Do you want to know how much money tire shops make yearly? If YES, here are 8 factors that determine the income & profit margin for used tire shop owners. Whenever any entrepreneur wants to start a new business, one of the first questions that they usually ask or rather one of the first info that they try to get is how profitable the business is or how much they are likely to make from the business.
This narrative also applies to entrepreneurs who are looking towards starting a used tire business. They would want to know the profit margin they would be expecting from their investment.
The truth is that there is no one-mold-fits-all when it comes to how much a used tire retail shop is expected to make. There are some factors we are going to look into before giving an estimate of how much an average used tire retail shop make yearly and these factors are;
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One cannot conveniently state the amount a used tire retail shop is expected to make yearly if you do not know the size of the tire shop. As a matter of fact, the amount a small road – side used tire shop is expected to make annually will be far different from the amount a standard used tire shop franchise will make annually even if they operate in same location.
Also, the amount invested in a small road-side shop is different from the amount invested in a large and well-organized used tire retail shop hence the amount they will both make will be far different.
One the average, starting a used tire retail shop could cost anywhere between $5,000 and $500,000 depending on what you want to achieve.
When it comes to setting up a new business, location plays a major role which is why feasibility studies and market survey are essential before settling for a location. Usually, if your used tire shop is located in an area with good human and vehicular traffic, and you stock your shop quality used tires from different brands, you may not have to struggle to get people to visit your shop and make purchase.
Please note that the amount a shop located in a low traffic area will make yearly will be far lower when compared to the amount a shop located in a high-traffic area will make. So, if you want to make it big with your used tire retail business, then be ready to rent a store in a high traffic area. Please note that you are going to pay more to rent a store in a high-traffic zone.
Another important factor that will determine how much a used tire retail shop is expected to make yearly is the brand of used tires in the shop. Ideally, a used tire business makes money by selling used tires to customers. Most tires are sold individually, in pairs of two or in sets of four.
They are also shops that retail used passenger vehicle tires, light vehicle tires, medium- and heavy- duty truck tires, tricycle tires, motor-bike and used bicycle tires from different manufacturers (brands) from the United States and abroad. Brands like Michelin, Pirelli, Goodyear Eagles and Nexen CP671 are in high demand and profit margin is usually hire from these brands.
4. Other Related Products and Services Offered by the StoreAside from retailing a wide range of used tires, retailing other complimentary products such as tubes, valves, rims, spanner wheel and jacks et al will surely boost the amount you are expected to make from your used tire retail shop.
So also, if you offer additional services like re-threading of worn out tires and also purchasing used tires that are still in good condition directly from your customers as against going to the market to buy from wholesalers/merchants, will position you to earn a higher profit margin.
5. The Management Style of the ShopAnother key factor that will determine the amount a used tire retail shop is expected to make yearly is the management style of the shop. Trust me, the results you will get when you have a good manager will be far greater than what an average or bad manager will get, even if you give the managers same conditions to work and same products to retail.
6. The Business Model of the Used Tire Retail ShopThere are different business models that a used tire retail shop can adopt and these models offer different results. For example, the amount a used tire retail shop that also runs an online store will make yearly will be different from the amount a strictly brick and mortar shop will make yearly.
The amount a used tire retail shop that also sells franchise will make yearly will be far different from the amount a one-location walk -in shop will make. This goes to show that the amount a used tire retail shop will make yearly is dependent on the business model of the shop.
7. The Advertising and Marketing Strategies Adopted by the ShopAnother key factor that will determine the amount a used tire retail shop can make yearly is the advertising and marketing strategies adopted by the shop. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings.
But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a used tire retail shop that engages in aggressive advertising and marketing to make same amount yearly with a shop that is passive with its advertising and marketing.
8. The Number of Years the Business is in ExistenceAnother key factor that will determine the amount a used tire retail shop is expected to make on a yearly basis is the number of years the business is in existence.
In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is properly managed. This is because you would have over the years won loyal customers.
For example in your first fiscal year (FY1) you might make a hundred thousand dollars ($120,000), in your second fiscal year (FY2) you might make two hundred thousand dollars ($200,000) and in your third fiscal year (FY3) you might make two hundred and fifty thousand dollars ($550,000). Interestingly, most businesses including used tire shops usually breakeven from the third year of operation.
In conclusion, the amount a used tire retail shop will make yearly is strictly dependent on all of the factors listed above. Usually, a small-scale but standard shop located in a high-prone human and vehicular traffic location in the United States of America can make between $120,000 to $350,000 annually all things being equal.
Please note that in the United States of America, used tires cost can vary from $25 to $160, usually 30 – 50 percent of the price of a new tire of the same model. This number depends on a range of factors, so you may get the same type of used tire for $50 or $90.
According to a report published by CostHelper, a standard, all-season tire costs between $50 and $200 each with an average price of $80 to $150. For a pickup truck or SUV, drivers may pay $50 to $350, with an average cost of about $100 to $250.
Have it in mind that the normal markup on auto parts is in the 30 to 40 per cent range, but tire sales are so competitive, very few garages ever attempt to earn this type of profit. In essence, the profit margin of used tires is between 30 to 40 percent and it includes all the factors involved in getting the used tire to the shelf.
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ManagementAugust 11, 2020
Dennis McCarron
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KEYWORDS customer service profitability service recommendations vehicle inspections
Some days, it may seem like you were busier than all get-out, but you didn’t make any money.
Other days seemed slow, but you were stunned at how much cash you generated. Sometimes the retail world doesn’t make any sense, does it?
Being “busy” isn’t a good indicator of how much money, cash or profit a business makes. “Busy” is actually a four-letter word.
I think everyone knows that simply increasing sales is the most difficult way to increase profit. You must increase car count and take on more customers. You must spend money on advertising and maybe increase store hours, too.
If your store is doing $1.2 million in sales, making $60,000 a year in profit, and you increase to $1.3 million in sales, you get, wait for it, $65,000 in net profits.
Woo. Hoo.
This is a ton of work for an extra $5,000. And that’s before taxes.
What you need to do is change the things that you sell — and preferably to customers who are already coming in the door.
For the rest of your business-owning life, please remember this phrase: “The least profitable thing you sell is what customers walk in the door to buy.
The most profitable thing you sell is what you recommend in connection to that item.”
When I ask tire dealers, “What is the least profitable thing you sell?” the usual answers are tires and oil changes, which is often true, but that scope is too narrow. Other than flat repairs, you must heavily advertise (high expense) and be ferociously competitive (low margin) on most of the services that customers request.
If a customer walks in the front door and asks for a price on tires, there is a high probability he or she has been “researching” prices and will engage in a discount conversation. And what about that customer who brings his or her car in because the vehicle’s brakes are “squeaking?”
There is no surefire, singular customer interaction, but if you look at your conversations with customers at the sales counter and your conversations with customers following a good vehicle inspection, I am positive you will come to the same conclusion: there is simply more profit margin in the things that you recommend, like air filters, cabin filters, wheel balancing, alignments, fluid exchanges and maintenance interval services.
Vehicle inspections and service recommendations are the lifeblood of your business. You simply won’t thrive without them. (Many businesses won’t even survive without them.)
Let’s continue to look at our original example of the store that sells $1.2 million a year and makes $60,000 in net profit. If we were to increase that store’s gross profit margin by just two percentage points on the same sales, we would make $72,000 in net profit or a $12,000 increase.
Our business exists between two guardrails. One is failure to inform customers of needed services. Invasive vehicle inspections occupy the other extreme.
“Failure to inform” means that if you discover that a customer’s car is visibly unsafe without taking parts off, as a professional, you are obligated to inform the customer. “Invasive inspection” is defined as removing parts from a customer’s vehicle, without their permission, to find items to upsell.
The simple solution to all of this is having a conversation with the customer at the beginning.
Tell the customer, “While your vehicle is in, we will inspect belts, fluids, bulbs and filters. If we find anything that needs to be addressed, we will let you know.”
If the customer declines and you later find a “failure to inform” issue, simply say, “While raising your vehicle up in the air, we found an obvious safety failure. You didn’t ask for an inspection, but under the law, if a safety failure is in plain view, I have to tell you about it. If you’d like, I can estimate the cost to repair.”
Proper recommendations are critical to your business’ success. As long as you’re doing it for the customer’s benefit and present it that way, everyone should be happy.
Dennis McCarron is a partner at Cardinal Brokers Inc., one of the leading brokers in the tire and automotive industry (www.cardinalbrokers.com). To contact McCarron, email him at [email protected].
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What is the ideal business for an average man in Russia? To invest not a lot and once, so that the work is not dusty, so that the garage is at hand. After some thought, we come to the conclusion that tire fitting is an ideal option. A lot of work twice a season, investments - a minimum, and the garage is always at hand. Let's try to figure out if everything is as perfect as it seems at first glance?
The first feature is that this niche is already quite densely occupied. Moreover, she is busy, not only with uncles - garage workers, but also with large services and service stations. The second feature is that the business is seasonal. And this means that it is better to consider tire fitting as an additional, and not the main income.
The third feature is that you will have to invest in business. And it's not a couple of cents at all. In order to enter this niche. You need to understand what and how to do, how the equipment works, and what equipment you need. The best option for a start is a trailer installed in a crowded travel area.
When opening a tire shop, you must understand exactly what services the company can provide:
Here is a sample list of tire fitting services.
As an additional service, it is possible to provide on-site tire fitting around the clock. This service can be in great demand and well paid. You can also provide field services to corporate clients, firms and organizations.
Business account for 0 ₽ from Tinkoff Bank
For quality work, you will need the following equipment:
No tire shop is complete without equipment such as lifts and jacks, as well as pry bars and other tools.
B Vladislav, owner of a garage tire shop
After this season, everything gradually returned to normal. I raised my worker myself. At the moment, my income does not exceed 30-35 thousand per month. This is without taking into account the employee's salary, rent and bank payment. But now I have free time, and I'm doing business promotion.
K Konstantin, owner of a network of tire shops
To be serious and for a long time, you need to invest much more than 400-500 thousand. Purchase high-quality equipment, tools that will be able to work for more than one season. Understand that even expensive machines require maintenance and repair. Build a budget for advertising and services to help you stay afloat during the off-season.
Tire shops located on intercity highways are not so tied to the season. It has its own condition of existence. In addition to "passenger" equipment, they must have "cargo" equipment. And this is a completely different order of investments. A normal tire changer costs from 300 thousand, German or Italian - already from 600 thousand. Balancing - from 150 thousand, vulcanizer - from 120, etc. In a word, you can earn. Unfortunately, this is a highly seasonal service with fluctuating income and expenses. But if you ask me if I would undertake to organize such a structure again from scratch, I would answer no. And since we have already begun, we will develop further.
Join the investment club Money, where the total turnover of participants is 20 billion rubles
09/07/2021
This question hides the sacred right to make money and common sense that it’s not enough just to open a workshop, but otherwise it will still be necessary you can just burn out.
Entrepreneurial activity should bring benefits to all market participants - it is satisfaction on time for the work done for the client, sufficient profit for the owner of the tire shop and constant work for the station employee along with a good level of pay.
Tire fitting becomes quite a profitable business at some point, not only during seasonal tire changes, but also when the client likes your bus station - because of the convenience of location, reasonable prices, high speed of work and other comfortable little things. Effective advertising will help you attract new customers and squeeze everything out of this market, outdo competitors, which will not consistently suck the entire budget to the bottom.
Dynamic inflatable handbags are a variation of inflatable advertising. The mobility of the figures and their high height guarantee you 100% visibility. The result will not keep you waiting and there will be more customers immediately.
With all this, you will not have to spend money on rent, the figure will be in your full ownership. There will be no big costs - the handheld consumes electricity from a household outlet from 200 to 270 watts per hour, like a desktop computer. Also, once every few months, you will need to replace the waving hand.
In the Tire Service>> section of our website, you can choose a figure that matches your car service and your mood. All these handbags are inflatable advertising automakers.
Here you can find simple figures of the universal Light series and elaborate handbags of the Premium series.
General purpose inflatable figures with a simple cylindrical shape and full color print showing details.
The premium segment of handbags is made taking into account the real forms of a person, the shape of the body, head and other three-dimensional elements are emphasized, including additional structures like a wheel from a tire fitter>>.
