Sunday, May 16, 2010

Is no news ever good news?

Pertaining to a blog on the internet, no posts is a Very Bad Thing.  Pertaining to saving up the money and finding the property needed to start a car lot, it is simply stagnant.  At this point, I am seeking other avenues of revenue such as reselling car parts I've pulled from junkyard cars or reselling computers I found cheaply.  Starting up a car lot requires quite a bit of capital.  It's not like a lemonade stand where some groceries and a folding table are all you need.  Here's a list of things necessary to start up a car lot in Texas:

A minimum 2-year lease on, or ownership of, a property suitable for selling motor vehicles
An office building of at least 100 square feet
A desk
Two chairs
A computer with internet access
A printer
A fax machine
Either a filing cabinet that locks, or a server in a locked enclosure (for customer record-keeping)
Room to park five for-sale vehicles on an improved (paved or gravel) portion of the parking lot
A sign with the car lot's name in lettering at least six inches high, with the phone number as well
A landline phone in the business's name
The business's name registered with the county clerk
Operating/Occupancy/Sales Tax Permits
$500 license application fee for a General Distinguishing Number
$200 annual licensing fee for a GDN
A surety bond in the amount of $50,000
Liability insurance (typically a garagekeeper's policy modified for dealer use)

This is NOT a complete list.  You also need to be open regularly at least four hours on Mondays through Fridays between 8am and 5pm, have your hours posted somewhere conspicuous, display your dealer license in the office in a conspicuous place, have enough paper and supplies to print out temporary tags and all the appropriate car-selling-transferring paperwork, and much more.  There are also rules regarding the acquisition, usage, storage, and access to private customer information.

The state and the dealer's association regulate advertising and where a car can be sold (if not sold on the actual car lot).  The state does NOT however, regulate the things that can help a business succeed or fail.  Advertising is key to having a successful car lot.  This goes doubly true for car lots out in the middle of nowhere.  Since Beater World will be out here in BFE, I will need to find ways to advertise without encroaching on the territory of other dealers.  Deciding which market to use as my home market will make a big difference.  If I choose Hillsboro, then I may not advertise in Waco or Dallas.  If I choose Waco, I have to have a sufficient sales pitch as needed to draw customers up a half hour away.  If I choose Dallas, well, I don't think they'll allow me to choose Dallas as I am more than 50 miles out of that market.  In fact I may not be able to choose Waco, either.

If you want to learn more about how to open a used car lot in Texas, or a boat lot, or a trailer lot, or a powersports lot, there is a wonderful PDF file you can download from the Texas DOT website.  Download the "full manual" from this page and enjoy lots of legalese jargon but pay attention to the finer points:

I have also been informed that these documents will no longer be on the DOT website but on the new DMV website.  Here is the link to the same page on the new site where the 2010 Dealer Manual can be downloaded:

Then click on the Motor Vehicle Publications link to find more useful documents pertaining to exactly what I'm dealing with right now.