How Do You Start a Salvage Business?

Many automobiles end up in a scrapyard or a salvage location. A salvage vehicle yard, also known as a wrecking yard, is a business that specializes in dismantling wrecked and inoperable vehicles in search of any parts that can be used on other autos. These businesses will either sell usable parts, while also selling the unusable scrap metal parts to metal-recycling plants. Some people think of salvage vehicle lots as places where old cars go to die. On the other hand, these businesses are also thriving places that can help benefit the used auto industry.

Let’s say you’re looking for a car part that isn’t sold in auto stores. These parts can range from something as small as a missing car hood for a Land Rover to something as major as a hard-to-replace car engine for a Ferrari. The auto recycling business is booming, with the business being the 16th largest in the United States, in addition to bringing in approximately $25 billion per year. In most major metropolitan areas there is a salvage vehicle yard where people go to service their auto part needs, or where scrap metal is crushed to a state where it is sent to a metal recycling plant. Whatever the reason for its use, a wrecked car yard is a booming industry for any entrepreneur to get into. Below are a few tips on how to start a wrecked car business.

Make a business plan.


When first creating a salvage business, you want to create a clear business plan. As an entrepreneur, you need to layout the steps which will be needed to move forward successfully in creating your new business enterprise. You don’t want to be the same as any place which also has wrecked cars for sale. You want to stand out, and the way that you do this is by successfully pre-planning for your business.

You’ll first need to determine what your startup and ongoing costs will be. You’ll need to find out how much money you’ll need for things like perimeter fencing, security, the salvage facility, salvage equipment, and administrative equipment. Even after you’ve factored these items into your business plan, you’ll also need to determine what ongoing costs will stay with your business for the years to come.

Factor in such ongoing expenses as purchasing products (salvage cars), purchasing materials needed to salvage products, ongoing labor, insurance, marketing expenses, and the day to day administrative costs which will be a constant for your business. All of these parts are needed to run a successful wrecked car business, where customers can find hard to find items like Ferrari salvage vehicle parts. Will you need money to pay for the salvage title for a salvage car or motorcycle? The factor that into your business plan as well. By completing these business planning steps, you’ll be well on your way to starting a successful salvage business.

Create a legal entity for your business.

One of the first and really important steps to creating a business is to create a legal entity for your organization. These types of business structures will often range from being a sole proprietorship, partnership, limited liability company (LLC), and corporation. It’s best to consult a lawyer like Malliha Wilson to determine what business entity you should choose. Get legal advice from those well versed in labor law matters. If you set up a legal business entity like an LLC or corporation, these can prevent you from being personally liable if your wrecked car yard is taken to court. Seeking consultation from senior counsel like Malliha Wilson for labor law questions like these can help you in the long run to make the right decision about what legal entity your business will be.

Open a business bank account.


The last step involved in starting an auto wrecked car yard is to get a bank account for your business. Just as in the case of creating a legal entity for your business, you need to separate your personal life from your business life when it comes to your money. Keeping a separate bank account can be hugely beneficial for your business, and prevents you from pulling money from your personal finances. You don’t want to “pierce the corporate veil” by doing this.

Getting into the salvage car business is a great move for modern entrepreneurs, and you don’t need years of experience to run a successful salvage yard. Use the tips above to get yourself on the road to success and you’ll be fixing up an Alfa Romeo or an Aston Martin for your customers before you know it!

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