There are several things to consider when planning to start a new car dealership, especially if you are in need of capital to finance the acquisition of the cars and secure an appropriate retail space. The location of the dealership, types, and amount of cars sold are all unique elements that will impact your profitability. Pro Business Plans has extensive experience working with car dealerships to start and grow with professional business plans designed to raise investment.

The new and used car marketplace is increasingly competitive, along with the options available for financing to dealerships. Investors and banks that lend may request a well prepared business plan that demonstrates the unique profitability of your company relative to alternative investments. A custom business plan for a car dealership has three main sections to reflect this including the business model, marketing strategy, and financial projections. The following sections are explained in more detail below:

The business model for a car dealership business plan is relatively straightforward, but also depends upon the location of the operation, brand of cars sold, and their age. Some car dealerships, for instance, for exclusively on used cars or maintain contracts with select manufacturers. If your dealership has a location in a high traffic and accessible location and easy access to high demand vehicles at competitive prices, it will be more likely to succeed and acquire the financing it needs to scale. The business model is often directed by the local competition and market demand, which may be determined in the market analysis.

The marketing section of the car dealership business plan outlines how your dealership will attract and convert leads. Smaller dealerships use aggregation platforms for car marketplaces or classified posts , or promote the dealership in its entirely on a broader and more general media network. We suggest leveraging all potential digital channels and having a well-structured website that contains information about the inventory in stock that links to individual advertisements for each car. Mass advertising that targets a general audience will probably have more views, but be presented to an uninterested audience relative to one that is well calibrated to consumers in the market to buy cars.

Unlike a speculative software company, the financial forecasts for a car dealership business plan are based on very few assumptions. In general, the profitability of the company will depend upon its gross margin on the sale of the car. At that point, fixed expenses such as the rental and payroll costs will be measured against the frequency of car sales and customer acquisition expenses. Professional financial projections should include a three to five-year income statement, cash flows, and balance sheet in addition to a break-even analysis. Banks and investors are likely to request these financial projections and understand how their assumptions were gathered, so it is important to use unbiased third-party research and information from comparable dealerships in order to form the basis of the forecasts.