All vehicles require tires and most brand-new tires are expensive. By starting a used tire shop, you can fill the existing gap and make a decent amount of profit. However, starting your used tire shop can be frustrating if you lack the needed knowledge.
We will guide you on how to open your used tire shop and ways you can promote it. Keep reading this article to find out all you need to know.
Is Opening a Used Tire Shop Profitable?
Yes, used tire shops are generally profitable. They have a higher profit margin than shops that sell brand-new tires. The high-profit margin is in line with the higher influx of buyers due to the room for bargaining.
How Can I Open a Used Tire Shop?
Starting a used tire shop requires in-depth knowledge of the market. Let us show you how you can go about opening your used tire shop.
1. Create a Strong Business Plan
Making a business plan for your proposed used tire store is the first step among many. Your business plan must address important issues because a well-drafted business plan makes getting bank loans and investments easy. Besides the financial benefits of a great business plan, it also serves as a guide for your business endeavors.
We have discussed some key points your business plan must contain.
- Executive Summary – this explains the purpose and vision of your used tire shop in a few sentences.
- Market Survey – your market survey helps you identify your target market and the needs your shop can meet. It provides information about your competitors, market size, the used tire industry and even helps you with pricing your products.
- Long and Short-term Goals – state clearly what you aim to achieve, the time frame for each and how you hope to go about them.
- Financial Projections – it is important to be realistic about the amount of money you will need over the next 3 to 5 years. Your financial projections help show if your used tire shop will be viable or not.
- Your Unique Selling Point – to help your shop stand out, you will need to identify your unique selling points. Your USPs are services, niches or goods you offer that your competitors do not.
After Drawing My Business Plan, What Is the Next Step?
Once you have carefully written your business plan, it is now time to focus on other aspects of your business.
2. Selecting a Name for Your Used Tire Shop
Your name is an important part of your identity as a used tire business. Care should be taken to select a name that is unique and easy to remember. You can check if the name you have picked out is available via your state’s online database. If it is available, ensure you register it to secure it.
3. Securing Funding for Your Shop
You may need to secure bank loans or investors to get capital to start up your used tire business. Doing this is easier when you have a good business plan. Your business plan helps the investors or banks understand what your brand is about, how viable it is, and the steps you have taken to ensure it succeeds.
4. Choosing a Suitable Location
Your location is important for the success of your used tire shop. You must select a location that doesn’t have so many of your competitors. Here are a few points that should inform your choice of location.
- Accessibility – your store location should be at a place with access to multiple roads. This way, you will gain more connections with customers.
- Visibility – your store must be situated in a prime location that offers visibility. Locations near road networks are preferable as your target customers can see your shop easily. You can also have your sign displayed to a wider audience.
- Storage Space – this is an important requirement for your tire store. You will be required to store the tires for an indefinite amount of time; therefore, you need a big store.
- Parking Space – most people prefer to go to stores with parking spaces. It is, therefore, important to consider this when making your decision.
5. Registering Your Used Tire Store
Registering your tire shop is an important step to making your business legal. You can do your research on the relevant legal authorities in your area and what they require for registration. Check online for the documents you require to complete this process.
6. Getting the Appropriate License
Your used tire shop will require licenses to allow you to operate within the law. In many states, you will also require a tax license. Getting the tax license is easy. First, you must apply for your Employer Identification Number.
In most countries, you will also need an LLC or LLP. Ensure you check the local requirements and licenses you require for your used tire shop.
7. Business Liability Insurance
Getting your business insured is a legal requirement for your shop. There are so many insurance plans offering varying degrees of coverage. We recommend you get at least a basic insurance coverage. With the basic, your business is insured against certain events, and you won’t suffer financial loss in the event of lawsuits.
8. Open a Separate Bank Account for Your Shop
Setting up a separate account for your shop helps improve your financial accountability plus helps you monitor your business expenses. With a business account, it is easier for investors to assess your creditworthiness and help you with loans.
Another advantage of the business account is that in the event of a lawsuit, you won’t lose everything.
9. Getting a Supplier
It would be best if you sourced your tires from a reliable supplier. Alternatively, you can source your tires from junkyards, other tire shops or repair and gas stations around. Ensure that you inspect the used tires before stocking them. Here’s how to inspect the used tires.
- Check for leaks.
- Check for physical defects or past repairs.
- Check the tread depth.
10. Getting a POS
Your used tire shop will require a retail POS system. It is important that you purchase one that offers all the functionality you need at an affordable price. Here are some tips on choosing a POS.
- Choose one that is compatible with your hardware and is easy to set up.
- Decide what features you require from your POS.
- Decide if you want one that runs on cloud software or traditional software.
How Can I Promote My Used Tire Shop?
Advertisement is crucial for your shop. Create awareness of your products and services with the various media available. You may create a website with information on your offers, opening hours and contact information.
It would help if you introduced a few marketing strategies to draw customers over to your shop. These marketing strategies include:
- Value-added Services – you can offer to loosen their installed tires and install the purchased ones for free or even deliver the tires for free.
- Offer Warranty – a warranty of 2 to 4 weeks can go a long way to put your customer’s mind at ease and have them buying even more tires.
- Offer Discounts – you can offer measured discounts for tire purchases. Be sure to communicate this discount on your website and social media handles to increase foot traffic.
- Communicate with Your Customers – you can convince people to buy your used tires by telling them about your inspection procedures. These inspections of the tires communicate to the customer that your products are safe for the road.
Running a used tire shop is a highly profitable venture. We have detailed several steps to help you set up your used tire shop. Follow our guide and start your used tire business.