A First Time Entrepreneur’s Guide to Establishing an Auto Salvage Business

Considering the incredibly low cost of salvage cars, it can be very tempting to consider starting a business dealing in these cars and parts and make a pot of money. However, you need to be extremely passionate about cars and know more than a little about how they are built and set them right. Some important considerations in setting up an auto salvage business:

Deciding Your Auto Salvage Objective

Essentially, you can setup two types of salvage business. You can buy totaled cars at cheap rates and then use all your engineering skills to repair the damages and make them roadworthy again to sell them to people who want serviceable cars or you can buy the cars for the scrap metal and parts. Repairing cars can call for a very high degree of engineering skills and will require you to have a competent team if you are trying to make decent money out of the business. On the other hand, selling parts can be more lucrative but you need to know what works and what doesn’t as well as a very robust tracking and inventory system that will let you fetch out the parts quickly and efficiently when a customer comes calling.

Take Care of Environmental Considerations

Putting up salvaged cars for sale as well as parts or even selling scrap metal and plastics is definitely something that environmentalists love because it eases the pressure off natural resources that must be exploited to manufacture more cars and parts. As much as recycling is important from the conservation point of view, you need to be careful that your business does not end up polluting the ground or the groundwater with all the assorted chemicals and metals that are contained in all modern cars. It is, therefore, essential for all salvage yards to comply with the guidelines of the Environmental Protection Agency (EPA). If you need to learn more about minimizing the environmental impact of your car salvage business, you can refer to bodies like the American Salvage Pool Association.

Draw Up a Workable Business Plan

Like any business you set up, you need to have a business plan rooted in reality for it to have a chance of being successful. You need to decide on your scale of operations as that will decide on how large a parcel of land you need, how many hands you need for help, the sort of equipment that you need, etc. Your decision on deciding the operational size will also be influenced by your ability to source damaged vehicles without incurring too much logistics costs and proximity to a large pool of customers requiring rebuilt cars or cheap spares.

Conclusion

If you want to get off the starting block fast, you could consider buying out an existing salvage yard. Hiring the services of a business broker can save you a lot of time in identifying the right business. You should never forget to do a proper study about the competition as entering a market with many players can be quite difficult.