Do you have a knack for mechanics, and dreams of starting a profitable business? If so, starting a salvage yard could be incredibly lucrative. While often overlooked when it comes to creating a startup, salvage yards provide valuable, necessary services to their customers. Best of all, they can be very profitable! Here’s what you need to know about building a salvage yard.
How you make money as a salvage yard
With junk vehicles as your main source of income at a salvage yard, you may be wondering how it’s even possible to make money. Turning a profit in the junkyard business predominantly comes down to having stock and knowing how to price high ticket items competitively.
Say, for example, that you source a salvaged vehicle for about $300. It’s important that you’re sure you can do better than break even when you start disassembling the car for parts. Although a simple engine failure may be the reason the vehicle is considered “totaled,” there are still other valuable parts to harvest and flip for profit. Even pieces like fenders and car doors add up when you start looking at their worth piecemeal.
In cases where the engine is in working order, that can garner even more money, with some engines going for upwards of $750. Still, other pieces of the vehicle (even the windshield wipers) can add up toward helping you meet your bottom line. If you’re resourceful, patient, and willing to sell every piece of the car that’s in good condition, you will be able to make a profit.
Where to source salvaged vehicles
The next thing you might be wondering before you start your salvage business is where to source vehicles from. While some junkyards also run towing businesses and keep unclaimed or totaled vehicles, there’s another way to get your hands on salvage vehicles too.
One of the best ways to buy salvage cars is to go to a salvage car auction, where vehicles are sold to the highest bidder. When you go to such an auction, you’ll want to keep a running tally of how much value you think is in the car you’re bidding on. From there, you can bid 50 to 70 percent less than its value, ensuring that you have solid profit margins after buying the car.
When calculating your maximum bid, don’t forget to factor in how much it will cost to tow the car from the lot to your business. Those towing costs can also eat into your profits, and that’s a mistake many rookies make when starting out.
How to best track your business
Once you get the hang of where to source your wares, it’s important that you track your business and maintain aggressive goals that push your business to grow and do well. Goal setting is important for narrowing your focus and keeping you on the path to success.
If you’re interested in really dialing in to how you measure and fulfill these goals, it may be worth investing in an all-in-one software solution that helps you to track data for your business. Platforms like Profit have a comprehensive approach to setting and measuring your company’s objectives.
From aggressively marketing your products to looking back at what steps you took during a particularly good month of sales, your business will benefit tremendously from software that tracks your objectives and key results.
Starting any business can be daunting, but with the right information, you can stay the course and head towards success. As Tommy Hilfiger puts it, “success is not easy to navigate.” However, with research, hard work, and a system to track, motivate, and analyze your efforts, you can achieve what you’ve set out to accomplish.
