If you want to start a retail business in the automobile industry, then you can consider starting an automobile spare parts business. This automobile-related business is highly profitable. In this article, we intend to explore an auto spare parts business project plan for your ready reference.
Every auto spare part requires frequent change during the entire lifespan of the vehicle. And only this single reason makes the automobile spare parts industry so lucrative and evergreen. The U.S., Canada, Germany, the UK, Russia, China, India, South Korea, Japan, Indonesia, Thailand, Brazil, Mexico, Argentina, and South Africa are the major automotive aftermarket globally.
Basically, there are several ways you can start a business depending on your investment capacity. However, never try to start this business part-time. Actually, this type of retail business demands constant dedication and effort to be successful.
10 Steps to Start an Automobile Spare Parts Business
1. Choose a Business Idea
There are mainly four ways you can start an automobile spare parts business. Below are the following:
a) Automobile Spare Parts Retail Store
This is one of the most profitable and traditional ways of starting this business. In this model, you will need to acquire retail space in a good location. And you will sell the spare parts from that retail counter to your customers.
b) Automobile Spare Parts Store with Workshop
This is another profitable opportunity for entrepreneurs. Basically, an auto spare parts retail store with a workshop allows customers to buy the parts and fix them. However, it is a cash-intensive business. With substantial capital investment and strategic planning, you can initiate this type of store.
c) Automobile Spare Parts Online Shop
If you don’t want to operate a brick-and-mortar establishment, then you can consider starting an online store. Additionally, you can run and operate this business model from home also. Basically, you can open an auto spare parts online shop with low startup capital investment. To know how to set up an online store,
d) Automobile Spare Parts Franchise
If you don’t have any prior experience in the automobile industry, then it is better to start the business as a franchise partner. Even, you can consider spare parts distribution and dealerships also.
2. Create a Business Project Plan
Crafting a specific business plan is a must for starting this business. Apart from creating a blueprint, the business plan helps to identify the goal and the ways of achieving that goal. Additionally, it helps to secure startup capital from investors or banks.
Develop both a business and marketing plan. Your business plan must consist of information about exactly how you are going to run the business. Additionally, mention the specialty areas if any, and 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. You can craft the plan yourself otherwise, you can take the help of professional plan writers or business plan software.
3. Conduct the Market Research
First of all, you must conduct a market feasibility study to get first-hand information about the market condition and opportunities. It will also help you to understand potential competition from the other operators. Basically, it enables you to know how to develop winning strategies that will help you getting breakeven within a few months of starting the business.
Additionally, you can identify the most popular spare parts brands in the local market. Additionally, you will need to identify the different models of bikes and cars that have a high population density in the city.
4. Understand the Industry
It is another important aspect you must consider before commencing this business. Though the business doesn’t demand any sort of educational degree, you must have clear knowledge about the inside industry.
You can work for a few days with other established shop owners to know the trade details. Basically, you have to have a clear conception of the specifications of the different spare parts. Additionally, you may need to advise your customers about what to buy and whatnot. These all demand specific knowledge about the spare parts industry.
5. Calculate the Cost of Starting an Automobile Spare Parts Shop
After getting the knowledge and finalizing the business model, you must calculate the requirement of startup capital. Generally, you have to consider the rent of the retail space, store setup costs, and purchasing the spare parts from the wholesaler or manufacturing companies.
Additionally, you must calculate and keep finance for operating expenses also. It will help you in calculating the breakeven and expected ROI of your business.
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6. Ensure a Retail Location
After getting the plan properly, you will need to secure a retail location according to your business model. You must select a storage space in a good location. However, if your marketing and advertising strategies are good enough, you don’t need to invest much more in the location.
You will need a location that is big enough to house and properly catalog a variety of spare parts for all the makes and models of cars you cater to.
7. Licensing & Registration Issue
Check the registration and licensing issues of your state. Get the licenses for opening the store, selling spare parts, and have the right insurance. In India, apply for MSME Udyog Aadhaar Registration online. In addition to that, you must apply for the license under the Shops & Establishments Act.
It is always advisable to talk with a local small business consultant for the upcoming tax and compliance liabilities.
Presently, GST Registration is a must to start a commercial business in India.
8. Procure the Spare Parts
After finalizing the store, you will need to procure the spare parts that you want to sell from your store. Actually, identifying the parts you need and where to find them depends largely on your business plan.
According to your plan, talk to the companies and deal with the best quote with MOQ (minimum order quantity).
9. Setup the Store
You must set up the store properly. An outdoor sign is a must. Additionally, check the electrification, counter space, and shelves properly. You can consult with an interior designer to have the right floor plan. However, you must use every inch of space properly to get the optimum benefits of it.
10. Hire Employees
Hire the right manpower. In any startup business, initial employees play important role in getting initial success. Check, whether you need a licensed mechanic or not. Additionally, if you want to open the store with a workshop then consider keeping an automobile engineer too. There are several free job posting sites that you can explore for headhunting.
Finally, it is time to promote your business. In the initial days, it needs tremendous promotion and advertising. Additionally, the success of this type of niche business highly depends on B2B networking. You must contact other businesses in the industry. As an example, automobile workshops buy spare parts in bulk frequently. You can offer a special discount for them.
Consider selling online. In today’s digital era, you can’t ignore internet audiences. You can sell auto spare parts from online marketplaces or from your own online store.
Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.