When setting up a new used car dealership, you will want to plan and budget the various revenues and costs when operating your used car dealership. Especially businesses such as car dealership require a lot of capital to operate. Therefore, it is very important to clearly budget and calculate the expected costs you run into in order to avoid negative surprises later on.
The revenues of a car dealership business model are determined by the number of cars which can be sold during a certain period and their average selling prices. These values can vary by car model. The profit is determined mostly by how much the purchasing costs of the cars amount up to and by other operating costs such as rent and salaries. When requiring financing, capital providers may request to be presented with a car dealership business model which proofs that the business will create sustainable profits and revenues. For equity investors, important is to understand the remaining cash flows after all costs and debt service expenses in order that they can obtain a realistic view how much return they can expect.
Example Car Dealer Business Model
An example of a used Car Dealer Business Model is available on eFinancialModels.