How to Create a Business Plan for Your Dealership

Whether you have an established dealership or you are looking to open a new operation, a business plan will be useful. However, it is important that you create a business plan that will answer all the questions in regards to your dealership’s operations. Here, we will take a look at how to create a well-rounded business plan for your dealership. 

What is a Business Plan? 

A business plan is a snapshot of your dealership’s operation. This includes how the business is currently operating and your plans for the dealership’s future. 

Why Create a Business Plan for Your Car Dealership? 

One of the major reasons to create a business plan for your car dealership is to attract funding. This funding may come from investors, lenders or potential partners. The business plan is essentially a marketing tool for the purpose of attractive capital. 

Essential Parts of a Dealership Business Plan 

When creating a business plan for your dealership, you want to make sure that you answer all the questions that a potential investor, partner or lender may have. To help you create a complete business plan, here’s a look at 10 sections that you should include in your presentation. 

Executive Summary

The executive summary gives an overview of your dealership. The goal of the executive summary is to “hook” in the reader. In a couple of sentences, you should catch the attention of the potential investors, lender or partner so they will read the rest of the business plan. While this section appears first, it should be written last. 

Company Analysis

In this section, you will detail what type of car dealership that you are operating. The reader should know if you sell new cars, used cars or if you are an online dealership. Additionally, this section should answer other questions:

• Why you started the dealership
• What milestones have been achieved in your dealership & what goals you have for the future
• The legal structure of your dealership.

Industry Analysis

This section has less to do about your dealership and more to do about the auto industry in general. This section will help readers who do not understand the auto industry or dealerships. Also, this section will establish you as an expert in the field. Here are some questions that you can answer in this section:

• How big is the dealership industry?
• What is the current state of the industry?
• Who are the key suppliers?
• Who are the top competitors?
• What is the industry forecast? 

Customer Analysis

In this section, you discuss your target customer. Does your dealership target luxury vehicle buyers, used car buyers? Are you targeting credit challenged customers? Here is some information that should be included when describing your customer:

• Demographics
• Gender
• Location
• Income
• Vehicles they are looking for

Customer analysis will detail your target customer.

Competitive Analysis

In this section, you should describe the direct and indirect competitors to your business. Your direct competitors are other dealerships while indirect competitors are other ways people can buy vehicles (private sellers, auctions, ect).

When discussing your direct competition, you should describe key aspects of their business:

• Customers they serve
• Vehicle they sell
• Their strengths
• Their weaknesses

Marketing Plan 

In a marketing plan, you will want to lay out what is known as the four Ps (Product, Price, Placement and Promotion). 

• Product – What kind of dealership do you operate and what kind of vehicles do you offer?
• Price – What is the price range of your vehicles? 
• Place – The location of your dealership and how it provides a steady stream of customers. (located on high traffic street, central location, or near highway)
• Promotion – How you drive customers to your dealership (Pay per click ads, newspaper print ads, social media advertising, flyers etc). 

Operations Plan 

Operations explains how you will meet the goals that are laid out in the business plan. This section can be broken down into two sections: Everyday operations and long-term goals:

• Everyday Operations – What you do every day from serving customers to maintain the dealership. Also thing of using a registration agency such as Redline Registration Services to help you complete your DMV transactions.  
• Long-Term Goals – Discuss milestone goals such as selling X amount of cars per month, reaching X in annual sales. 

Management Team 

Here, you will highlight your specific qualifications to run your dealership. This could include previous experience as a car seller, education, or specific skills. Also, include the key members of your dealership’s management team. 

Financial Plan 

Here, you should provide hard accounting numbers associated with your dealership. In this section, you should include the following information:

• Income Statement – Also known as the profit and loss or  P&L statement. This simply states whether your dealership is making money. 
• Balance Sheet – The balance sheet details your dealership’s assets, liabilities, equity capital, total debt and other financial information. 
• Cash Flow Statement – A cash flow statement details the way money comes into and out of your dealership. 

Creating a Complete Business Plan for Your Car Dealership 

A well prepared and complete business plan can make almost anyone understand your dealership operations. It can be a persuasive tool that can attract capital for your dealership. With a successful business plan, you will  have a valuable tool to grow your operations. Contact us for further questions or comments.