Starting your own auto parts business can be an incredibly lucrative endeavor if you’re willing to put in the time and hard work necessary to make it happen.
But there are many elements of such a business that you need to consider before starting up, from the kind of spare parts you’ll offer for sale to how much you’ll spend on the advertisement to how you’ll handle issues with customer satisfaction.
This guide will walk you through everything you need to know about starting your own auto parts business so that you can get started right away!
Starting Your Own Parts Business
There are plenty of reasons to start your own auto parts business; here are three big ones: Flexibility: Part-time and full-time entrepreneurs, stay-at-home parents, college students, and retirees can all make money in a spare parts business.
Whatever your situation and whether you want to commit yourself completely or not, there’s almost always room for part-time hours.
Residual income: The beauty of running a spare parts business is that once you’ve got it up and running, you don’t have to work as hard on promotion–which means it’ll be easier to manage your time well.
Why Consider Starting A Part Business?
After deciding you want to start an auto parts business, it’s important to know why. Are you looking for a way to supplement your income or is it something that will make up your entire salary?
How much time do you have available each week and are there any other obligations preventing you from devoting time toward a start-up?
Starting your own part business has significant up-front costs, so how quickly do you want to see results? There are many factors in play when considering if starting a spare parts business is right for you.
Read also: Best Advance Auto Parts For Your Car
Step 1: Set Up Your Company Legally
If you want to make your spare parts business an actual business, you’ll need to determine how you want to run it.
Do you plan on running a fully integrated e-commerce site? Are you planning on sourcing products from a wholesaler or manufacturer? Do you want to sell only online, or do you plan on establishing a physical presence as well?
Creating these answers is key because they’ll help determine your profit margins and overall success. Online sales are quick and easy, but many of your customers will expect face-to-face customer service, and making that happen might not be practical for all types of businesses.
Step 2: Choose Your Product
When you decide to start your own auto spare parts business, it is very important that you have an idea of what type of products you are going to sell.
You will need a product that can be easily found in different stores and doesn’t require expensive tools or machinery to assemble.
Most spare parts can be purchased locally at a discount, which makes them ideal for those who have little experience or money to invest in their business venture.
Purchasing inventory doesn’t mean you will have to spend a lot of money upfront; instead, look for items that are easy on your budget but easy on your customers too!
Step 3: Market Your Company
Now that you have some ideas on where to start, it’s time to think about what you’re going to do about getting customers.
The beauty of a franchise is that most of your marketing has already been done for you, you don’t have to start from scratch.
Franchises typically bring a built-in audience (thanks to successful advertising campaigns), and franchisees are often granted discounts in exchange for running ads or maintaining a presence at corporate locations.
But if you own an independent business, chances are it will be much more difficult finding enough customers to make ends meet.
In fact, over 50% of all new businesses fail within five years because they don’t have enough revenue coming in.
Step 4: Reach Out To Customers Via Social Media, Etc.
Social media is one of your best tools to reach customers because you can find them online, interact with them and post content that helps market your business.
According to an infographic from Column Five Media, social media engagement is up 200 percent since 2012. And only half of the brands are capitalizing on it.
That means there’s a big opportunity for you if you know how to use social media sites like Facebook and Twitter effectively.
Step 5: Sell Products Online or Offline
There are a few ways to do so. One is to list them for sale on an existing marketplace, such as eBay or Amazon, and ship them when they sell.
Another is to purchase wholesale goods from a manufacturer and sell them out of your own store with your own mark-up. If you have high-quality goods that are in demand, either can be quite profitable.
Plus, some online marketplaces have built-in analytics and marketing services that will help make selling easier as you start off (though there’s no substitute for great product photography).
Sell both wholesale and retail: It’s possible to run an effective business by selling solely through one channel, but it’s hard work without a lot of capital behind you.
Tips for Running a Successful Spare Parts Business
If you’re looking to start your own spare parts business, you’ve come to the right place! Spare parts are highly specialized products that people often don’t realize they need until something goes wrong with their current device.
If you want to get into the market, there are some things you should keep in mind before you start your own spare parts business so that you can build a successful company from the very beginning.
An important part of running a successful spare parts business is establishing connections within your industry.
Forming relationships with nearby businesses and keeping on top of trends can help you stay in touch with other firms in your area, which gives you an opportunity to find new customers and potential leads for future projects.
Connections are one of those things that seem obvious but get overlooked by so many small businesses. Always make sure to prioritize making good connections when it comes to growing your business and try to consistently attend industry events or form partnerships with local companies in order to build up your network.
Keep in mind, though, that relationship building takes time; don’t expect immediate results—even established businesses take months or years to cultivate long-lasting professional relationships.
At its core, running a successful spare parts business is all about finding customers and making sales. Unfortunately, that’s not as easy as it sounds.
Customers don’t just come knocking on your door asking to buy parts, it takes time and effort to find them and win their business. Fortunately, there are proven techniques that can help you build customer relationships quickly and effectively.
For example, direct mail marketing (or postcards) can be an incredibly effective way to spread your message out into neighborhoods.
List building also helps you create new customer profiles that have been tailored toward specific categories of spare parts purchases, and it helps your company get valuable information about each prospective buyer at a relatively low cost.
Growing Your Business
You might be able to drop prices and attract more business when you first open your spare parts business, but you should always be careful with your profit margins. When it comes to selling spare parts, customers often equate lower prices with lower quality.
If they think they’re getting screwed over by buying a part at a low price, they won’t come back again or refer other customers. Over time, that can hurt your bottom line far more than initially discounting each part.
Introducing New Products
Inventory management is an important part of any business and one that many people overlook. Often, too much stock will end up costing you money in terms of paying interest on debt used to purchase it.
Too little, and you’ll be missing out on sales opportunities that may well have been profitable. Whether you’re selling spare parts or running any other kind of business, here are some tips for managing inventory levels
Managing Profit Margins
So you’ve just found your niche market and have started selling spare parts great! Now it’s time to learn how to maximize your profits.
There are plenty of ways to increase revenue in your spare parts business, but don’t neglect profit margins.
An experienced entrepreneur will tell you that it’s much easier to raise prices than lower them, especially if you want to make a long-term profit. Here are some tips on managing profit margins in your spare parts business
Managing Inventory Levels
It can be difficult to find balance in your spare parts business. It’s tempting to hoard supplies and order more than you need because you don’t want to get caught out.
The risk is that if demand slows or your inventory does not sell, it will sit on your shelves and go bad before you have time to replenish it.
You might think about taking some of your inventory out of its original packaging and putting it on display so that you can sell old stock quickly when new items arrive, then ordering just what you need for restocking purposes.
Selling through less popular items first is another good strategy, as long as they aren’t going bad, repackage them with newer stock and put them upfront so they catch customers’ eyes first.
To maximize profits, you’ll want to ensure that your spares business is set up in such a way that costs are minimized and productivity is maximized.
That starts with managing inventory carefully, ensuring each stock order arrives on time. If you operate an online store, make sure it’s optimized to improve conversions.
A well-designed site can encourage people to choose your products over competitors’ items, and prompt them to spend more once they click add to cart. This means using friendly buttons and powerful descriptions instead of dull links and lifeless words.
Before you start your own auto parts business, consider whether it’s right for you. You’ll want to make sure there’s a high demand for your product or service before diving in, which requires research into how people use products and what they need.
Are there any rules you must obey? Once you’re ready to take that leap, hire an attorney or small business advisor to help write a business plan and get the necessary permits.
Be prepared to invest in some equipment (trucks, computers, desks) but also know that it may be beneficial in terms of tax write-offs.
Finally, be aware that it can take months or years before making sufficient profit where your parts business is fully sustainable. Good luck!
Frequently Asked Questions (FAQs)
How do you increase sales in spare parts?
Whatever spare parts your business stocks, if you aren’t increasing sales, you’re not meeting your goals. After all, you can’t make a profit without making money.
So why is it that some companies and entrepreneurs find ways to increase sales in their spare parts and others don’t? What are they doing differently? One common denominator among those who are successful in selling more spare parts is that they know how to use lead generation.
With many different options available (such as print advertisements, TV commercials, pay-per-click ads, and more), businesses of all sizes can enjoy a steady flow of new clients or customers through online marketing efforts. Through lead generation, companies attract potential buyers by promoting special offers.
How do I organize my spare parts store?
Not all spare parts need to be stored in large warehouses. If you have a small selection of products, you can store them in smaller containers that take up less space and add some extra flair to your display.
Keep your products organized and visible with a few clear containers. The choice is yours; however, regardless of what type of container you choose, make sure they are labeled or well-organized so it’s easy for customers to find what they’re looking for when they come into your shop.
How much does it cost to start a spare parts business?
Starting a business isn’t free, if it were, everyone would be an entrepreneur! You don’t have to shell out for your own personal island, but there are a few expenses you’ll have to face before launching your own spare parts business.
Before you make any decisions, figure out how much cash you can invest upfront (and after launch) and what costs you can defer until later. This is called determining your startup costs and is vital if you plan on bootstrapping your business.
How do I start a successful parts department?
It is not difficult to start a new spare parts business. However, it is important to ensure that your business has enough customers before spending a lot of money on advertising or taking on staff. Work out what you need to sell and how much you need to make.
Make sure that there are people who want to buy those items and decide whether it is best for you to sell your products yourself or through outlets such as eBay, Amazon Marketplace, or an online store.
In some cases, making products can be cheaper than buying them from wholesalers or other retailers – check if anyone else in your area is selling products like yours before starting up.
What is a parts salesman?
If you have a background in sales, or if you’re highly competitive and enjoy taking on more responsibility, becoming a parts salesman may be just what you’re looking for.
A parts salesman handles purchasing for customers who need replacement car parts, working with both buyers and suppliers to ensure quality service.
In order to succeed in business-to-business sales like these, it’s important to be detail-oriented, presentable, and friendly. You’ll also want good negotiation skills since they’ll come into play while dealing with your suppliers.
You can find out more about becoming a spare parts salesperson by checking out various career websites as well as trade magazines like Tire Business.