There aren’t that many business ventures that can act as a small side-hustle, allowing you to continue working full-time. It’s the ultimate dream of the modern business owner. To build a secondary, almost passive source of income to complement a sizeable salary.
But fortunately, it is possible, and it is a realistic goal. Motor trade, if done correctly, can be exactly that source of income that you desire. A profitable business operation that won’t take full-time commitment.
Of course, if you want to take it full-time and expand faster than a waistline over Christmas, you can do just that. Our current economy is reliant on startups and entrepreneurs, creating new jobs and pumping money into the system. The bigger your business, the better.
And in that, you have a flexible, lucrative business opportunity on your hands. Setting up a motor trade business won’t be easy, as most businesses aren’t – but it will be worth your time. With this in mind, here’s your essential guide to all things motors, and the ideal steps you’ll need to take to reach that monetary paradise.
Step one: Passion and know-how
No company is complete without these two traits belonging to the owner. And since that’ll be you, it’s important to realize that your company should be a reflection of you. If you hated seafood, would you open a seafood restaurant, no matter the financial opportunities? Probably not.
And in that, your passion for cars, trading and motors of all kinds should permeate any possible financial gain. This way, you can focus on making your company as good as it can possibly be, without letting cash blind you. As Irish writer Jonathan Swift once said, “a wise man should have money in his head, but not in his heart.”
Step Two: A sufficient insurance policy
A motor trade business can be extremely profitable, as we previously discussed. And the biggest reason as to why that is? The value of your stock. In the average Joe’s life, a car is likely to be the second most valuable thing they purchase. Subsequently, this value gets transferred to your bank account, but it’s not without its risks.
For example, what if your premises succumbed to a fire, or a flood? What if you sustained a robbery? What if, God forbid, a member of your own staff committed a theft? It’s hard to predict, analyze and combat every eventuality, which makes a combined motor trade insurance policy a wise choice.
If you just ran a wheel dealing business, then things would be a different story. But the value of your stock combined with the many possible ways that stock could be damaged means insurance is vital.
For this, you’ll need to hand lots of information to the insurer. You’ll need to give them details of your premises, what kind of vehicles you’ll be trading, and if you’re at risk from any particular weathers. Some insurers will ask for a lot more too, quite understandably. Just make sure you have a thorough business plan laid out before you move forward.
Oh, and the number one most valuable thing your average Joe will purchase? A house. But I’m sure you already figured that out!
Step Three: Branding
You can flip steps two and three around however you’d like, and it won’t really affect much. You need insurance to do business, so if you brand beforehand and fail to land a policy, that branding time was wasted.
With a vast policy under your belt, though, it’s time to press onward. In terms of your company branding, you have a couple of questions to ask yourself. The first, and most important, is what type of feel do you want to convey to the consumer?
Imagine you named your business ‘Carl’s Cars.’ The use of your first name instantly strikes a personal tone with the customer, making your business seem more friendly. You’ve just introduced yourself and welcomed people onto your premises, without saying a word.
On the other hand, a name like ‘Auto Dealer’ may appear a tad more professional, less personal, and more business-focused. Choose the feel that you prefer! You could use an online service like Name Check, which offers the ability to see if your name has been taken.
Step Four: Funding and tax
Unless you’ve got quite a bit of cash already, you’ll need some help getting your company off the ground. The government can help here, with a number of financing options for those looking to start their own business.
Again, like your insurance policy, you’ll need to produce a thorough business plan. This demonstrates to the powers that be that you won’t simply be wasting their investment. You may even need to produce your insurance certificate, to prove you’re covered in the event of a disaster.
You’ll also need to register as a sole trader to be able to fill in your tax returns. Typically, it’s best to register within three months from the date you begin trading. However, the first October in your businesses second tax year is the point of no return. For example, if you started your business in June 2016, you’d have until October 2017 to register.
Step Five: Trade plates
Unless you want to tax, register and process every single vehicle that passes through your clutches, you’ll need trade plates. A trade plate is simply a license plate that indicates that the vehicle is being used as a trade tool, and is not being driven normally.
Trade plates can be bought from your government’s driving standards agency, and usually last 12 months. You can buy ones that last 6 months though, if you know you won’t have the car for very long. These plates aren’t too expensive either, so you shouldn’t notice a massive dent in your budget.
If you do find them costly, though, you can just claim them back as a tax deduction. Make sure that when you fill in your tax return, you factor in every single cost associated with running your company.
Step Six: Choosing cars to sell
This can all come down to your personal preferences, and ideally, you should be doing this at the business planning stage. But if it’s taken you this long to get here, now’s the time to start considering.
Some cars are more valuable than others, and some cars have a better reputation than others. It’s best to start by working out what cars sell best in your local area. You can do this by assessing the main types of household that exist in and around your premises.
For example, do you trade near a university, or near an apartment block? It’s likely your customers will be young, so a focus on smaller, trendier, sportier cars would be better. If you’re surrounded by detached houses with lots of families, then bigger, more spacious cars should be the focus.
Remember that each car you buy to sell will lose a lot of value. At the same time, you have to sell it at a cost that recoups your insurance, tax and other business expenses. Aim to sell fewer cars at higher prices. If the stock is clean and well-kept, you can make more per transaction this way.
Step Seven: Offer flexible payment options
One of the biggest reasons why many motor trade companies go under is that they don’t offer the consumer enough. Most people don’t want to splash thousands on a car in one fell swoop. They’d much rather space things out, paying in monthly or weekly installments.
And this is where you can win out. Letting your customers pay weekly, or monthly, has several benefits. One, you’ll have a steady drip of cash coming in over the next 12, 18 months, which can keep you afloat. Two, you’re more likely to draw those people in who aren’t ready to part with all their money in one go. You’ll be appealing to more people.
You can also offer this functionality through an online store. Building a basic ecommerce site takes time, but this process can also be outsourced. Consider adding in PayPal payments and check payments, too. The more you can offer, the better!
Step Eight: Profit!
Starting a business of any kind is hard – from the beginning, it’s an uphill battle. It takes time, dedication, slyness and frugality. It’s unlikely you’ll become an overnight success, or a two-month success. Patience is key.
But, for those who start off on the right foot, success is much more common. By following this series of tried and true steps, it’s possible to get a healthy motor trade company off the ground rather speedily.
As long as the passion, knowledge and proper business practices are there, you shouldn’t have any issues. Make sure your insurance policy covers everything from premises to staff, and don’t forget to invest in trade plates.
Assess the local market and local audience to determine what kind of stock to carry. Then, it’s a case of sell, sell, sell – and only you can help yourself with that. Best of luck, and hopefully, this post has helped you out in some way!