Earunder 69 Posted October 5, 2017 Just now, trade vet said: Great stuff !,but did you forget bookeeping and accountancy fees.I recall the first time I divided the annual cost of sales by the number of sales and the penny dropped ! Very True Share this post Link to post Share on other sites
sparky 274 Posted October 5, 2017 Welcome to the board Earunder Apologies for taking the this thread off track somewhat, but I've yet to come across a dealer of this size (80 cars) who has ditched you know who. Food for thought. Share this post Link to post Share on other sites
Earunder 69 Posted October 5, 2017 13 minutes ago, sparky said: Welcome to the board Earunder Apologies for taking the this thread off track somewhat, but I've yet to come across a dealer of this size (80 cars) who has ditched you know who. Food for thought. Thanks for the welcome It depends on what works for you. Always remember what works for someone else is not always guaranteed to work for you. We do regular (once a months) checks all our advertising platforms as well as track leads and track finalized sales. Since the introduction of sponsored ads on AT we say that our listings fell in not only views but also conversions (they go hand in hand obviously). Upon our checks we obviously saw we were below the pecking order (pages 3/4+) despite being 3rd-5th most valuable in terms of value for money, but sponsored ads were always first. We tried premium, upped our retail value of the cars to try to cover the additional expense but to no avail. As we only sold 6 cars in 2 months via their platform it was a no brainer due to us being down by £12k ish in those months via their platform. Cross that with 12 cars from Motors and 3 CarGurus in only 1 month for £500 per month each platform meant it was a no brainer for us. I'm a firm believer of stats. I love them, love doing it, love tracking everything. If you don't you may as well throw your monthly budget at a wall and hope for the best. Some dealers will be surprised at what else can work. But as I mentioned, some dealers are stuck with AT because of the market appeal in their area. We're very fortunate of having a lot of local traffic, being established a good number of years and a return sales average of just over 20% per month. I'm not going to label everything out on a public forum but the research and information is right there. Go and search for your cars on each platform to see how easy it is to find it if you were the consumer. We take 1 day a month to do this and you'll be surprised the things you'll see. It's all good relying on automated or generated advice guides that platforms provide, that makes you lazy and in turn lose money. I'd rather spend the time myself to see for myself and in return get an idea on the entire market I am in. I'm not saying we do this with every car, no we have a business model / strategy when it comes to our pricing, stock portfolio and turnaround averages. But you should keep a close feel on the market by manually checking things or you'll become a robot listening and doing what you're told to do. Share this post Link to post Share on other sites
twerp 69 Posted October 5, 2017 I would be interested to know why your average person would browse Motors and CarGurus ? They are literally unheard of amongst the general public. Are they literally Googling 'second hand cars in XX' ? Share this post Link to post Share on other sites
grant8064 219 Posted October 5, 2017 6 hours ago, twerp said: You can not be serious !? Haha yep! In at the deep end...in fairness I did have a partner with 10 years experience though. The insurance policy was pretty expensive that year! Share this post Link to post Share on other sites
It's me 611 Posted October 5, 2017 100 g sounds a lot but isnt really tread carefully and as said keep a tight rein on spending lots of guys ive known over the years go to the block and buy any old tat just to make the place look busy,do NOT do that consider most importantly what sells in your area Share this post Link to post Share on other sites
Nvp cars 0 Posted October 5, 2017 13 hours ago, Earunder said: @Nvp cars No problem at all. It's a very precarious situation at the moment, not just in used car sales, but in the business world in general. Most customers don't appreciate that they are buying from a business and that the margin in used cars (on average) is not thousands but hundreds. Of course you get the odd one or 2 that make a pretty penny but these `bonus` (what I like to call them) cars are few and far between nowadays. If you're completely committed to doing this you'll need to be strong minded and have A LOT of financial backing. If you've got 100k to start with, never `play` with money or you're destined to fail, then you should spend 50-55k on stock, probably 12-15 cars. The rest you'll need as cover for your costs over the next 6 months. You ALWAYS should count on rainy days. In this industry those days are months so you should prepare for them as they can average as high as 4 months out of a yearly period. Don't get attached to the cars. Having a smaller stock can mean you can get attached to a car for one way or another, which results in you not letting it go for a £200 discount. In some circumstances like you've just got it in, fair enough, but if you've had it a month, sell it. Don't under value your cars. A/T love to put this incentive to dealers. Move it in 20 days blah blah... Ok that's great, make £400-600... Now try and replace it, that takes you longer than selling the cars in the first place unless you over pay on everything. As others have mentioned, it's a very unpredictable market at the moment. If a friend of mine had £100k of his money, with a site available to him like you have, would I recommend him to get into this industry without prior knowledge and just being a car nut? Nope. It's a very easy way to lose £100k and that £100k will not provide you with enough financial support to start and run a 30-35 car site properly. You should take a course on HP and PCP finance. There are a few out there ranging from £600 a day - £5,000 for a 5 day certificated course. My finance advisers are sent on these with Santander and I also ensure they pass a SAF test every year to ensure their knowledge of the finance aspect in the used car market is kept up-to date. I've recommended all the dealers I know to do the SAF test as it's a great way to ensure you know what you need to know and refresh your brain on things that have changed or you've forgotten. One of the biggest things in business is to know what you offer and know it inside out, it just so happens in this industry, there is A LOT to know. What many people don't understand is the overheads for any business but for a car dealer, it's astronomical. As mentioned previously we were paying A/T nearly £10k per month for only 80 cars, 1 bill per month for only advertising was just shy of £10k. Just don't forget your overheads... Regular Monthly Payments: Wages - You WILL need a sales manager with at least 10 years of experience at a decent sized used car showroom to help you. You'll need to pay £500 + bonuses per week for a decent one with knowledge of the industry and not one of the sales staff from a car supermarket as they are not really trained at all. At the end of the day a salesman can sell anything but the sale manager can direct the company in the right direction so a good one is a MUST. I can never stress the importance good staff play in help making a company successful. Pension Scheme Health Insurance Scheme (You can do without this, but I do advise it for later) Business Site Insurance Liability Insurance Cover Business Trade Insurance (You may be able to tie in within the same company) Business Rent Business Rates Business Bills (electricity, gas, Site Bills Repair Works MoT Works Car Servicing Car Preparation Costs Advertising Costs Valeting Equipment Sundries Website Hosting Warranty Cover (in house or outsourced, it still costs) Stock Database and Invoicing Monthly Payment One Off Start-up Costs (12-15 cars, with £100k Budget) Stock Branding First Promo Advertising Website Setup Stock Database and Invoicing Setup Car Site Branding FCA Licence Fee Solicitors Fee to setup and Limit a New Company Trade Plates I may have missed something from this list, but there are a lot of overheads. Anyway, think it through hugely, as I've said, it's a quickfire way to lose A LOT of money. Do pro's and cons and think it through over a few months and months. Do a Risks and Challenges Assessment for everything. On a side note, if you're really into cars, a good sales manager at a large franchised main dealer can get around £72,800 per year if they show good enthusiasm, hit their targets and motivate their sales team to hit their targets. I've known someone as young as 27 to be a Sales Manager on this kind of pay. As I've said and highlighted above: "If a friend of mine had £100k of his money, with a site available to him like you have, would I recommend him to get into this industry without prior knowledge and just being a car nut? Nope. It's a very easy way to lose £100k and that £100k will not provide you with enough financial support to start and run a 30-35 car site properly." All the best with what you decide, just really do think it through. Hi there @Earunder once again thank you so much for your advice which has value no money can put on,and again hopefully I could do the same one day I will take on aboard what you have said it's like a summary of a bible of a car trader no words can explain my gratitude towards your help,you should really do mentoring I would be interested? Share this post Link to post Share on other sites
Arfur Dealy 823 Posted October 6, 2017 18 hours ago, Earunder said: @Nvp cars No problem at all. It's a very precarious situation at the moment, not just in used car sales, but in the business world in general. Most customers don't appreciate that they are buying from a business and that the margin in used cars (on average) is not thousands but hundreds. Of course you get the odd one or 2 that make a pretty penny but these `bonus` (what I like to call them) cars are few and far between nowadays. If you're completely committed to doing this you'll need to be strong minded and have A LOT of financial backing. If you've got 100k to start with, never `play` with money or you're destined to fail, then you should spend 50-55k on stock, probably 12-15 cars. The rest you'll need as cover for your costs over the next 6 months. You ALWAYS should count on rainy days. In this industry those days are months so you should prepare for them as they can average as high as 4 months out of a yearly period. Don't get attached to the cars. Having a smaller stock can mean you can get attached to a car for one way or another, which results in you not letting it go for a £200 discount. In some circumstances like you've just got it in, fair enough, but if you've had it a month, sell it. Don't under value your cars. A/T love to put this incentive to dealers. Move it in 20 days blah blah... Ok that's great, make £400-600... Now try and replace it, that takes you longer than selling the cars in the first place unless you over pay on everything. As others have mentioned, it's a very unpredictable market at the moment. If a friend of mine had £100k of his money, with a site available to him like you have, would I recommend him to get into this industry without prior knowledge and just being a car nut? Nope. It's a very easy way to lose £100k and that £100k will not provide you with enough financial support to start and run a 30-35 car site properly. You should take a course on HP and PCP finance. There are a few out there ranging from £600 a day - £5,000 for a 5 day certificated course. My finance advisers are sent on these with Santander and I also ensure they pass a SAF test every year to ensure their knowledge of the finance aspect in the used car market is kept up-to date. I've recommended all the dealers I know to do the SAF test as it's a great way to ensure you know what you need to know and refresh your brain on things that have changed or you've forgotten. One of the biggest things in business is to know what you offer and know it inside out, it just so happens in this industry, there is A LOT to know. What many people don't understand is the overheads for any business but for a car dealer, it's astronomical. As mentioned previously we were paying A/T nearly £10k per month for only 80 cars, 1 bill per month for only advertising was just shy of £10k. Just don't forget your overheads... Regular Monthly Payments: Wages - You WILL need a sales manager with at least 10 years of experience at a decent sized used car showroom to help you. You'll need to pay £500 + bonuses per week for a decent one with knowledge of the industry and not one of the sales staff from a car supermarket as they are not really trained at all. At the end of the day a salesman can sell anything but the sale manager can direct the company in the right direction so a good one is a MUST. I can never stress the importance good staff play in help making a company successful. Pension Scheme Health Insurance Scheme (You can do without this, but I do advise it for later) Business Site Insurance Liability Insurance Cover Business Trade Insurance (You may be able to tie in within the same company) Business Rent Business Rates Business Bills (electricity, gas, Site Bills Repair Works MoT Works Car Servicing Car Preparation Costs Advertising Costs Valeting Equipment Sundries Website Hosting Warranty Cover (in house or outsourced, it still costs) Stock Database and Invoicing Monthly Payment One Off Start-up Costs (12-15 cars, with £100k Budget) Stock Branding First Promo Advertising Website Setup Stock Database and Invoicing Setup Car Site Branding FCA Licence Fee Solicitors Fee to setup and Limit a New Company Trade Plates I may have missed something from this list, but there are a lot of overheads. Anyway, think it through hugely, as I've said, it's a quickfire way to lose A LOT of money. Do pro's and cons and think it through over a few months and months. Do a Risks and Challenges Assessment for everything. On a side note, if you're really into cars, a good sales manager at a large franchised main dealer can get around £72,800 per year if they show good enthusiasm, hit their targets and motivate their sales team to hit their targets. I've known someone as young as 27 to be a Sales Manager on this kind of pay. As I've said and highlighted above: "If a friend of mine had £100k of his money, with a site available to him like you have, would I recommend him to get into this industry without prior knowledge and just being a car nut? Nope. It's a very easy way to lose £100k and that £100k will not provide you with enough financial support to start and run a 30-35 car site properly." All the best with what you decide, just really do think it through. Earunder thoroughly excellent post, welcome to the forum:) Arfur Share this post Link to post Share on other sites
Earunder 69 Posted October 6, 2017 16 hours ago, twerp said: I would be interested to know why your average person would browse Motors and CarGurus ? They are literally unheard of amongst the general public. Are they literally Googling 'second hand cars in XX' ? Again, the stats on the websites are all online. You'll be shocked at where AT are on search platforms and how much more Motors get in response to click throughs and search results from search engines. Last time I checked they were up by 62% where as AT were at 30-32%. Like I said, follow your stats, not the shepherd or sheep 4 hours ago, Arfur Dealy said: Earunder thoroughly excellent post, welcome to the forum:) Arfur Thanks Arfur Share this post Link to post Share on other sites
D&M 66 Posted October 6, 2017 We've started up relatively recently too! (March 2017) - We've sold numerous cars as a hobby for years too. More modest than you're plan though - trading from our home with a maximum of 6 cars. Before we started, we worked on a commission based wage for a local used car sales yard with about 20 cars. Although it was only for 5 months, we learned a huge amount from that short time. Not all of what we learned was what we should be doing, we learned a lot of what we don't want to be doing! We did get legged over - we started on the understanding that we would be valeting a few cars and speaking to any customers that turned up and we'd earn commission if they bought. Within a month we were there full time and didn't see the owner for weeks at a time. We were opening the place, valeting, collecting cars, selling the cars, dealing with warranty complaints but still only for a pitiful commission! - We should have drawn up an agreement each time our duties increased. When we started for ourselves, we started with only 2 cars at a time as we had very little money. We were only earning little profit as we used a third party warranty company to protect ourselves against warranty claims from customers. Luckily we didn't have any catastrophes in the first couple of months so we had a little more money in the bank and slowly increased our stock levels from 2 to 4-6 cars. As we had a little more money in the bank, we started to offer our own warranty alongside the third party company so that saved us a little money. We advertise solely online, and have had to try a number of different platforms as we don't have our own website. We have found that certain cars sell better on different platforms. If you are borrowing money from someone, make sure you have it written down and have an agreement to pay it back - borrowing money does get messy if everyone doesn't know exactly where they stand. Make sure everyone involved knows their role in the business and sticks too it. We have found it hard to find a good mechanic that we can trust, and someone to do our bodywork. The information that has been given above is invaluable - take note of the advice offered. I wish we found this forum earlier! Wish you the best of luck, we love this business and we do run ours with both passion as well as for the profit! Share this post Link to post Share on other sites
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