick buck, then yes, it can be quite difficult. There's a lot of competition out there and you need to be able to stand out from the crowd. However, if you're serious about starting a used car business and you're willing to put in the work, then it can be a very successful venture. Your biggest challenges to begin will most likely be building your inventory and securing a location. Following the steps outlined above will help you get started.
How Can I Start a Used Car Business With No Experience?
The first step is to do industry and market research. Learn about the different aspects of the business, such as the types of cars that are in demand, how other used car dealerships are setting their prices, and how much you will need to spend on inventory, licensing, employee salaries, and other costs before you start making money. Finding an experienced mentor in the used car industry could also help you gain some helpful insights.
What Type of Used Car Business Is Most Profitable?
The most profitable type of used car business will vary depending on your location, target market, and other factors. However, some tips to help you choose a profitable niche include focusing on a specific type of vehicle (such as luxury cars or SUVs), targeting a particular price range, specializing in just one brand, or catering to a specific customer base (such as first-time buyers or experienced collectors).
How Much Does It Cost To Start a Used Car Business?
The cost of starting a used car business will depend on a number of factors, such as the size and location of your dealership, the number of vehicles you plan to stock, and whether you intend to hire any staff. However, you can expect to spend at least several thousand dollars on inventory and several hundred dollars on licensing and permits. Additionally, you'll need to factor in the cost of leasing or purchasing a property for your dealership, as well as any advertising and marketing expenses.
Key costs to keep in mind include:
- Building lease or purchase and renovation
- Equipment and professional installation
- Store fixtures and office equipment and supplies
- Surety bond
What Are the Ongoing Expenses for a Used Car Business?
Ongoing expenses for a used car business include the cost of maintaining inventory, such as paying for storage, repairs, and cleaning; the cost of staffing (if you choose to hire employees); and the cost of marketing and advertising. You will also need to factor in the cost of property taxes and insurance for your dealership.
Key ongoing expenses to keep in mind include:
- Inventory purchases
- Inventory repairs/service
- Leases for building and/or equipment
- Equipment and building maintenance
What Are the Key Costs in the Used Car Dealership Industry?
Purchases are the greatest expense for a car dealership owner and account for over 84% of revenue. In addition to purchasing used cars at auction and from customer trade-ins, used car dealers must also repair and recondition these vehicles.
Wages are also a major expense, but increased automation with regard to inventory management and online cataloging has resulted in minimal wage growth.
Marketing costs can be significant for a successful car dealership. According to the National Independent Auto Dealers Association, car dealers spend 33.6% of their marketing budget on internet advertising.
How Does a Used Car Business Make Money?
A used car business makes money by selling vehicles for more than the cost of acquiring and maintaining the inventory. The profit margin on each sale will vary depending on the make and model of the vehicle, as well as market conditions. Some used car dealerships also make money from offering vehicle services and repairs.
Is Owning a Used Car Business Profitable?
Yes, owning a used car business can be profitable. However, the amount of profit you make will depend on a number of factors, such as your inventory, overhead costs, and selling prices.
Additionally, the profitability of your business may fluctuate from month to month or year to year depending on changes in the market. Navigating these fluctuations is key to making money for used car dealership owners.
Why Do Used Car Businesses Fail?
There are a number of reasons why used car businesses fail. Some common causes of failure include poor planning, inadequate capital, overspending on inventory, and failing to adapt to changes in the market. Additionally, many used car dealerships are unsuccessful due to competition from larger businesses or because they are unable to generate enough sales to cover their expenses.
How Big Is the Used Car Dealership Industry?
IBISWorld reports the Used Car Dealership industry has had a net decline over the past five years, due to the Coronavirus, at an average annual rate of -1.6%. Next year, the industry’s 129,553 businesses are forecast to see $99.1 billion in collective revenue.
What Are the Key Segments of the Used Car Dealership Industry?
Used cars account for over half of industry revenue. This excludes vans, minivans, and trucks.
The remainder of industry revenue is generated from other used vehicles, parts and repair services, and financing and insurance.
What External Factors Affect the Used Car Dealership Industry?
A number of factors affect the performance of the Used Car Dealership industry. These drivers include:
- Per Capita Disposable Income – When consumers have more money to spend, they become more willing to spend on expensive discretionary items, such as used cars.
- Price of New Cars – Buying a used car is a more affordable alternative to purchasing a new car.
- Aggregate Household Debt – Consumers are still less likely to invest in nondiscretionary items such as cars when debt is high.
- Average Age of Vehicle Fleet – As the average age of vehicle fleets increases, it represents greater pent-up demand for vehicles.
- World Price of Crude Oil – High gasoline prices tend to decrease new and used vehicle sales.
Who Are The Key Competitors In The Used Car Dealership Industry?
The Used Car Dealers industry is highly fragmented, with nonemploying dealerships representing more than 80.0% of establishments. As a result, the industry exhibits a low level of market share concentration, with the four largest operators accounting for an estimated 19.3% of industry revenue. In fact, just one company holds significant market share in the Used Car Dealership: CarMax, with a 17.9% marketshare leads the industry, while America’s CarMart, Carvana Co., and Enterprise Car Sales each command just a fraction of the market.
What Are the Key Customer Segments in the Used Car Dealership Industry?
The largest customer segment (37.5%) in the used car dealer industry is consumers who have prime credit scores. Other segments include Subprime, Nonprime, Super prime, and Deep subprime customers.
Where Can I Download a Used Car Dealership Business Plan PDF?
You can download our used car dealership business plan PDF template here. This is a business plan template you can use in PDF format.
Facts About Used Cars
Growing a Successful Used Car Dealership
Startup Car Dealership Success Story
Used Car Dealership Merchandising Examples
For additional information on the used car dealership industry, consider these industry resources:
- National Alliance of Buy Here Pay Here Dealers www.bhphinfo.com
- National Automobile Dealers Association www.nada.org
- National Independent Automobile Dealers Association www.niada.com
- Used Car News www.usedcarnews.com
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Car Dealership Business Plan Template
Whether you want to start your own car dealership business or expand an existing one, you need a business plan. the following car dealership business plan template lets you know what elements you need to include in a successful car dealership business plan., fill the form to download business plan templates.
To ensure your car dealership business success in this highly competitive market, you need a properly structured car dealership business plan template. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their car dealership businesses. Using the following car dealership business template, you can put together an effective business plan for car dealership.
Things to Know Before Writing a Car Dealership Business Plan
We are discussing only new car dealerships here and we will answer ‘how to write a business plan for a car dealership’ in detail.
Car dealership industry is one of the biggest industries in the USA. According to the IBISWorld industry report , the industry GDP stands at a whopping $1.2 trillion dollars with an annual growth of 2.7% for the last five years (2017-20220). The industry is expected to grow at about the same pace in the coming 5 years (2022-2027).
The car dealership industry earns $21.2 billion dollars in profit every year. The industry profit grew steadily at 3.5% for the period of 2017-2022.
The profit margins are low at 1.8% but that is compensated by the big sales volumes of car dealerships.
There are about 18,666 car dealerships in the USA. Since car dealerships are capital-intensive businesses, the number of new entrants experienced a meager 1.4% growth. The percentage of new entrants and number of car dealers will grow at 0.8%.
Car dealership industry is one of the largest employers in the nation offering over a million jobs. The number of jobs stays steady in the industry. The industry pays $80.6 billion in wages.
The car dealerships make money with new car sales, car service, and car financing and insurance. Some car dealerships may also sell car parts.
The market is stable for car dealers. There are no exponential growth forecasts. Most car dealership businesses take off so if you start a car dealership with some thought, chances are you will be successful.
The car dealership industry offers these products and services:
- Car financing
- Car Insurance
- Car Service
- Car trade-in
Key Success Factors for the Car Dealership Business
The key success factors for new car dealers are the following. If you take care of these, you will increase your chances of success.
Offer Range of After-Sale Service: The after-sale service range is important for diversifying income streams and making sure that the dealership stays afloat even when car sales plummet.
The after-sale service can include parts, service, and repair. Since car dealerships are costly for such services, you will need to maintain high service quality.
Focus on Sales Volumes even On Low Margin: New car prices are also negotiated. Sometimes, car dealers may sell new cars at a low profit margin. Car dealerships make less money on cheap cars and more money on luxury brands.
However, the real money comes in when you keep hitting your sales volume goals. That is when the car dealership gives bonuses. The truth of the matter is that you will have to keep your car sales volumes staggering.
Internet Presence: You will have to leverage the power of digital marketing for increasing sales for your car dealership business. The millennials and Gen Z do much of buying and selling online. If you don’t use digital marketing, you will miss a chunk of car sales.
Financial Management and Debt Management: Car dealerships involve complex financial management. You will be dealing with debt capital much of the time. For that, you will need to have good financial management skills or develop a competent team.
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What is a Car Dealership Business Plan?
A car dealership business plan is a road-map for starting and growing your car dealership business. Your business plan outlines your business concept, identifies your target customers, presents your marketing strategy, and details your financial projections.
Any bank or investor you approach will require a car dealership business plan, so putting one together will be critical to securing funding.
In short, writing a business plan can help you succeed if you’re thinking of starting a car dealership business or pitching to investors or venture capitalists.
Why You Need a Car Dealership Business Plan
Car dealership business plans can be used to gain interest from potential investors or to secure loans from banks. They are also helpful to you as the owner. A car dealership business plan allows you to thoroughly analyze every aspect of your potential business.
A solid, detailed plan gives you a clear path to follow, forces you to examine the viability of a car dealership business idea, and may help you better understand your company’s finances and competition.
Car dealership business owners who have a business plan grow 35% faster than those who don’t, and 75% of fast-growing businesses have one.
A car dealership business plan is a living document that should be updated annually as your company grows and changes.
Free: Business Plan Examples
Do you need help creating a business plan? Check out these six free, proven business plan examples from different industries to help you write your own.
Sources of Car Dealership Funding
Car dealership business is capital-intensive, you will need to get credit lines and loans to start and grow your car dealership business.
Since your own savings and friends and family money will not be sufficient for this business venture, you will have to look into other options.
Angel investors can be the first point to get business funding for your car dealership business. Angel investor is someone who believes in your idea and invests with you against a share of the equity. This money can be good for starting your car dealership business.
Traditional banks can offer reliable credit lines for car dealership business. Banks can give you sizable loans and continuous financing. Banks also give you valuable advice for efficient management of debt. However, banks set a high standard for approving big loans and the process may take many weeks before you know anything for sure.
SBA loans are offered at comparatively softer loan terms. However, getting an SBA loan for your car dealership business can be even harder than the banks’ loans.
Bonus Tip: You can increase your chances of getting an SBA loan with a professional business plan crafted for SBA and Bank loans only.
The third option for business financing is alternative lenders. These alternative lenders may be strict on credit score criteria but they work with new businesses and quickly process your business financing request and debt.
Check more ways to get funding for your startup business .
How to Write a Car Dealership Business Plan
To write a car dealership business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a car dealership business plan, or you can just download our proven sample business plan pdf to get a better idea.
Car Dealership Business Plan PDF and Word
Download our car dealership business plan in PDF and Word here.
The executive summary is the most important part of the document since it outlines the whole business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.
It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.
Tell them what kind of car dealership business you have and what stage you’re in; for example, are you a startup, do you have a car dealership company that you want to expand, or do you have a lot of car dealership businesses?
Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.
- Provide a high-level overview of the car dealership industry
- The name, location, and mission of your car dealership business
- A description of your car dealership business, including management, advisors, and a brief history
- Discuss the type of car dealership business you are operating, Give an overview of your target customers., and how your company differs from competitors in the industry
- Create a marketing plan that describes your company’s marketing strategies, sales, and partnership plans.
- And give an overview of your financial plan
Check out these executive summary examples to help you write a perfect one for your car dealership business plan.
Free: Executive Summary Examples
An executive summary is the most important part of your business plan, and it need not be challenging to write. This is why we have put together some awesome free Executive Summary examples for you.
Your company overview section in a business plan will be short and clear, similar to the executive summary.
Even if they just have a few minutes, your reader has to understand what your company does and who your customers are.
The following sections will be included in your business plan’s Company Analysis:
- Company summary:
Your company analysis will describe the type of car dealership business you are running and its future goals.
The car dealership you want to open and the brand you want to sell is important. The type of cars you want to sell, like budget cars, cheap cars, or luxury cars, the brands you want to carry like Hyundai, Kia, Mercedes, or Bentley, the car dealership location, all these are important.
- Company history: When and why did you start your car dealership business?
- What milestones have you achieved so far? Among the milestones might be the number of cars sold growth year over year, etc.
- Legal structure and ownership: Do you have S-Corp status? Is it an LLC ? A sole proprietorship ? Describe your legal structure.
- Mission statement: An overview of your car dealership’s guiding principles. Learn how to write a perfect mission statement .
Provide a brief overview of the car dealership industry in your industry analysis. This may seem unnecessary, but it serves multiple purposes.
First, researching the car dealership industry will educate you. It gives you an understanding of the market in which you are operating. Secondly, market research can improve your strategy, especially if it identifies market trends.
Third, market analysis shows readers you are an expert within your field. Conducting research and presenting it in your plan is the most efficient way to accomplish this.
Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.
- Give a quick overview of the car dealership industry. Define the car dealership business in terms of size (in dollars), historical background, service region, and products.
- Examine previous trends and growth patterns in the car dealership industry.
- Identify the market’s major competitors.
- Age, gender, and general lifestyle of the targeted market
- Determine the factors that have an impact on the car dealership industry. These might include government regulatory rules and other businesses’ competitive activities.
- Using research data, the industry forecast expected growth over the next five to ten years. Predictions should be made for both the long and short term.
- Describe how your car dealership business intends to position itself in the industry. Concentrate on how your car dealership business can benefit from opportunities highlighted in the industry.
The customer analysis section is an important part of any car dealership business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how your car dealership will meet those requirements.
Customers can be categorized into the following segments:
- Families looking to buy vehicles
- Professionals looking for a car for work commute
- Affluent millennials
- Gig Economy workers
- Baby boomers
Customer analysis may be divided into two parts: Psycho-social profiles (why your car dealership suits a customer’s lifestyle) and Demographic profiles (descriptions of a customer’s demographic qualities).
With regards to demographics, include information about: the ages, genders, locations, and income levels of your customers. When targeting businesses, describe what kind of business, size, and location your target customers are.
The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better your chances of attracting and retaining customers will be.
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It is necessary to do a competitor analysis. Because you may use their data to define your goals, marketing plans, tactics, new product lines, pricing, and more. Use competitor analysis to:
- Identify the strength and weakness of your car dealership business competitors.
- Search for opportunities to distinguish your car dealership business from competitors.
The first step is to determine who your direct and indirect competitors are.
The direct competitors consists of other car dealerships that offer essentially the same services to the same people as you do.
Indirect competitors are other car dealerships like used cars dealerships or classic cars dealerships that people have in addition to direct competitors. The online car sellers and the car manufacturer itself are also your indirect competitors. Other competitors may include websites for selling used cars, classic cars, or other forms of vehicle buy and sell.
Once you’ve identified the competition, concentrate on the direct, head-to-head competitors, since they are the most threatening to your car dealership business— but keep an eye on the indirect competition as well, just in case.
Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.
You will be able to position yourself competitively in the market if you perform proper competition research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:
- Prices – Are they offering cheaper cars and vehicles or more costly than you and other competitors, what value do buyers get for that price?
- Range: Are they offering a range of vehicles from different brands or you only sell one brand?
- Customer service – How they respond to their consumers, whether they treat them poorly or well, and the degrees of satisfaction customers show
- Reputation — The sum of everything mentioned above: their credibility, how loved the brand is, and the loyalty of their customers
The final section of your competitive analysis should include a list of your areas of competitive advantage. for example: Are you going to offer premium cars or budget cars? Do you offer cars and vehicles that your competitors do not? Will you offer better pricing or will you offer greater customer support?
Consider how you will outperform your competitors and include them in this portion of your car dealership business plan.
Free: SWOT Analysis Examples
Take advantage of our free SWOT analysis examples. Make your business future-proof by identifying your strengths, weaknesses, opportunities, and threats using this free SWOT Analysis Template.
Creating a marketing plan for a car dealership business involves identifying the target demographic and finding the vehicles that suit their preferences.
As part of your marketing plan for a car dealership business, you should include:
Pricing and Product Strategy
Your car dealership business must offer cars and vehicles that have at least some advantage over the competition, like vehicle range, better financing options, car repair and service, etc. Research what your competitors offer and how they price their vehicles.
Placing and Promotions
Place refers to the location of the business office of your car dealership. Describe how your location might attract customers. As an example, is your car dealership located near to an affluent area, do you have location in the downtown, etc.
Promoting your car dealership is the final part of your marketing plan. In this step, you document how you will drive customers to buy your services. A few marketing methods you could consider are:
- Pre-Opening Events
- Social media marketing
- Get referrals from current clients
- Optimize your Google My Business listing
- Reaching out to local bloggers and websites
- List your business on industry-specific sites
- Community Outreach
You should also think about your car dealership’s Unique Selling Proposition (USP), which should explain why clients should choose you over other car dealership businesses. Ensure that your USP is reflected in your marketing.
Read Later: How to create a marketing plan in a business plan.
While the previous sections described your goals, your operational plan in a business plan discusses how you will achieve them.
An operations plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.
Your operations plan should be divided into two individual parts, as seen below.
Your daily short-term processes include all the tasks involved in running a car dealership business, including hiring and training employees and administering the business. etc.
Your long-term goals are the milestones you hope to reach. It may include the date when you hope to lease the facility or remodel the facility: or when you hope to reach $X in revenue.
The management team section in a business plan ‘ outlines your management team, staff, resources, and how your business ownership is structured.
This part may be easily organized by dividing it into the following points:
Internal Management Team
External Management Resources
This section outlines your car dealership business’s legal structure. If your company is a sole proprietorship , it may simply be one phrase. It might be longer if your company is a partnership or a corporation . You should make it a point to clarify who owns what part of the business.
This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your car dealership business. Ideally, you and/or your team members have direct expertise in the car dealership business. If this is the case, highlight your experience and skills.
Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with car dealership business.
An advisory board would consist of 3 to 7 people who would serve as mentors to your car dealership company. They would assist in answering queries and providing strategic direction.
If necessary, search for advisory board members with expertise running car dealership business.
Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches.
The final topic to consider in the management area of your car dealership business plan is your human resource needs.
As part of your financial plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.
A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.
As you develop your income statement, you need to develop assumptions. Will you serve 30 patients per day or 200? Will sales grow by 2% or 10% per year? Your choice of assumptions will greatly impact your business’s financial forecasts. Conduct as much research as possible in order to ground your assumptions in reality.
Free: Income Statement Template
Create a financial statement for your business by downloading our free income statement templates.
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
The balance sheet shows your car dealership business’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:
- Assets: Tangible goods with the monetary worth that the company owns.
- Liabilities: Debt owing to a company’s creditor.
- Equity: The net difference when the total liabilities are subtracted from the total assets.
The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.
Create a pro forma balance sheet for your car dealership business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.
Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.
For example, spending $200,000 to build out your car dealership business will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.
Similarly, if a bank sends you a check for $200,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.
Cash Flow Statement:
Your cash flow statement will help you determine how much money you need to start or grow your car dealership business. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a car dealership business:
- Design fees, car dealership, and other costs associated with location development.
- Cost of equipment like display cases, computers, and software
- The cost of maintaining a sufficient cars stock
- Staff payroll or salaries
- The total cost of insurance coverage (general liability, workers’ compensation, and property casualty)
- Start-up inventory costs
Pro Tips: Learn how to write a financial plan in a business plan to help you write a winning car dealership business plan.
Free: Balance Sheet Template
Create a financial statement for your business by downloading our free balance sheet templates.
List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.
Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix.
Bonus Tip: Learn how to write a business plan appendix for your car dealership business.
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Summary of the Car Dealership Business Plan
A car dealership plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the car dealership business, your competition, and your customers. The plan will help you understand the steps necessary to launch and grow your car dealership business.
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Since 2010, Wise business plans’ MBA professional business plan writers has developed business plans for thousands of companies that have experienced tremendous success.
Download Our Car Dealership Business Plan Template
We will show you some real-world business plan examples so you may know how to write your own, especially if you are seeking a bank loan or an outside investment and need to use SBA-approved formatting.
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Sample Car Dealership Business Plan Template
Do you need help starting an auto dealership? If YES, here is a sample car dealership business plan template.
To start a car dealership business, you need to consider many factors. Chief among these is your plan. This is our main concern in this article as we present you with a car dealership business plan sample.
Why do you need this sample? If you have struggled with writing a real plan yourself, then you’re welcome!
Here is a guide on car salesmanship .
CAR DEALERSHIP BUSINESS PLAN SAMPLE
If starting a car dealership business is what you are passionate about, then you are on a profitable business track.
Starting a car dealership business is quite easy when one has access to the right information.
Considering the quest for quality cars either new or used might stimulate attention to starting a car dealership business. Each year, exotic cars are being manufactured to meet up consumers’ tastes. The cars manufactured need dealers to sell to buyers that need them at a location far from where it was being manufactured.
The car dealership business is ideal for those with good business sense. Additionally, a good knowledge of automobiles is highly essential for building a successful car dealership. Starting a car dealership business also requires skills that involve a very strong sales background.
A potential dealer should be up for the day-day activities that happen at a dealer store involving checking invoices, interacting with customers, and price negotiations.
If you are really interested in starting a car dealership business, this article is written to guide you. You will learn how you can start and its requirements for the operation also, it will comment on the legal requirements for setting up locations and other important factors that will be explained.
Here is a sample business plan for starting a new or used auto dealership shop.
As previously noted, there are processes you never can do away with if you are enthusiastic about starting a car dealership business, however, the steps are not burdensome, yet it will only charge you to get things done immediately.
Choose the Niche
Starting a car dealership business will require you to choose what category of cars you want to deal with. Is your car dealership business limited to only used cars? Or you are only going to deal with new cars? Or are you will be considering dealing with both? Getting answers to these questions tells a start.
The real reason for the proper consideration of whether it is a new or used car is simply because going into a new car dealership demands great capital, unlike the used one. On the other hand, new cars will generate more income than the used ones.
Therefore, investing in a new car dealership will tell you the likelihood of requiring investors or financial backings from any reputable bank.
Write An Auto Dealership Business Plan
After deciding on what form of service you are into, either new or used, you need a business plan that actually will speak for the business. Your business plan should involve everything about your business.
You must be very certain that a very decent and clearly written car dealership business plan is what you must have, most especially, if you will be dealing with new cars.
Your investors will want to know how realistic your car dealership business model is before pumping in their cash in the business.
Get a Surety Bond
You certainly need a surety bond for your car dealership business.
This will protect your contract with suppliers, vendors, and wholesalers. A surety bond is also capable of safeguarding transactions with other third parties you will business with.
Get a Liability Insurance
All car dealership requires an insurance coverage irrespective of what types of cars you are dealing with either used or old. Your insurance liability covers property damage and lot coverage.
Acquire a License
Starting a car dealership business will also require you to obtain a license. A car dealership license will permit you to sell vehicles throughout the whole year without laying any restrictions on the number of cars you can sell.
Also, if a car dealer would want sales activities to fall within consumer’s rights and safety laws, a car dealer must obtain a license.
Obtain Sales Tax Number
You need a tax number you can be identified with to avoid embarrassment and to be sure you are a legal and qualified car dealer. The process for obtaining this might be different from country to country.
Establish the Proper Location
You should pick a location that will affect your business positively. Don’t choose a location that will limit your exposure to potential customers.
You should consider a road frequently plied by vehicles, seek locations at intersections, high traffic roadways. In fact, securing a location at the peak traffic flow is a sweet spot location.
Stock and Manage Your Inventory
After acquiring a befitting location, the next point is to stock your inventory with cars. Will you be dealing with just a single model or multiple models? Which company would you love to meet and thereafter partner with them?
These are what must be known, to get cars stocked in your inventory. Although your target market will influence what you will have in your inventory.
Managing your inventory properly is also very important. Don’t get customers frustrated by saying “not available”. Therefore, investigate into what the present trend to see what you can fill your inventory with.
Advertisement today is as important as a business. If your business gains popularity, a high record of sales can be accurately predicted. Advertising online is made easy. You can have it done on blogs, social networks, and websites.
Pay the Required Fees and Adhere to Rules in your Location
How much does it cost to get a used car dealer license? All the fees required by you from the state and country must be paid to avert regular disturbance or restriction on business activities.
Abide by all rules made by the country where you intend on starting a car dealership business.
All these steps should take you through starting a car dealership business.
However, you might also consider it rewarding to interact with already established dealers on how to effectively run the business now that you have known how to start.
AUTO CAR DEALERSHIP BUSINESS PLAN EXAMPLE
As you read through the entire sample, we will provide you with something to work with. All information contained in this sample is fictional and shouldn’t be duplicated. You need as much information as you can about your business. Your feasibility study will supply you with this. Are you ready? Let’s go!
Eco-Drive is a car dealership that sells only cars considered environmentally friendly. This is the future of automobiles and we are right in the mix of creating a cleaner and better world.
We have a partnership agreement with Toyota to open an electric car dealership in Austin, Texas. This is its zero-emission brands of vehicles that will eventually replace its fossil fuel-powered cars.
Our preference for zero-emission cars is influenced by the fast-changing auto landscape. This is because there is a growing departure for environmentally friendly cars among a young generation of car lovers and environmentalists.
Toyota is currently installing its charging infrastructure across the country.
This is at an advanced stage and will be completed next year. Future expansion of this grid has been announced and will be implemented in stages to meet up with the growing desire to switch.
Products and Services
Our car dealership business will sell Toyota sedan cars in addition to four-wheel and 2 wheel drive variants of its Sport Utility Vehicles SUVs. A 2-year warranty will accompany any car bought from our dealership.
This is in addition to the servicing of vehicles when due.
Eco-Drive is positioned to become a major player in Austin.
By taking the bold step to venture fully into the sale of purely zero-emission cars, we will dominate the Texan eco-friendly car dealership landscape.
Our ultimate target is to be among the 10 major car dealerships in America within 15 years.
Our mission is to provide quality Toyota products to a huge and eager market.
To grow our reputation, we are willing to go the extra mile to ensure our clients are satisfied. Our sales team is among the best in the industry.
These are skilled in the provision of world-class services. We are not in a hurry to make a sale but are genuinely committed to understanding the needs of our clients.
We treat them on an individual basis and offer the best recommendations after understanding their preferences.
Financing will be sourced through a credit facility to the tune of $5,000,000.00. This will be sourced from 2 major banks and charged at an interest rate still being negotiated.
These would be used in renting a sizable business outlet which will house our car dealership. This will include a large showroom as well as offices and a car service section.
Understanding our potentials and risks is important to us. This is why we have contracted a major business services solutions company to conduct a SWOT analysis.
This has noted the following;
We are one of the few car dealerships in the whole of Texas to venture fully into the sale of zero-emission-only vehicles. We have a strong partner in Toyota.
This is a trusted brand that will easily sell and offers some of the best margins of profit in the industry.
We are likely to experience a lull in activities for some time. This will mean trickling sales or the absence of sales and profitability. We expect this not to last beyond 6 months.
However, in the event it does, it will lead to some losses as our running costs will mount.
There is a positive reception to the idea of driving an environmentally friendly car.
We are riding on this wave of enthusiasm to provide our esteemed clients our prized assets. This positive reception has received a big boost since Toyota announced the launch of these cars in North America.
Threats to our car dealership will come by way of an economic recession. This is not a frequent event, yet when it does happen; it is like a Tsunami that destroys everything in its wake. This will be our major threat.
We are anticipating a sharp rise in sales in the coming years.
This will be fuelled by the harsh climatic conditions ravaging the planet. The calls for the adoption of lifestyles that encourage the safety of the environment have reached an all-time high.
Given this, we have projected a three-year sales growth that shows the following;
- First Financial Year $2,000,000.00
- Second Financial Year $8,000,000.00
- Third Financial Year $20,000,000.00
Marketing and Sales Strategy
The brand we represent is reputed for producing quality cars. We will leverage this advantage by conducting our own marketing campaign.
Our products will be displayed at auto shows in Texas. In addition to this, we will get the word out about the existence of our car dealership business. This will include the use of social media and billboards to convey the message.
Although a small car dealership, we have the advantage of being one of the few selling cars that are zero-emission compliant. We already have the attention of our market. Therefore we only need to create awareness about our business.
This car dealership business plan sample helps you understand better what is important and should be included.
SEE: Cost Of Acquiring A Bugatti
We cannot stress it enough that to start a car dealership, you need to learn about what is involved and what to expect. This gives you the advantage to plan and implement better.
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