Your about 2 years behind me, and I’ll tell you, it’s not easy. I started when I was young with an idea just like yours. Start a website, find some distributors, and just go with the flow...1 year later, nothing. All the customers I had were all friends, and friends of friends, and those customers are never loyal. I’d say within that 1st year of my 1st business, I spent over $500 and endless amount of hours on website design and getting contacts with shops for distributors.
Things I’ve learned
A) You need to have a storefront, not an office, not a home office – a storefront
B) You need to keep inventory
C) You need to setup accounts (charge) with any / every main distributor in your state
D) You need to get used to cold calls, and shop owners with attitude
E) You need to find out the reasons why garages buy from your competitors over buying from you
F) You need to have delivery drivers (either hired, or sub-contracted)
G) You need to have the lowest prices
RE: POINT E) – shops are the best customers to have, if they like you, they’ll order over $5000/W worth of parts from you. The reason you’ll have shops buying off of competitors over you, even when they know about you, is because your competitors are really that “one-stop-shop” – they have pretty much every part in stock or in storage, if not they can get it or refer you to someone that can. Shops hate it when you cant find them a part, and when you can, trust that they’ve called 6-10 other stores just like you to compare prices – if your even $2 more expensive, you’ve lost the sale – and they’ll probably never call you again.
RE POINT G) – you have no idea how deep this rabbit hole goes. Essentially, this is how it works. A Part is manufactured – then sold to a trade company, the trade company will then sell it nationally to distributors. Distributors sell just to jobbers (or at least they’re supposed to just sell to jobbers) *YOU WILL BE A JOBBER* - jobbers sell to shops and retail walk-in’s – shops install and resell to customers. The thing is this; there are some massive jobbers out there that have huge inventory. Needless to say, they’ll buy from your same distributor in such higher quantities and for such lower prices that they can SELL a part for the same price you’ll buy it for and still make $20 (if that makes any sense). So unless you’re going to have $10-$25K worth of cash for inventory purchasing – you’ll never have the best prices. Moreover, the difference between the price at which you buy for and the price at which shops buy for (the people that should buy from you) is about 30% - so what most distributors do, to make an extra buck, is they’ll sell directly to your shops – this undercutting you. Essentially, distributors will stab you in the back to make an extra 30% in profit. Because, think about it, if a shop calls you for a bumper – they’ll sell it to you for jobber rate (lets say $45) – meanwhile they can sell that exact same bumper to the shop that you’ll sell it to for $85 – so they made their profit (lets say they bought that bumper for $12) AND they’ve made your profit.
Otherwise, just be careful and realize what you’re getting into before you get into it. Like my mother used to say “The world isn’t waiting for Steven Rossi” – no ones just going to call your number and make you rich, and paper advertisements hardly work – so you’ve got to figure out your way to make people want to buy from you.
Oh, and to answer some of your questions - I don't know how it is in the states, but you pay about $75 to have your business name registered, then you own that name in that state (or province) for somewhere around five years.
Things you'll need
A) Lawyer (for legal advice)
B) Accountant (for taxes and accounts)
C) A rock solid business plan with financial forcasts and spending previsions
D) A heck of a lot of knowledge about cars and car parts. (I worked in 2 shops, and 2 wreckers for 5 years before even thinking about it)
Best of luck!
SR
[This message has been edited by stevenrossi (edited 06-19-2005).]
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