How to Start Automobile Parts Business
Automobile parts business can be a fantastic way to get off the labor market, making you so much money and staying prosperous for the rest of your life. If done, properly, you stand a great chance of making it BIG in this line of business. The demand for automobile parts is constantly on the rise, especially in regions like Africa, Asia and the Americas.
So long car enthusiasts love to maintain their vehicles, starting this business means that you will never go out of the market. This is a market type that will remain relevant as long as we keep producing new models of vehicles.
The aim of this article is to guide you on how to start an automobile parts business.
What is an automobile parts business?
The automobile business deals on automobile parts and meets the demand of clients who prefers avoiding the troubles of heading straight to the manufacturing company to buy these parts. Likewise, the automobile manufacturers themselves are not completely receptive to the idea of supplying only spare parts to car owners.
So here you go, the middle – man who remains relevant.
Nowadays, auto – vehicles have made it so much easier to move from one location to another. No doubt, you can agree that everyone uses vehicles as a means of transport. Whether you’re taking the bus, taxi or cars, we’re all frequent users of motor vehicles.
Every part of an automobile requires regular replacement throughout the lifespan of the vehicle.
As a result of frequent use, automobiles are unable to run in perfect condition for a long time. At some point in time, for one reason or the other, they are prone to develop either an electrical or mechanical fault. This is the only reason the automobile spare parts market will remain lucrative evergreen and lucrative.
Now this is where automobile businesses come in.
Start your automobile parts business in 10 easy steps
Based on your investment capability, there are many ways of starting this business. However, you must not attempt operating this business on a part – time scale. In fact, this type of business requires from you consistency, commitment and intentional efforts in order to become successful.
Read Also: Checklist for Starting a Company
- Decide on your Automobile parts business Model
There are four business strategy models required to effectively run your automobile parts business. You can decide to go anyone that suits your preference:
The automobile part retail store model
This is considered as the most financially viable and conventional way to start this business. In this model, you will have to procure a commercial space in a prime area. Then you’d have to sell the replacement parts from the retail store to your clients.
The Automobile Parts Store with Workshop model
This is regarded as another profitable opportunity for business owners. Typically, an automobile parts store with a workshop provides customers with option of purchasing and fixing parts simultaneously. Besides that, this model is quite capital intensive. With massive investment capital and strategy formulation you can start this kind of business.
The Automobile Spare Parts Online model
If you don’t have intentions of conducting a brick and mortar business, then you should try opening an online store. In addition, you can manage and execute this business model right from the comfort of your home.
This type of business model is not capital intensive as you can start with a minimum investment of $3000
The Automobiles Parts Franchise Model
It’s advisable to accomplish your strategy as a franchise partner if you lack previous experience in the automotive industry. You should also include the sale of spare parts and dealership.
- Write a Business Plan
The writing of a good business plan is a must to commence this business. Aside from the creation of a blueprint, a business plan will help you to understand the objectives and the means to achieve that objective.
In addition, a business plan will help to protect your start-up capital from investment firms or banking institutions.
Your business plan must include information on precisely how you intend managing the business. Furthermore, indicate your areas of specialty should there be any, and also how you will operate and sustain your business.
It should also have where you’re going to get your auto parts, and the price you are to place on them to generate profit.
Your business plan should include information concerning your intended audience and fierce competitors, and also how you plan to attract your intended audience.
You can design the strategy yourself else, you can seek the assistance and support of skilled strategy writers or business strategy software.
Read Also: 8 Reasons You Need a Business Plan for Your Small Business
- Conduct an extensive market research
Firstly, you must carry out a feasibility study to gain first-hand information on business trends and challenges. It will also help you consider the possible competition from several other businesses. Practically, an extensive market research will help you to understand how to create winning strategies that would help you breakeven within few months of running your business.
In addition, you can classify the most popular automobile parts on the local market. You will also need to highlight different types of cars and bikes that are common in a particular region.
- Understand the technical aspects of the market
This is yet another most crucial component that you need to take into account before starting your automobile parts business. Although this line of business doesn’t require any kind of educational degree, you need to possess a robust knowledge of the latest industry trends of what works and what doesn’t.
Try working with other existing automobile parts owners for a couple of weeks in order to know the specifics of the trade. Apparently, you need to have a clear understanding of the set –up of the various spare parts.
Moreso, you might actually have to try and convince your customers what to purchase and what not to purchase. All of these require detailed knowledge of the spare parts industry.
- Determine the startup capital
After researching and finalizing the marketing strategy, you have to determine what your start-up capital requirements should be.
Typically, you need to know;
- What it will cost you to set up an office space or a workshop.
- installation costs
- Purchase of the spare parts from wholesalers or manufacturers.
In addition, you also need to calculate and save up some funds for business operation. It will help you calculate the breakeven and estimated Return on investment of your business.
- Ensure the location of the retail
Once you’ve gotten the plan right, you’ll need to secure your business location based on your business strategy. You need to pick a store room in a prime area. However, if your advertising and marketing techniques are good enough, you wouldn’t have to spend so much in getting a very good location. Certainly, you will need a place that is capable of accommodating and can properly catalog for a wide range of spare parts for all the brands and car models that you are interested in dealing on.
- Licensing and Registration
Verify your state’s registration and licensing issues. Obtain an operating license to open an automobile office outlet, license to sell the auto parts, and acquire the right insurance. It would be a smart move to consult with a local small business consultant regarding future tax and compliance obligations.
- Purchase Spare Parts
This part is the ‘real McCoy’, what’s the point of developing a business plan, conducting a feasibility study, obtaining a license to operate, if you don’t have the commodities to actually sell?
This is part where you’d have to purchase the auto parts you’d be dealing on. Either you make your purchase from wholesalers or you make your purchase from manufacturers themselves.
Whichever the case is, this part of the steps is so vital. In essence, the identification of the parts you require and where to locate them depends greatly on your business strategy.
Consult with your prospective suppliers and work with the best quote.
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- Set up your office
You need to set up your office in an appropriate manner. An outdoor sign is essential. In addition, inspect your wiring and storage space to ensure it done in an appropriate manner.
You should contact the interior designer to provide a perfect plan for your office flooring. Finally, you need to use every inch of your office space carefully to make the most of it.
- Recruit Workers
Hire the right workers. Hiring the right people to work with you plays a significant role in the achievement of early success.
Check to see if you will need the services of a licensed mechanic on your team. In fact, if you want to operate your automobile business alongside a workshop, then it’s important you have an auto engineer on your payroll.
10 tips to help you grow your auto parts business
- Great management of inventory
Understand that your store inventory does not have to be all-encompassing in order to be successful. In fact, it is not a smart business move to store large quantities of different parts.
Create specific criteria to help identify and categorize spare parts in order to achieve better inventory management. Properly storing and organizing spare parts in a designated, secure area is also beneficial for inventory control.
A reorder prompt does not take place if a part is taken without a record. Similarly, if the new supply is placed on the shelf without being recorded.
It cannot be account for. A thorough review of your collection and check-out system can tell you a lot about stock discrepancies.
- Be unique and exceptional
You should distinguish your business by providing quality spare parts with long warranties. Emphasize the relevance of quality parts particularly in comparison to low-cost alternatives which might perform poorly and cause safety hazards.
Get a franchise to supply original replacement parts or spare parts from a quality manufacturer to give your business its reputation.
- Grant price match guarantees
Keep in mind that buyers are more or less encouraged by pricing. When you can grant a price match guarantee, you decrease the chances of a shopper leaving your business in search for a better price (the guarantee usually makes customers think that you have the lowest deal).
A Price match guarantee also helps you “steal” business from your competition who deliver better prices, but who can’t compete the service of your business.
- Be on the hunt for clients
Take quality time to process and look for prospects for your business. Aim at high-volume clients, including service and repair firms, fleet operators and independent service technicians.
Try implementing a wholesale operation to offer retail outlets selling spare parts. Check the availability of specialized parts for older items which are not readily available, such as spare parts for antique cars.
- Become versatile and adaptable
Ensure that your customer finds it much easier ordering and buying from you. Create a website for your business as well as an online ordering service.
Offer your most loyal clients with printed catalogs or personalized web pages that display the items they often buy from you.
Consider creating a 24-hour mobile answering service to encourage consumers to place urgent orders outside your usual working hours. Provide consumers with a variety of delivery options to improve comfort.
Offer good service and repair to customers with an express delivery or collection service for emergency repairs. Introduce a same day delivery service to customers who place orders before a certain time, say 3:00 a.m. Also, have a unique collection point in your site for customers who purchase phone or online.
- Offer preference to your major Customers
Offer a stock management company to large clients. Evaluate their stock purchases and recognize patterns of use. Present a stock top – a service that guarantees that buyers always have the correct stock level for frequently used products.
Start offering for scheduled delivery lesser-volume sections. Include stock consumption reports as part of the management program.
- Ask for feedbacks and testimonies
Understand that customer feedback and testimonials are extremely important – a number of studies have shown that customers put a lot of faith in them.
Consumers also search for favorable feedback before purchasing goods from any business with which they have not previously done business.
- Establish Partnership
While walk-in customers can keep your workshop workers busy, you can increase sales substantially without adding to your foot traffic.
Try forming partnerships with body shops and car repair firms. They would like someone to obtain these parts, so you might as well just be the one. Contact small retailers and give them a discount on their orders.
Join local trade unions and business groups to interact with other automobile business owners and encourage them to do business with you. To build good rapport with local body shops, occasionally send business their way and make sure they know when you send a customer by calling the referral yourself.
Read Also: Reasons for Business Partnership Failure
- Organize and attend Car Shows
Keep in mind that contributing pieces and/or funds to a project is a simple way to gain access on social media. Sponsoring car shows positions the name of your business in front of many enthusiasts online, at a car show and in blog posters and in news.
Meanwhile, the car shows are the best location where car owners meet up.
Although this may be a major undertaking, the payoff is publicity. Car shows helps you connect with local enthusiasts, and the ‘buzz’ they generate can give rise to interest in both social media and local news channels. You can also use the fact that you have a car show to create links on our website.
- As a rule; Never lose touch with your clients
Remember that your existing client base is one of the main sources of new business. Keep in touch with them by composing a monthly or quarterly newsletter and sending it via e-mail and postal services.
Publish a blog on your website, send links to your customers and add them on your social media platforms. In your reports, offer driving tips, reports on new items that are just arriving as well as tips for car repair. Your clients will appreciate the details and recall who gave it to them on any occasion it is needed.
Tools you can use to boost your Automobile Parts Business Corporate Identity
- Place advertisements on both print (magazines and newspapers) and online media channels.
- Fund important community-based projects/events
- Utilize the Internet and social media sites like Twitter, Facebook, YouTube, Instagram, Facebook, and others to advertise your goods.
- Place your billboards in prime places within your city or state.
- Occasionally, participate in road shows in targeted communities to increase awareness of your automobile spare parts shop and automobile accessories.
- Allocate the fliers and handbills to the selected locations.
- Notify car owners, auto mechanics, sustenance and servicing of garages, hauling and transportation companies and several other relevant stakeholders in the city of your location, educating them about your company and the items you sell.
- List your auto spare parts shop automobile accessories on local directories / yellow pages.
- Publicize auto spare parts shop and your car accessories on your online webpage and use strategies that will draw people to the website.
- Place your banners in a strategic location at the area where your auto spare parts store and car accessories is situated.
- Make sure that every one of your team members wears your customized shirts and all of your cars and vans are labeled with your corporate logo.
Legal Documents required to smoothly operate your Automobile Parts Business
The purpose of having the required documentation in place before starting a business cannot be overemphasized. It is factual that you cannot run any company effectively without appropriate documents. If you end up doing it, it won’t take long before the arm of the law catches up with you.
Here are some of the essential legal documents that you are supposed to have in place if you’re interested intended running your own auto spare parts shop and car accessories legitimately;
- Employee Handbook
- Certificate of Incorporation
- Business License
- Non – disclosure Agreement
- Employment Agreement
- Insurance Policy
- Tax Payer’s ID / Tax Identification Number
- Business Plan
Starting Your Car Accessories and Auto Spare Parts Store Business from Scratch vs. Buying a Franchise
- If you’re aiming to establish an auto spare parts store and car accessories business, the only option is to start fresh, because you can’t afford to buy a car accessories franchise and auto spare parts.
- However, establishing a car accessories and auto spare parts store business from scratch is less exhausting compared to several other small-scale businesses which typically need extensive planning before starting the business.
- But with automobile spare parts store and car accessories business, you only need to try as hard as you can to find a shop that is close to the main road or repair village and then take full advantage of every marketing strategy at your fingertips, particularly the internet, to market your auto spare parts and car accessories.
- Please bear in mind that most of the major and profitable car accessories and auto spare parts stores have started from scratch (zero) and have been able to create a strong business name.
- It takes commitment, hard work and persistence to achieve success in business.
- You can create your own automobile spare parts store and car accessories and company brand to become a popular brand with individual and corporate clients in your city and even across the length and width of your country.
Read Also: Cost Advantage of Sole Proprietorship
Conclusion
Starting and operating a successful automobile parts business is a very easy thing to do, especially if you do it the right way. You could become financially free running your business in the most effective way.
The reason why many people experience troubles running their automobile business is due to the fact that they have not properly done their homework.
With this short guide, it is our belief that you will get started and you could always refer back to this post if you run out of ideas.