Setting up as a used car trader - bottom of the ladder!

[rockits]

It is certainly admirable giving your own business a go. I spent 4 years working after school then 8 years working in my now industry gaining experience at other people's expense. As it turned out at my expense and their gain!

Then started my own business in 2002 at 30yo It has been a lot of blood, sweat, years and then some. Set up a 2nd business in 2008. Then a 3rd in 2006 which has been slow due to other idiots involved in the business!

There is no way on this earth I would do what you are suggesting the way you are suggesting if you want to any any decent money without risk and/or grief. This is my own personal opinion of course. I am not risk adverse, pretty entrepreneurial and not afraid to work hard, graft and put the hours in.

The clever (some may say unscrupulous) thing to do is go and work for someone for a year or maybe longer. You can learn all about the industry, how it works, build some contacts, get some experience and test the water then get paid at the same time.

My brother has been in the car game many years and doing well. He is not passionate about cars and shows no emotion about them. It can be a curse to be passionate but it can be a benefit. You just need to take emotion out to be independent and objective. Don't buy a car because you like it as that is irrelevant. But what the market wants. This is where the fun may come out of it a little.

Take your time and build a rough business plan to see how the numbers look and how realistic it is. I have never done a business plan in my life but run the business on solid foundation of always making profit. I never went to business school or did a business degree but most of it is common sense. It helps having some!

If someone says you can't do something.....prove them wrong. If someone says you're mad....prove them wrong. If someone says it can't be done
.....prove them wrong. However never be stupid about things.

I'm 46 btw have a wife and two kids with a massive mortgage (IMHO) and have reasonably large costs each month (IMHO). I rely on nobody and have nobody to fall back on or find my mistakes or get me out of trouble. It can be a lonely place but it is certainly challenging and always eventful

Fortune favours the brave and if it was easy any idiot could do it. I don't regret my choices and path but if I had my time again I would make some little tweaks.

No idea if that helps but hope it does!

 

[Deleted member 11979]

I think buying privately can be a good source of cars if priced right, at least you can test drive it to see any faults. Auction prices are closer to retail prices now so not as good a place as they used to be. I think you need to establish your niche, if you sell cheap well prepped cars you’ll be up against the unscrupulous type who sell cheap rubbish cars for less, and at £1k to £2k every pound matters.

I think you’re very brave to try and make a living out of selling end of life cars that you have to warrant for 6 months. What about slightly better cars with hopefully a bit more margin and a bit less grief?

You also need to know what cars to avoid, ie rusty Fiat 500s and VW group 3 cylinder petrols apparently etc

I used to do it and made a very good living doing it properly, but times have changed

All the best, there is still money to be made but you need to know what you’re doing

 

[Deleted member 37751]

I once owned a business that shifted vans b2b i.e. no joe public... and it was a very nice living I made...

That was until we started getting offered that many part exchanges we set up a sideline offering them to the public at what were effectively trade prices and it was a nightmare!

 

[MWCLS]

Thank you all for your input.. please do keep it coming.

 

[MWCLS]

OP , you are going to bring low rent mentality into your home...

Will that affect you?

 

[thebiglad]

MWCLS, I've been selling 'vehicules de prestige' for the last 15 yrs, from home. My clients either buy from my stock (very small quantity) or buy by demande. I call them prestige vehicles because I'm not interested in family hatchbacks, I'm interested and can sell vehicles that interest me.

Whether it's Land Rover Defenders & Discoverys, or Jaguars, they are cars that I like. So I can enjoy them whilst I have them. I tend to stick with what I know so that I know them inside out and can apply a preventative maintenance approach. I have built up a small network of parts suppliers which means that I have confidence in the vehicles I sell.

I don't sell quantity, I do make a living on my own terms and I do have a life. I found my niche and I tend to stick to it and my customers have confidence in me, to find them a good vehicle.

The profit is ALWAYS in the buying !!!!!!

The very best of luck to you.

 

[BTB 500]

I have storage facility ( my current drive will hold 6 or 7 small hatchbacks plus I have a detached garage )

Any potential issues in running a car sales business from home? Thinking planning permission, council tax, insurance, etc. ?

 

[MWCLS]

Still lots of planning and research to do.. but thank you for highlighting those potential issues - I have a mate of mine who has started many successful businesses. I'm out with him the weekend to sit down and discuss away forward.. maybe I need to steer clear of the **** end and look more toward as the big lad says sell cars that interest me..

 

[rockits]

I'd agree 100% that buying right is key. I would say it is more important than the selling IMHO.

Buy wrong and you'll lose money or it will be painful. Buy right and worse case scenario you will brake even at the very worst.

Btw I don't have all the answers just a kid from a working class background prepared to take a punt, graft with half a brain and a bit of common sense.

Having a slush fund to kick off with is key in IMHO. Also make sure your personal finances can take a beating day one and also during periods when times are rough.

I started my business with 25k in my bank knowing I could live my life to the same level for a year with zero income. I was 30 with girlfriend (now wife) small mortgage on flat. I couldn't live for a year on 25k now!

I never needed 1 penny of that 25k as made money from day one and have done ever since. Luckily my business didn't need substantial investment from day one and any ongoing investment has been funded by profits already earnt. I had a rough patch for a couple of years 2016/1017 but resolved those issues and am over that now.

To not have to make decisions based on a stressful financial position clouds your judgement and can lead to poor or desperate decisions. This in turn can cost you even more.

I'll keep throwing it in the pot and feel free to discard all of some of my thoughts.

The one thing I have always wondered is why so many people have done far better than I when they seem to be far less equipped for the task. Never worked that out!

 

[320Alan]

This is something I have off and on thought about. What puts me off is needing cash. Needing cars for starting stock plus money for repairs and other set expenses. Minor repairs I feel comfortable doing but a workshop and ramp would be beneficial as it's normally dark and wet but that's another £500 a month or £1000 with a storage yard.
A £200 a car profit is 5 cars a month to break even. Another one to cover utility bills, 6 minimum.
6 cars covers a basic wage.
Looses on bad buys say another 3 sales to cover your them.
So your talking 15 cars a month or 1 every 2 days this is all beer mat maths but is enough to stop me going further.
Plus most sales will be evening or weekends when I want to be with my family.
This is my own ramblings on this and wish you luck if you go for it

 

[m2287]

I used to do this on the side with a good friend (have calmed down recently).

If you can’t do mechanical work yourself then £200 a car in that price range is about right.

What people don’t see is the going to buy cars which turn out to be dogs (this happens ALOT), the time wasters that don’t turn up, the time wasters that do turn up!!
The dodgy people that turn up, in the end we actually refused to meet anyone unless we could both be there due to this. You will need to be prepared to go and view cars at any time of day at the last minute, most people don’t work 9-5 anymore and there are so many people in the game now that they are literally picking cars up at midnight if they come up for sale that evening!

Don’t get me wrong, I’ve met some really cool people, made a substantial amount of cash on some cars and I do love doing it. I would advise doing it part time on the side to start off with, try doing a car a week and see how you go!

 

[PGW124]

Hi OP, you could keep it low key initially, the absolute must have is trade insurance, as others have suggested start off slow. Try to qualify your buyers, if they call at 10pm asking for you to take the car to show them, block the number. Planning permission will only become an issue if you cause your neighbours issues. Good stock is hard to find so if you get something good don’t give it away. If you get a problem car or buy wrong deal with it ruthlessly sell it as spares or repairs and move on. The consumer rights act 2015 is against you so read up on it. You can not remove you legal obligation to your customers with caveats like trade sale or 30 day warranty. Always best to buy the car back less the use the customer has had. Keep costs low, keep low key and start on eBay. Plaster your mobile number in the listing and people will call. More tips to follow.

 

[m2287]

I forgot to add, get a second phone and turn it off at night, you will 10000% get nutters ringing you at 3am (I had one just last week)!

 

[markjay]

Also, consider your cashflow.

Not sure if you can buy the cars on credit, but if not, then the stock you have will be limited by your capital.

You'll need to manage the stock well so you don't end up with cars you can't sell (or won't sell at a loss) holding-up your working capital and preventing you from buying new stock that you can sell.

 

[Darrell]

I'd agree 100% that buying right is key. I would say it is more important than the selling IMHO.

Buy wrong and you'll lose money or it will be painful. Buy right and worse case scenario you will brake even at the very worst.

Btw I don't have all the answers just a kid from a working class background prepared to take a punt, graft with half a brain and a bit of common sense.

Having a slush fund to kick off with is key in IMHO. Also make sure your personal finances can take a beating day one and also during periods when times are rough.

I started my business with 25k in my bank knowing I could live my life to the same level for a year with zero income. I was 30 with girlfriend (now wife) small mortgage on flat. I couldn't live for a year on 25k now!

I never needed 1 penny of that 25k as made money from day one and have done ever since. Luckily my business didn't need substantial investment from day one and any ongoing investment has been funded by profits already earnt. I had a rough patch for a couple of years 2016/1017 but resolved those issues and am over that now.

To not have to make decisions based on a stressful financial position clouds your judgement and can lead to poor or desperate decisions. This in turn can cost you even more.

I'll keep throwing it in the pot and feel free to discard all of some of my thoughts.

The one thing I have always wondered is why so many people have done far better than I when they seem to be far less equipped for the task. Never worked that out!

What type of businesses do you own??

 

[Edd1968]

I too have read all these posts with interest as it's something I thought about up here in the Highlands.
I did it once selling Ducati motorcycles back in the late '90s but I ended up hating it - turning my hobby into business didn't work for me.
I have spent the last 2 years doing a kind of ' Wheeler Dealers Trading up' thing with a particular model of car (Ford Streetka - extremely rare in Northern Scotland) buying only clean, low mileage ones down South and bringing them up here. made amazing profit in every car (8 in total to get what I've got now). However this is still only a hobby, did any and all the prep work myself and sold them privately so it's not quite the same. I've become somewhat of a specialist on the model though and know them inside out. I've often passed that MGF specialist on the A1 while bringing a car back up north and thought about specialising in one model - it's that hobby into a business thing and the tw@t tyre kickers I can't be dealing with that puts me off.
I saw someone posting about only dealing in prestige vehicles, this could be another avenue for you.
My advise is to just take the plunge, you only live once, take the risk a d take the fall, it could be the best thing.

 

[PGW124]

Initially don’t offer any warranty or sell them. If you sell them customers will expect everything to be covered, when the warranty company won’t help they will come straight back to you. Tell customers there is no warranty that is why they are getting a great price. Provide a genuine 100 point check list for their piece of mind. You should pay vat on profits on each car, repair spend is not vat deductible. Don’t worry about tax and vat initially but keep your own good records. Write “trade sale” in your listing. This means nothing legally but sets expectations for you customers. Trade plates are really hard to get these days so see if you like it before you apply. Buyers expect the world on a stick £4K buyers think they are in a Bentley showroom. Don’t be tempted to go the extra mile like hold the car for a month, you never get any thanks for it. If they say “what will you take mate?” Say “are you in a position to buy and can you transfer the full amount now?” The will always say “errrr” then you can invite them to come an look at the motor. Good luck !

 

[rockits]

What type of businesses do you own??

Small IT/tech/networking/internet/backup/access control. Very broad!

 

[neilrr]

Granddad put deposit down on car - Changed mind!

This is the world you are talking about jumping in to.

My post, # 70, sums up my view on your planned venture.

 

[Yugguy]

Aye, I've sold a couple of older cars privately and never again. People seem to be more suspicuous yet more demanding at this end of the market.