Starting a small business is a dream for many, representing as it does the opportunity to directly control your income – and to do something you love in the process. If you’re a self-professed ‘pistonhead’, you may be interested in starting your own automotive business. Buying and selling cars is an excellent way to turn a hobby into a career – but how would you go about it?
Setting Up Your Business
Before you make any major investments in your new business venture, you should take the necessary steps to make it a legitimate one. Firstly, you will want to register your business for tax purposes.
If buying and selling cars is a passion project for you, it may make the most sense to set yourself up as a sole trader. This way, any profits are treated as personal income, and taxed accordingly – with the money you spend on stock eligible to declare as expenses.
If you are planning on building a staff cohort on business premises, you will want to take the steps necessary to set up a limited company. Setting up a limited company means your staff can be enrolled in PAYE; limited companies are also safer for larger businesses, as business finances are ringfenced from personal finances – protecting you in the event of poor performance or deficit.
You may also find it beneficial to register your new business with The Motor Ombudsman. The Motor Ombudsman is an independent regulatory body, that can resolve disputes between consumers and businesses. Registering with it can demonstrate your commitment to fair business, giving new customers more confidence in you as a seller.
Buying Stock
With the initial administration complete, you can turn your attention to the buying of stock. Buying cars for the purpose of sale as a business is not altogether different from buying cars for personal use; scouring local marketplaces and online platforms for cheap deals can ensure you build a portfolio of vehicles without breaking the bank. Another way to raise funds if you are low on cash is through equity release mortgage.
But doing this can result in razor-thin profit margins. If you have a basic understanding of car mechanics, though, you can increase your profit margins by taking on cars in poor condition, or with key faults. Repairing these cars will improve their value greater than the cost of repair, netting more profits. These repairs should run the gamut, from replacing car tyres to replacing timing belts and beyond.
Selling
Whether you are refurbishing vehicles or simply selling them on, you will need to ensure they are in safe, legal and drivable shape for your consumer. Before each prospective viewing or sale, you should ensure each car has its associated documents, and is safe to drive. Having your cars MOT’d before sale can add value and trust, ensuring customers are able to enjoy their new purchase immediately and without fear of imminent breakdown.
