Starting a dealership business is one of India's most lucrative and easiest business ideas. It involves distributing or selling particular products in a specific area. As a dealer, you will purchase goods directly from manufacturers and sell them to your customers or clients with a profit margin. You can establish your business with minimal investment with adequate planning and strategies. The best part about running a dealership is that you don't need a hefty investment to purchase or stock inventory in a warehouse.
Are you planning to become a dealer in India? Look no further! Here, you will find an outline of starting a business in a dealership!
Understanding the Dealership Business Model
Before you become a dealer, understand that each item available in the market usually reaches its customers via distributors and suppliers. India has a hierarchy system involving various contact points between manufacturers and end customers. Each product passes the supply chain, where manufacturers send products to dealers. Dealers pass them on to distributors who ship the products to retailers, where they ultimately reach the customers.
Read Also: How to Start a Business - A Step-by-Step Guide Steps to Become a Dealer and Start a Dealership
Have you made up your mind to start a dealership in India? Here is how to get a dealership:
Step 1: Identify the Industry and Product
Select the product or industry you want to deal in, be it electronics, automobiles, pharmaceuticals, consumer goods, etc.
Step 2: Conduct Market Research
Identify the market demand, target audience, competition, and potential suppliers to determine your business viability and success potential.
Step 3: Select the Right Manufacturer
Select reputable manufacturers with good quality products, favourable collaboration terms, and great after-sales support.
Step 4: Business Registration and Legal Compliance
Follow your local or industrial regulations to register your dealership, including obtaining the necessary permits, licenses, and certifications for business operations. These include trade licenses, GST registration, industry-related approvals, etc.
Step 5: Arrange Capital and Financing
Assess your business’s initial investment, inventory, infrastructure, and working capital needs to arrange the required money from sources like your savings or a Business Loan.
Step 6: Secure a Suitable Location
Choose a strategic location considering factors like visibility, accessibility, infrastructure needs, proximity to the target market, etc.
Step 7: Build a Strong Team
Hire skilled staff to manage your business operations, sales, administration, customer service, etc. Train them properly to ensure professional customer experiences.
Read Also: 15 Zero Investment Business Ideas In India Benefits and Challenges of Becoming a Dealer
A dealership is a highly lucrative business with minimal initial investment. However, you must know the benefits and challenges involved to succeed.
Advantages of Being a Dealer
Profit Potential
As a dealer, you will purchase goods from manufacturers and supply them to retailers while keeping a profit margin in between. Given its low investment requirements and potential product demand, the dealership business holds significant profit potential.
Established Brand Association
If you plan to deal in branded products, you can establish brand associations by becoming an exclusive dealer of a preferred brand and get additional margins.
Flexibility in Business Operations
Being a dealer, you purchase finished products from manufacturers and sell them to retailers. You are not involved in the production, quality check, and other manufacturing procedures. So, you have the flexibility of conducting the business at your convenience hours.
Challenges Faced by Dealers
Initial Investment
Although the initial investment is not hefty for a dealership business, you still need some investment for hiring staff, setting up an office, and paying the manufacturer before you receive money from the retailer or corporate customers.
Market Competition
Since a dealership is an easy business with minimal investment and a high-profit margin, there is increased competition in the market offering better deals to the retailers. So, you must keep your quotes competitive to gain business.
Inventory Management
While running a dealership business, you must keep a balance between demand and supply. You must stay in touch with retailers to monitor market demand and inform manufacturers about upcoming demand and trends.
Requirements in Dealership Agreement
To start a dealership, you must have an agreement with the business owner. Called a dealership agreement, it is a document that details the terms and conditions for business operation. Some of the requirements it must include are:
- Dealership name and location
- Products and services offered
- Compensation scheme for the salespeople
- Dealer perks like discount schemes and training facilities
Spell out and confirm all these details before signing the agreement. Once the document is ready, create a business plan to outline the dealership's business model. Moreover, bring all permits and licenses in place before starting the dealership. Finally, recruit skilled staff and get started!
Keep an Eye on How Your Company is Doing
Create a network and maintain contact with your buyers and wholesalers as far as possible. Keeping an eye on the company's performance will help retain the parties and support business growth. Dealership business ideas are in high demand and profitable without a hefty initial investment. If you need financial support to start a dealership, you can get a small Business Loan from Hero FinCorp and start your dealership business. However, to be eligible for an unsecured Business Loan, you should have a minimum experience of up to five years in a similar field.
How Can a Business Loan Help to Become a Dealer?
You will need some initial investment to become a dealer in India. Common expenses include hiring staff, marketing, inventory management, setting up an office, market research, meeting working capital needs, etc. A Business Loan can cover the associated expenses without any usage restrictions, helping you become a dealer without worrying about finances. Hero FinCorp offers unsecured Business Loans of up to Rs 40 lakh at competitive interest rates and flexible repayment tenures of up to 60 months.
Also Read: What are the different types of Business Loans available in India?
How to Apply for a Business Loan Online at Hero FinCorp?
Are you planning to apply for Business Loan to start or expand your dealership business? These are the steps to follow:
- Visit the Hero FinCorp website or download the loan app.
- Go to the Business Loan section and click ‘Apply Now’.
- Fill out an online application form with all the details and documents.
- Enter your loan details like the loan amount, repayment tenure, etc.
- Receive a reference number that you can use for future reference.
- Talk to a customer representative and provide additional details as required.
- Accept the loan offer to get disbursal directly into your bank account.
Read Also: How to Start a Startup in India?
Conclusion
Understanding how to get a dealership and keeping an eye on details is crucial to establishing a profitable dealership business. Although you don't need a large investment to become a dealer, you can apply for a Business Loan from Hero FinCorp to cover the costs and meet your working capital needs. So, wait no longer and grab this opportunity to take your dealership to the next level without worrying about finance.
Frequently Asked Questions
1. How do I become a successful dealership?
Doing market research, setting sales goals, identifying the products with high supply and demand, marketing the business, and monitoring sales performance are the best strategies to become a successful dealership.
2. Who is bigger distributor or dealer?
Distributors are bigger as they serve larger areas. A single distributor may sell products to several local dealers in an area.
3. How many types of dealers are there?
There are two types of dealers: direct and indirect. Direct or authorised dealers source products from the manufacturers and sell them directly to end consumers. Indirect dealers deliver them to retailers, who finally sell them to end consumers.
4. Who gets paid the most in a dealership?
The payment model in a dealership varies depending on the industry, market demand, location, brand, etc. Usually, car dealerships are highly profitable due to consistent vehicle demand.
5. What is the difference between a dealership and a distributorship?
Distributors sell products within a particular territory or region with exclusive rights. Dealers purchase products from distributors and sell them to end customers.
