Car Dealership Business Planning: Three Must-haves
Your car dealership business plan should follow a standard business plan outline
, offering few surprises in this regard. A few areas stand out as specific needs for a car dealer to persuade readers to invest in or lend to the company.Experience
The auto dealership business is a tough one, featuring thin gross profit margins, high initial startup costs, and heavy negotiation from customers. Ideally, the entrepreneur launching the business should either have car sales experience or should be adding it to the team by hiring a key manager or bringing on a partner.
Manufacturer Contract
It goes without saying that if your dealership doesnt have products to sell, you dont have a dealership. Show that you have done the legwork of either insuring that you will be able to get a contract to sell cars from the manufacturer you seek, or that you already have this contract. Manufacturers will want to see that their dealers are not in competition with each other, as this situation, like with any type of franchise, will hurt overall sales and profits. If you have the contract or a letter showing the availability of the contract, include them in the appendix of your business plan as evidence of your ability to open.
Space
Finally, a car dealership cannot be opened just anywhere. A large space will be needed both for the building and showroom, which reports say averages 15,000 to 18,000 square feet in the United States, and parking that will serve the inventory of cars, employees needs, and customers. This type of space is generally not found in the center of towns, which is why car dealers generally live in the strip malls and outskirts of towns and cities. Obtain a letter of intent to be leased a given space upon funding or find a few potential available spaces in order to show your plans feasibility.
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