11 Steps How To Start A Used Auto Parts Business

(doylc.com) How to Start a Used Auto Parts Business - Starting a used auto parts business can be an excellent way to make money and keep older auto parts from ending up in landfills. Not only do they help the environment, but they can also help people who cannot afford brand new car parts to keep their cars in working condition.

• How to planning used auto parts business

1. Know your market. Used auto parts stores usually operate on a local level, with some companies offering this service in the form of a regional or national chain. So do some research in your local market to ensure you are not entering an overly competitive market with many established used auto parts companies.

Do an internet search, check the local phone book, and pay close attention to local TV commercials to identify similar businesses in your area.

Consider the size and population of your city and compare it to the geographic location of existing used auto parts stores.

Used auto parts businesses are more likely to thrive in low-income areas because the more affluent sections of society generally don't buy used auto parts as often.

2. Develop a business and marketing plan. Your business plan should include information about exactly how you will run the business, what your specialties are, how to start and run your business, where to source your auto parts, and how to price them to make a profit. Your marketing plan should include information about your target audience, local competition, and your planned targeting.

Your specialty may be import, export, engine or body. Do your research to determine which area is right for your business.

A used auto parts business can be particularly lucrative if you offer rare or hard-to-find parts for more obscure vehicles.

In your business plan, be sure to consider all of the costs and expenses associated with the business, project realistic sales goals, design a plan to reach new customers, identify potential community demographics that will use your services, and plan for growth potential Of your company . Make sure you state where and how you expect to generate the necessary capital to get your business off the ground and ensure you can expand if needed.

3. Obtain the necessary documents. Make sure you get all the necessary licenses, permits, and insurance to operate a used auto parts store in your area. Observe the zoning regulations as well as state and federal guidelines.

Most states require a license for businesses that buy, restore, recycle, and resell used auto parts.

4. Find a suitable location. Find a location for your used card parts business. As long as you have quality marketing and promotional strategies in place, you don't necessarily need a place that's easy to find. There may be times when people are looking for you because the service you provide is so special.

You need a location large enough to hold and properly catalog a variety of used parts for all the makes and models of cars you supply.

Hire employees. If you're looking to start a used auto parts business, chances are you have at least a rudimentary understanding of cars and how they work. However, you likely need a licensed mechanic in your business to help you refurbish old parts and identify parts that have potential resale value. Placing an ad in local newspapers or job search websites can help you find potential candidates for employment.

5. Identify sources of supply. The more you have on hand, the better. In the beginning it can be difficult to invest in the right parts. Start small and look for parts that you know will be sought after. You can also invest money in parts that you know are necessary and expensive when bought new. That way, people will look for the used parts you have more often.

What parts you need and where to find them largely depends on your business plan. Your business may be focused on providing parts for rare vehicles that are no longer in production because they are in high demand by a small portion of the population. Alternatively you can specialize in providing parts for very common vehicles to expand your potential sales base.

Try to find these parts at junkyards or from cars that have been sold at junk auctions, or contact insurance agencies to try to buy "discarded" cars from them at a reduced price.

As a used car parts store owner, you must learn the mechanics of how a car works in order to find the right parts. Also, be prepared to test the parts found to determine if they are still operational or can be refurbished to be operational again.

• How to run used auto parts business

6. Connect with existing companies. Local businesses like towing companies, junkyards, and insurance companies can help you find used auto parts.

Insurance companies may be willing to sell you parts of a vehicle to get some of their money back, especially when selling the entire vehicle is not a practical option.

7. Buy "junk" vehicles. In the case of a total car write-off, many valuable functional parts can remain on the vehicle. Sometimes it can be worth buying an entire junk vehicle so you can get a breakdown of the engine and body parts for a specific make and model.

8. Advertise your business to the public. Advertise online, on the radio and in local newspapers. If you can afford it, consider running a commercial on a local TV station. Use flyers, business cards, and word of mouth to let people know about your business. Run special promotions to celebrate your grand opening.

9. Build repeat business. One of the main goals of any business is to build a reliable customer base that brings repeat business. This can be particularly difficult with used car dealers, as customer needs are sporadic and specific. However, you could offer a regular customer discount, a regular customer card, or other special offers to keep customers coming back.

Offer to take the used parts from your customers who buy their used parts from you. You may be able to salvage auto parts, refurbish them inexpensively, and put them back on your shelf.

You might also consider offering a discount to customers who trade parts into your business.

Consider selling online. If you deal in very specific parts for certain vehicles, you may find that nobody in your immediate area needs the parts you are offering. Therefore, it is wise to list your inventory online to reach a much broader customer base. When you sell parts online, you need to factor packaging, shipping, and handling costs into your pricing and business model.

10. Manage and monitor your inventory. The success of your used auto parts business depends on managing your inventory. If customers can't find what they need in your store, they'll happily shop elsewhere. To remain profitable in the used auto parts space, you must have an extensive selection of parts for a variety of vehicles at all times.

11. Control your cash flow. Monitor cash flow in and out of your business. Make sure you don't spend more to buy the parts than you make on the sale. When pricing your products, also consider the other costs your business incurs through day-to-day operations. These costs include:

- Paying employees and employees (if necessary)

- Paying rent or mortgage on your commercial property

- Paying bills such as electricity, water and gas that are required to run your business

- Payment of property taxes and insurance

- Advertising costs