There’s no doubt that the motor trade is a competitive industry, but it can also be extremely lucrative – so long as you take the time to do your research and make sure you fully grasp the market.
As with any type of business, one of the first things you need to do if you choose to sell cars is to take out quality motors traders insurance. This type of cover is designed to protect you and your assets, as well as staff if you choose to employ people later down the line. Here at the Insurance Choice, we can set you up with a bespoke policy suited to your needs, your business and your budget.
We’ll talk more about our motor trade insurance later. For now, here are some top tips for new motor traders that you might find useful:
1. Consider part-time trading
Many people choose to start off working as a part-time motor trader. Why? Well, it can be a good way to experience what the industry is like, without dedicating all of your time (and money) to the business at the start. There’s a small chance you might realise you’re not cut out for the trade – so in this way, running the company on a part-time business could limit risk.Working part time also means you can earn income from elsewhere if you need a little more financial help to fund your motor trade business (and don’t want to take out a large business loan). Then again, you may have enough financial backing to make your motor trade business a full-time commitment – this has its advantages too, as you can give your new company 100% of your time and attention. It really depends on your individual circumstances, and what you want from the business.
2. Research, research, research
The importance of research can’t be understated. As Startups.co.uk rightly points out, some real knowledge of the motor industry is essential, as is a basic understanding of vehicle mechanics and a good grasp of vehicle values.
You need to scrutinise the current market. So explains another Startups.co.uk blog, you should find out which types of cars are selling, and for how much. You might even decide to specialise in selling a certain car make or model you know a lot about.
The Society of Motor Manufacturers and Traders (SMMT) represents the industry’s interest and is a great place to go for market research and statistics. You’ll find data and advice on everything from used car sales and car registrations, to insight on vehicle sustainability.
Ultimately, you can’t be expected to know everything about cars and the motor industry at the beginning – and you’ll find that you’ll learn a lot on the job. But the more research do now, the more confident you’ll feel when you open the doors to your forecourt for the very first time.
3. Sort out the admin
There’s a good deal of admin involved with setting up any type of business. Again, the tasks you’ll need to carry out will depend on your individual circumstances – this list is by no means exhaustive, but duties may include:
- Writing a business plan so you can assess the viability of buying and selling cars as a business (as opposed to a hobby).
- Notifying your council if you plan to sell cars from home.
- Considering options for a business loan if you don’t have sufficient start-up capital.
- Finding and securing premises, if applicable.
- Later down the line, you’ll need to apply for trade licence plates (to save you having to tax and register every car you purchase).
- Registering as a sole trader (after your first car has sold).
- Setting up a merchant account.
- Marketing your new business, including setting up a website and social accounts.
4. Where to buy cars
As Startups.co.uk explains, there are a number of ways to purchase used cars, with the most convenient option being auction and listing sites, like eBay, Copart UK and Gumtree. You might also want to browse car selling sites, for instance Carwow and Carspring.
Buying cars at auction tends to be the cheapest option. However, if you’re new to the auction game, you should get a feel of what they’re like by attending as a spectator. Bear in mind that purchasing a car at auction means you’ll have less legal protection, so be sure to thoroughly pick through the history of the vehicle and the buying terms and conditions.
And another thing to note: you may be aiming for maximum profit on every car you sell, but that doesn’t mean you should also choose the cheapest vehicles and sell them on for inflated prices. You might end up spending a lot of money (not to mention time and effort) repairing the car or providing refunds to unhappy customers (which could also damage your reputation).
5. Get insured
Car dealers need insurance just like any other business owner. Motor trade insurance, also known as traders insurance or traders car insurance, will provide you with full cover if you’re buying or selling vehicles independently or commercially.
Insurance Choice understands that every business is unique, and knows how important it is to secure the right type and level of cover that reflects your needs. And, of course, making sure that cover is offered at the most competitive price.
We have access to a leading panel of motor trade insurance providers and can arrange policies for:
- Full time traders
- Part time traders
- Road risk
- Collection and delivery cover
- Mechanics
- Valeters
Get your motor business off to a great start with competitive motor trade insurance from Insurance Choice. Get a quote today – and happy trading!