With an estimated 287 million registered vehicles in the United States, there are ample auto parts business opportunities. Consider an independent storefront, an online business, or a franchise store such as Advance Auto Parts or NAPA Auto Parts.
Because the auto parts market is vast, it's not hard to find a store, even in a small town. Customers may have several options to choose from, so it's up to you to decide what segment of the market you want to capture. It may be owners of classic and vintage cars, foreign cars or cars manufactured by select makers.
A written business plan guides you in the decision-making process for every aspect of your business. It's a necessary document if you plan to seek funding from banks, investors or other lenders. Look for examples and templates online with the search term "auto spare parts business plan" or "auto parts business plan."
A business plan typically contains the following sections:
- Executive summary: An overview of your company and the customer demographic you plan to serve.
- Business structure: Ownership of the business and the form it takes – S corporation or limited liability company, for example. Include information about the knowledge and experience you have that qualify you to open and run a successful auto parts store.
- Startup summary: A list of startup costs, including computer hardware and software, office equipment and furniture, opening inventory and storage space.
- Products: Type of products sold, your plan to distinguish yourself from competitors and how you'll source and market your products.
- Market analysis: Explanation of the current market for your products and demonstrated understanding of future trends.
- Business strategy: How you plan to build awareness of your business and attract customers, manage daily operations and build relationships with vendors and other businesses.
- Financial summary: Projected for at least two years. Include expenses, profit and loss, cash flow and balance sheet.
Apply for a Federal Tax ID number through the Internal Revenue Service. You complete the application free on the IRS website, and you receive your unique identifier within one to two business days. Register your business at the local level in your city or county offices.
Unless you open a franchise, your auto spare parts business plan should include strategies for sourcing parts. Depending on the needs of your customers, consider the following:
- Auto parts wholesalers: Look online for companies that deal directly with manufacturers and sell wholesale to retailers.
- Auto parts drop shippers: With drop shipping companies and some auto parts manufacturers, you order products only after a customer places an order and pays for the merchandise. The supplier then ships the parts directly to the customer. You keep your costs low because you're not tying up money in inventory or maintaining the space to store it.
- Auto Auctions: Attend auto auctions to source used and hard-to-find parts. You may also be able to meet customers' requests by using a general auction site such as eBay.
- Car Clubs and Meetups: Get to know people who are knowledgable about the kinds of cars driven by people in your customer base.
- Specialty magazines: Many magazines are devoted to cars and drivers. All have classified sections through which you can buy parts.
Building a business from scratch can be extremely rewarding, but it pays to get help navigating the many challenges associated with a new enterprise. In most communities, you can find free and low-cost assistance through the Small Business Administration or Small Business Development Council. Experienced business professionals at these locations can advise you on your business plan, financing options, required paperwork and other components of a successful startup.