Thinking about opening an auto leasing business? We tell you what you need to know to get started.
Nuances of the Independent Auto Leasing Business
Auto leasing has become an acceptable financing alternative for many consumer and commercial vehicle buyers. It's also grown to encompass a diverse mix of industry practices ranging from fleet vehicle leasing to consumer auto leases to short-term car rentals.
Many startup auto leasing businesses focus on fleet and short-term leasing simply because the major auto manufacturers dominate the consumer leasing sector with their own lease programs. The right startup can still turn a profit in consumer leasing, it's just that success can be more elusive in this market segment, especially for first-time auto leasing entrepreneurs who aren't equipped to compete against the automakers' in-house leasing plans.
Auto Leasing Capital Requirements
It's important for startup auto leasing business owners to understand that an auto lease is basically a financing arrangement. Your auto leasing company will have the same fundamental characteristics and requirements as a startup financing company, including the need for access to a large quantity of capital.
Unless you have won the lottery or already have access to vast sums of capital, you'll need to acquire investors and/or financing to get your auto lease business off the ground floor. From the outset, your planning process must emphasize not only the startup capital requirements, but the sources of capital your company will access to provide leasing services on a go-forward basis.
Profit Optimization in Auto Leasing
In any business, profitability is a simple equation -- it comes down to maximizing the amount of revenue generated and minimizing the costs you incur in the delivery of products or services. As an independent auto lease company, the market will limit lease pricing. So to optimize your startup's profitability, you'll need to focus on two areas: (1) Increasing the number of vehicles leased, and (2) reducing your costs.
Aggressive marketing and advertising campaigns through both traditional and online channels can drive commercial and consumer prospects to your startup, but only to the extent that they are performed in both a strategic and tactical manner. To reduce costs, you'll need to develop relationships with auto manufacturers' fleet managers to take advantage of discounted fleet pricing, particularly for your inventory of short-term leased vehicles.
Best Auto Leasing Company Business Plans
An effective business plan is your auto leasing business's stepping stone to profitability and long-term success.
Although there are a lot of tasks screaming for your attention, cutting corners on your business plan can be a precursor to disaster. Why? Because there are a multitude of reasons why your company can't succeed without a sound business plan.
From a business ownership perspective, that makes business planning your first priority - and not a task that can be assigned to the back burner.
Don't Overlook Competitors
Prior to launching an auto leasing business in your area, it's worthwhile to see what the competition looks like. Use the link below to find competitors in your city. After clicking on the link, type in your city, state and zip code to get a list of auto leasing businesses near you.
It's important to be aware of what the competition is doing. Take the time to visit the competition to properly assess their strengths and weaknesses.
A Good Source of Advice
Once you've finished assessing the competion, be sure to have a conversation with someone who is in the business. It's very unlikely that the local competition will talk to you. What's in it for them?
Fortunately, somebody who runs an auto leasing business in another town can be a great learning resource for you, given that you don't compete with them in their area. Indeed, many experienced entrepreneurs enjoy offering advice to startup entrepreneurs. It can take a while to find an entrepreneur who is willing to talk, but it's well worth the effort.
How would you find an auto leasing business entrepreneur that lives outside of your area?
We can help. Follow the link below, try a few city/state combos or zipcodes, and then start calling!
Business Brokerage for Auto Leasing Business Entrepreneurs
Business owners are decision makers. And the first decision you'll need to make is between an auto leasing business startup and an acquisition. In most cases, there are compelling financial and practical reasons buying an existing auto leasing business.
Although you could navigate a business acquisition on your own, most prospective auto leasing business owners enlist the services of a business broker.
Top quality brokers with an industry track record understand the nuances of auto leasing business acquisitions and are equipped to make your transition to auto leasing business ownership as easy as possible.
Don't Rule Out Franchising
If you want to minimize your chances of failing, it's a good idea to look into the pros and cons of franchising.
If you are thinking about opening an auto leasing business, you would be wise to investigate whether franchise opportunities in your space might be the right move for you.
The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.
These additional resources regarding starting a business may be of interest to you.
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