7 Things to Take Care of Before Starting a Used Car Business

Car business
Car business

Starting a business is a big move. It is an opportunity to amass resources by solving a need in society. However, unlike starting other businesses, starting a used car dealership is different. It requires careful planning with laid out details on how the business will run. There are several things to put into consideration, including the legal requirements of your state.

As you look to comply with those legal requirements, here are seven things you must also take care of before you can start your business of selling used cars:

Determine your target market

Selling used cars is not a business you randomly start without knowing who your client-base will be. Like any other business, your target audience will shape how you package your product. When it comes to a used car dealership, decide who you are targeting with the cars.

For example, are you targeting transporters, mothers, or foreigners? By narrowing down to a specific target market, you will be better placed at deciding the kind of dealership to run and what vehicles to buy.

The kind of dealership you are starting

There are different dealerships when it comes to selling used cars. You must be clear about the specificity of your business. For example, will you focus on electric vehicles, luxury vehicles, or primarily foreign vehicles? Deciding the kind of dealership to start will help you meet the needs of your target audience. It will also guide you in the types of cars to sell in your dealership.

Besides, you have to decide whether you will run a servicing department in your business. This might be your way to cater to the repair and maintenance works for your clients.

Choose the brand of car to sell

Even for a used car dealership, you can choose the kind of brand to sell. Now that you are clear about your target market, have the right car brands. Some brands are harder to sell than others.

Used car buyers are also hesitant with brands that are not well recognized. Stick to the needs of your client-base, all while considering the liquidating power of the brands you choose to sell.

A business plan and a financial plan

Every business begins with a business plan. It is the guide that informs how your company will be run. The financial aspect also explains how you plan to solicit funds to run your business.

It also includes your plan on how you will make a profit from your sales. Have a business structure that will inform your dealership especially on matters of the product range. The plan should also capture how you intend to market your business.

Stretch as far as analyzing how you will make sales of the used car business you solicit for your company. Consider that all customer leads may not always result in sales.

Find a suitable location

Car dealerships are many all over the world. Those that sell used cars and new cars are all competitors to your company. With this knowledge, finding a location that sets you apart from your competitors.

You also want to ensure it is a very accessible location. Consider the roads leading to your dealership. If your plan is not to have a servicing department within your company, consider a location close to qualified mechanics.

It helps to start making friends with mechanics who can help with the slight repairs of the used cars you intend to sell.

Licensing Requirements

Such a business as this cannot be operated without legal implications. You need to ascertain that your business is legit and you are not doing stolen car business. Licensing will cover the lease on the property you set up your business.

You also have to account for dealer training courses. You have to pass a criminal background check as well. Make sure you pay the fees for licensing, and dealer plates before you commence your business. With an Employee Identification Number (EIN) from the IRS, you can be in a better position to offer search vehicle history for your clients.

Build Your Inventory

Now that your business is selling used cars, you want to find several of them to start you off. Finding used cars to sell will not be an easy job. You have to come up with different strategies to help build your inventory.

Some of the techniques include online trade websites, advertising in trade publications, or putting signage on your dealership location to invite those willing to sell. You can also approach people on a personal level who wish to sell, then liaise with them for referrals. This process will take time, so beware before you start your company.


Like with any other business, the goal with a used car business is to turn a profit for all inventory. For that reason, the above-mentioned factors can help you start your company on a good note.


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