Car Dealership Business Plan Template
Whether you want to start your own car dealership business or expand an existing one, you need a business plan. The following car dealership business plan template lets you know what elements you need to include in a successful car dealership business plan.
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To ensure your car dealership business success in this highly competitive market, you need a properly structured car dealership business plan template. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their car dealership businesses. Using the following car dealership business template, you can put together an effective business plan for car dealership.
Things to Know Before Writing a Car Dealership Business Plan
We are discussing only new car dealerships here and we will answer ‘how to write a business plan for a car dealership’ in detail.
Car dealership industry is one of the biggest industries in the USA. According to the IBISWorld industry report, the industry GDP stands at a whopping $1.2 trillion dollars with an annual growth of 2.7% for the last five years (2017-20220). The industry is expected to grow at about the same pace in the coming 5 years (2022-2027).
The car dealership industry earns $21.2 billion dollars in profit every year. The industry profit grew steadily at 3.5% for the period of 2017-2022.
The profit margins are low at 1.8% but that is compensated by the big sales volumes of car dealerships.
There are about 18,666 car dealerships in the USA. Since car dealerships are capital-intensive businesses, the number of new entrants experienced a meager 1.4% growth. The percentage of new entrants and number of car dealers will grow at 0.8%.
Car dealership industry is one of the largest employers in the nation offering over a million jobs. The number of jobs stays steady in the industry. The industry pays $80.6 billion in wages.
The car dealerships make money with new car sales, car service, and car financing and insurance. Some car dealerships may also sell car parts.
The market is stable for car dealers. There are no exponential growth forecasts. Most car dealership businesses take off so if you start a car dealership with some thought, chances are you will be successful.
The car dealership industry offers these products and services:
- New Cars
- Car financing
- Car Insurance
- Car Service
- Car Parts
- Car trade-in
Key Success Factors for the Car Dealership Business
The key success factors for new car dealers are the following. If you take care of these, you will increase your chances of success.
Offer Range of After-Sale Service: The after-sale service range is important for diversifying income streams and making sure that the dealership stays afloat even when car sales plummet.
The after-sale service can include parts, service, and repair. Since car dealerships are costly for such services, you will need to maintain high service quality.
Focus on Sales Volumes even On Low Margin: New car prices are also negotiated. Sometimes, car dealers may sell new cars at a low profit margin. Car dealerships make less money on cheap cars and more money on luxury brands.
However, the real money comes in when you keep hitting your sales volume goals. That is when the car dealership gives bonuses. The truth of the matter is that you will have to keep your car sales volumes staggering.
Internet Presence: You will have to leverage the power of digital marketing for increasing sales for your car dealership business. The millennials and Gen Z do much of buying and selling online. If you don’t use digital marketing, you will miss a chunk of car sales.
Financial Management and Debt Management: Car dealerships involve complex financial management. You will be dealing with debt capital much of the time. For that, you will need to have good financial management skills or develop a competent team.
What is a Car Dealership Business Plan?
A car dealership business plan is a road-map for starting and growing your car dealership business. Your business plan outlines your business concept, identifies your target customers, presents your marketing strategy, and details your financial projections.
Any bank or investor you approach will require a car dealership business plan, so putting one together will be critical to securing funding.
In short, writing a business plan can help you succeed if you’re thinking of starting a car dealership business or pitching to investors or venture capitalists.
Why You Need a Car Dealership Business Plan
Car dealership business plans can be used to gain interest from potential investors or to secure loans from banks. They are also helpful to you as the owner. A car dealership business plan allows you to thoroughly analyze every aspect of your potential business.
A solid, detailed plan gives you a clear path to follow, forces you to examine the viability of a car dealership business idea, and may help you better understand your company’s finances and competition.
Car dealership business owners who have a business plan grow 35% faster than those who don’t, and 75% of fast-growing businesses have one.
A car dealership business plan is a living document that should be updated annually as your company grows and changes.
Free: Business Plan Examples
Do you need help creating a business plan? Check out these six free, proven business plan examples from different industries to help you write your own.
Sources of Car Dealership Funding
Car dealership business is capital-intensive, you will need to get credit lines and loans to start and grow your car dealership business.
Since your own savings and friends and family money will not be sufficient for this business venture, you will have to look into other options.
Angel investors can be the first point to get business funding for your car dealership business. Angel investor is someone who believes in your idea and invests with you against a share of the equity. This money can be good for starting your car dealership business.
Traditional banks can offer reliable credit lines for car dealership business. Banks can give you sizable loans and continuous financing. Banks also give you valuable advice for efficient management of debt. However, banks set a high standard for approving big loans and the process may take many weeks before you know anything for sure.
SBA loans are offered at comparatively softer loan terms. However, getting an SBA loan for your car dealership business can be even harder than the banks’ loans.
Bonus Tip: You can increase your chances of getting an SBA loan with a professional business plan crafted for SBA and Bank loans only.
The third option for business financing is alternative lenders. These alternative lenders may be strict on credit score criteria but they work with new businesses and quickly process your business financing request and debt.
Check more ways to get funding for your startup business.
How to Write a Car Dealership Business Plan
To write a car dealership business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a car dealership business plan, or you can just download our proven sample business plan pdf to get a better idea.
The executive summary is the most important part of the document since it outlines the whole business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.
It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.
Tell them what kind of car dealership business you have and what stage you’re in; for example, are you a startup, do you have a car dealership company that you want to expand, or do you have a lot of car dealership businesses?
Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.
- Provide a high-level overview of the car dealership industry
- The name, location, and mission of your car dealership business
- A description of your car dealership business, including management, advisors, and a brief history
- Discuss the type of car dealership business you are operating, Give an overview of your target customers., and how your company differs from competitors in the industry
- Create a marketing plan that describes your company’s marketing strategies, sales, and partnership plans.
- And give an overview of your financial plan
Check out these executive summary examples to help you write a perfect one for your car dealership business plan.
Free: Executive Summary Examples
An executive summary is the most important part of your business plan, and it need not be challenging to write. This is why we have put together some awesome free Executive Summary examples for you.
Your company overview section in a business plan will be short and clear, similar to the executive summary.
Even if they just have a few minutes, your reader has to understand what your company does and who your customers are.
The following sections will be included in your business plan’s Company Analysis:
- Company summary:
Your company analysis will describe the type of car dealership business you are running and its future goals.
The car dealership you want to open and the brand you want to sell is important. The type of cars you want to sell, like budget cars, cheap cars, or luxury cars, the brands you want to carry like Hyundai, Kia, Mercedes, or Bentley, the car dealership location, all these are important.
- Company history: When and why did you start your car dealership business?
- What milestones have you achieved so far? Among the milestones might be the number of cars sold growth year over year, etc.
- Legal structure and ownership: Do you have S-Corp status? Is it an LLC? A sole proprietorship? Describe your legal structure.
- Mission statement: An overview of your car dealership’s guiding principles. Learn how to write a perfect mission statement.
Provide a brief overview of the car dealership industry in your industry analysis. This may seem unnecessary, but it serves multiple purposes.
First, researching the car dealership industry will educate you. It gives you an understanding of the market in which you are operating. Secondly, market research can improve your strategy, especially if it identifies market trends.
Third, market analysis shows readers you are an expert within your field. Conducting research and presenting it in your plan is the most efficient way to accomplish this.
Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.
- Give a quick overview of the car dealership industry. Define the car dealership business in terms of size (in dollars), historical background, service region, and products.
- Examine previous trends and growth patterns in the car dealership industry.
- Identify the market’s major competitors.
- Age, gender, and general lifestyle of the targeted market
- Determine the factors that have an impact on the car dealership industry. These might include government regulatory rules and other businesses’ competitive activities.
- Using research data, the industry forecast expected growth over the next five to ten years. Predictions should be made for both the long and short term.
- Describe how your car dealership business intends to position itself in the industry. Concentrate on how your car dealership business can benefit from opportunities highlighted in the industry.
The customer analysis section is an important part of any car dealership business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how your car dealership will meet those requirements.
Customers can be categorized into the following segments:
- Families looking to buy vehicles
- Professionals looking for a car for work commute
- Affluent millennials
- Gig Economy workers
- Baby boomers
Customer analysis may be divided into two parts: Psycho-social profiles (why your car dealership suits a customer’s lifestyle) and Demographic profiles (descriptions of a customer’s demographic qualities).
With regards to demographics, include information about: the ages, genders, locations, and income levels of your customers. When targeting businesses, describe what kind of business, size, and location your target customers are.
The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better your chances of attracting and retaining customers will be.
It is necessary to do a competitor analysis. Because you may use their data to define your goals, marketing plans, tactics, new product lines, pricing, and more. Use competitor analysis to:
- Identify the strength and weakness of your car dealership business competitors.
- Search for opportunities to distinguish your car dealership business from competitors.
The first step is to determine who your direct and indirect competitors are.
The direct competitors consists of other car dealerships that offer essentially the same services to the same people as you do.
Indirect competitors are other car dealerships like used cars dealerships or classic cars dealerships that people have in addition to direct competitors. The online car sellers and the car manufacturer itself are also your indirect competitors. Other competitors may include websites for selling used cars, classic cars, or other forms of vehicle buy and sell.
Once you’ve identified the competition, concentrate on the direct, head-to-head competitors, since they are the most threatening to your car dealership business— but keep an eye on the indirect competition as well, just in case.
Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.
You will be able to position yourself competitively in the market if you perform proper competition research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:
- Prices – Are they offering cheaper cars and vehicles or more costly than you and other competitors, what value do buyers get for that price?
- Range: Are they offering a range of vehicles from different brands or you only sell one brand?
- Customer service – How they respond to their consumers, whether they treat them poorly or well, and the degrees of satisfaction customers show
- Reputation — The sum of everything mentioned above: their credibility, how loved the brand is, and the loyalty of their customers
The final section of your competitive analysis should include a list of your areas of competitive advantage. for example: Are you going to offer premium cars or budget cars? Do you offer cars and vehicles that your competitors do not? Will you offer better pricing or will you offer greater customer support?
Consider how you will outperform your competitors and include them in this portion of your car dealership business plan.
Free: SWOT Analysis Examples
Take advantage of our free SWOT analysis examples. Make your business future-proof by identifying your strengths, weaknesses, opportunities, and threats using this free SWOT Analysis Template.
Creating a marketing plan for a car dealership business involves identifying the target demographic and finding the vehicles that suit their preferences.
As part of your marketing plan for a car dealership business, you should include:
Pricing and Product Strategy
Your car dealership business must offer cars and vehicles that have at least some advantage over the competition, like vehicle range, better financing options, car repair and service, etc. Research what your competitors offer and how they price their vehicles.
Placing and Promotions
Place refers to the location of the business office of your car dealership. Describe how your location might attract customers. As an example, is your car dealership located near to an affluent area, do you have location in the downtown, etc.
Promoting your car dealership is the final part of your marketing plan. In this step, you document how you will drive customers to buy your services. A few marketing methods you could consider are:
- Pre-Opening Events
- Social media marketing
- Get referrals from current clients
- Optimize your Google My Business listing
- Reaching out to local bloggers and websites
- List your business on industry-specific sites
- Community Outreach
You should also think about your car dealership’s Unique Selling Proposition (USP), which should explain why clients should choose you over other car dealership businesses. Ensure that your USP is reflected in your marketing.
Read Later: How to create a marketing plan in a business plan.
While the previous sections described your goals, your operational plan in a business plan discusses how you will achieve them.
An operations plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.
Your operations plan should be divided into two individual parts, as seen below.
Your daily short-term processes include all the tasks involved in running a car dealership business, including hiring and training employees and administering the business. etc.
Your long-term goals are the milestones you hope to reach. It may include the date when you hope to lease the facility or remodel the facility: or when you hope to reach $X in revenue.
The management team section in a business plan‘ outlines your management team, staff, resources, and how your business ownership is structured.
This part may be easily organized by dividing it into the following points:
- Ownership Structure
- Internal Management Team
- External Management Resources
- Human Resources
This section outlines your car dealership business’s legal structure. If your company is a sole proprietorship, it may simply be one phrase. It might be longer if your company is a partnership or a corporation. You should make it a point to clarify who owns what part of the business.
Internal Management Team
This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your car dealership business. Ideally, you and/or your team members have direct expertise in the car dealership business. If this is the case, highlight your experience and skills.
External Management Resources
Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with car dealership business.
An advisory board would consist of 3 to 7 people who would serve as mentors to your car dealership company. They would assist in answering queries and providing strategic direction.
If necessary, search for advisory board members with expertise running car dealership business.
Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches.
The final topic to consider in the management area of your car dealership business plan is your human resource needs.
As part of your financial plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.
A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.
As you develop your income statement, you need to develop assumptions. Will you serve 30 patients per day or 200? Will sales grow by 2% or 10% per year? Your choice of assumptions will greatly impact your business’s financial forecasts. Conduct as much research as possible in order to ground your assumptions in reality.
Free: Income Statement Template
Create a financial statement for your business by downloading our free income statement templates.
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
The balance sheet shows your car dealership business’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:
- Assets: Tangible goods with the monetary worth that the company owns.
- Liabilities: Debt owing to a company’s creditor.
- Equity: The net difference when the total liabilities are subtracted from the total assets.
The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.
Create a pro forma balance sheet for your car dealership business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.
Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.
For example, spending $200,000 to build out your car dealership business will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.
Similarly, if a bank sends you a check for $200,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.
Cash Flow Statement:
Your cash flow statement will help you determine how much money you need to start or grow your car dealership business. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a car dealership business:
- Design fees, car dealership, and other costs associated with location development.
- Cost of equipment like display cases, computers, and software
- The cost of maintaining a sufficient cars stock
- Staff payroll or salaries
- The total cost of insurance coverage (general liability, workers’ compensation, and property casualty)
- Start-up inventory costs
Pro Tips: Learn how to write a financial plan in a business plan to help you write a winning car dealership business plan.
Free: Balance Sheet Template
Create a financial statement for your business by downloading our free balance sheet templates.
List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.
Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix.
Bonus Tip: Learn how to write a business plan appendix for your car dealership business.
Summary of the Car Dealership Business Plan
A car dealership plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the car dealership business, your competition, and your customers. The plan will help you understand the steps necessary to launch and grow your car dealership business.
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