Everyone who drives will eventually need tires for their vehicle, and they can be quite expensive. Even the tires on a brand new car will eventually wear out. And many potential customers would rather go to an independent shop than a dealership or giant chain tire store. Consider filling this business niche with a used tire shop.

Starting a used tire company takes a lot of planning and several steps. As with any new business, you'll want to develop a business plan, find funding for your used tire shop and understand laws and safety regulations in your state.

Develop Your Business Plan

Every business should have a written business plan since it provides direction and attracts investors. A comprehensive business plan is the key to the success of your new used-tire shop. There are a lot of resources that can help you get started, and the Small Business Administration is the best place to begin.

Business plans should include:

  • An executive summary. This is your business explained in a succinct paragraph or two.
  • A company description. Here you can describe in greater detail what your company will do.
  • A market analysis. Provide research on your industry, market and competitors in the used tire industry.
  • The organization and management structure of your company.
  • More detail on the services or products you'll be offering.
  • Your plan to market your business and your sales strategy.
  • The amount of money your used tire shop will need for the next three-to-five years.
  • Financial projections for the next three-to-five years. 
  • An appendix where you can include a bio, resumé and permits.

Secure Funding for Your Used Tire Company

SBA Loan: You might qualify for a business loan guaranteed by the SBA, which was created with the goal of helping more small businesses secure financing. However, the SBA doesn’t provide loans; instead, it guarantees them. If a loan is given an SBA guarantee, lenders know the SBA believes in the soundness of the business. However, if a business defaults on an SBA loan, the SBA is responsible for paying back a certain percentage of the loan. Many new companies don't take advantage of getting backed by the SBA because the process can be tedious and time-consuming, but it is definitely worth the extra work.

Crowdfunding: In recent years, business funding has gotten a boost from such crowdsourcing platforms as Indiegogo and GoFundMe, which allow individuals to raise funds through social networks. The donors can give as little or as much as they want. Typically, the business offers some type of share, bonus or reward in return for the donation.

Local government help: There are sometimes loans or grants available for new businesses that are located within certain districts, such as a downtown revitalization area. Funding is also available for certain types of businesses. The great thing about getting this type of funding is that loan rates are low, and some might even be grants with no repayment required.

Buy Your Inventory

Starting with a large, varied selection of tires is smart. Include many sizes of car, truck, low-profile and high-performance tires. You can purchase tires from wholesalers, junkyards, tire shops and retreading centers.

You may need to spend a couple of thousand dollars to tens of thousands. It will depend on how much a space costs, what type of equipment you buy and how large an inventory you plan to open with.

Test Your Tires

It is always important to sell safe, good-quality tires. To that end, you must inspect all the tires you buy. Just one bad tire could kill your business, especially if someone is injured due to a flawed tire that causes an accident.

Make sure that you perform air tests to check for leaks, visually inspect tires for defects or previous repairs and inspect tread depth and overall wear.

Liability Versus Profit of Used Tires

Starting a used tire business can be quite profitable, particularly because you can sometimes acquire tires at zero cost. However, used tires come with liability.

Although there are many used tire places open, and it is a perfectly legal business, the law says it is your responsibility that the tire is in a safe condition when sold. Even if you're unaware of a defect at the time of the sale, by accepting payment, there is an expectation that the tire will provide safe handling and performance. The liability falls on the manufacturer with a brand new tire, except if the defect is caused during storage or the installation. Make sure you know all the laws governing a used tire business in your state and understand the importance of safety.

Hiring Employees

When you have a shop, the tires and the funding, it's time to hire a couple of employees. Always start slowly because most new businesses don't make a lot of money. It takes time to build a business, and you want to be sure you can pay your employees. Do background checks to make sure you've hired trustworthy workers, and train them well. Providing excellent customer service is important at a tire shop, as it is for any new or established business.