Launching any kind of a new business is daunting—and starting a used car dealership is no exception. As you set up your showroom, make sure you’re aware of some of the most common startup mistakes that impact used car dealerships. Here are four of the big ones.
Unless you have millions of dollars in your savings account, you’ll need to secure some sort of financing in order to buy inventory—but where will your financing come from?
Some dealerships seek solutions from a local bank or credit union, but the best option is to meet with a floor plan financing company. Floor planning is effectively a credit line, made with used car inventory in mind, and it represents a good way to get your dealership funded. Make sure you do your research and find a credible floor plan company with competitive interest rates!
No Business Plan
There’s no such thing as a product that sells itself—and there’s certainly not a car that sells itself. For your dealership to succeed, you’ll need to have a business plan in place—one that provides you with a road map for generating revenues, controlling expenses, and growing your dealership strategically.
That business plan should touch on your location, as well—specifically, things you can do to stand out in a crowded market; who your competitors are, and how you can differentiate yourself; and even where your physical showroom should be located.
Poor Marketing Efforts
Again, your inventory won’t sell itself. To generate qualified leads, it’s important to have a marketing plan in place—but what are the most effective ways to market a used car dealership?
Our recommendations include:
- A great, conversion-ready website
- A robust presence on Facebook Ads
- Craigslist postings on a regular basis
- Email marketing
Other tools and resources, such as Twitter and Instagram, may or may not prove useful, but always make sure you focus on those big four.
Lack of a Sales Strategy
This one is closely related to our point about having a business plan. More specifically, your startup needs a clear plan for how it plans to move inventory—and, how it will deal with aging inventory.
What makes this so important is simply this: As cars languish on your lot, they actually cost you money through your floor plan financing credit line. As such, you can’t afford not to have some inventory management practices in place. Don’t just assume that all your cars will sell like hotcakes!
As you consider the launch of your new dealership, make sure you get help from people who know used car sales inside and out—like Get My Auto’s team. We’d love to help you put a marketing plan in place. Reach out to us today to learn more.