How to Start a Used Auto Parts Business

Planning for Your Used Auto Parts Business

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   Know your market. Used auto parts businesses usually operate on a local level, with a few companies providing this service in the form of a regional or national chain. As such, do some research on your local market to ensure that you are not wading into an overly-competitive market with many well-established used auto parts businesses.

   1. Do an internet search, look in the local phone book, and pay close attention to advertisements on local television to identify similar businesses in your area.
   2. Account for the size and population of your city and compare that to the geographic location of existing used auto parts businesses.
   3. Used auto parts businesses are more likely to thrive in lower income areas, as wealthier segments of the society generally don't buy used auto parts as often.
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   Develop a business and marketing plan. Your business plan should list information about exactly how you are going to run the business, any specialty areas, how you will open and maintain your business, where you will get your car parts, and how you will price them to earn a profit. Your marketing plan should contain information about your target audience and local competition as well as how you intend to draw in your target audience.

   1. Your specialty areas may be in imports, exports, motors, or bodywork. Do some research to determine what area can work for your business.
   2. A used auto parts business can be particularly lucrative if you provide rare or hard to find parts for more obscure vehicles.^[1]
   3. In your business plan, be sure to account for all costs and expenditures related to the business, project realistic sales goals, design a plan to reach new customers, identify potential demographic segments of the community who will utilize your services, and plan for the growth potential of your business. Be sure outline where and how you expect to generate the necessary capital to get your business off the ground and to ensure that you can expand when needed.^[2]
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   Obtain the necessary paperwork. Make sure you acquire all the required licensing, permits, and insurance to run a used car parts business in your area. Pay attention to zoning regulations as well as state and federal guidelines.^[3]

   1. Most states require a license for businesses that buy, restore, recycle, and resell used car parts.
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   Find a suitable location. Find a location for your used card parts business. As long as you have quality marketing and advertising strategies, you don't necessarily need a location that is easy for people to find. People may come looking for you because of the service you provide is so particular.^[4]

   1. You will need a location that is big enough to house and properly catalog a variety of used parts for all the makes and models of cars you cater to.^[5]
   2. Hire employees. If you are looking to open a used auto parts business, chances are that you have at least rudimentary knowledge about cars and how they work. However, you will likely need a licensed mechanic in your business to help refurbish old parts and identify parts that have potential resale value. Posting an add in local newspapers or on job search websites can help you find potential candidates for employment.
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   Identify supply sources. The more you have on hand, the better. In the beginning, it may be hard to invest in the right parts. Start small, and seek parts you know people are looking for. You can also invest money in parts you know are necessary and are expensive when purchased brand-new. This way, people will more often seek out the used parts you have.

   1. Identifying the parts you need and where to find them depends largely on your business plan. Your business may choose to focus on providing parts for rare vehicles not in production anymore, as these will be in high demand among a small segment of the population. Alternatively, you may choose to specialize in providing parts for very common vehicles in an effort to expand your potential sales base.
   2. Try finding these parts in junkyards, from cars sold at salvage auctions, or contact insurance agencies to try to purchase "scrapped" cars from them at a discounted price.^[6]
   3. As a used auto parts business owner, you will need to educate yourself on the mechanics of how a car operates in order to find the right parts. Also, be prepared to test the parts you find to know if they are still operational or can be refurbished to become operational again.