Are you about starting a salvage yard company? If YES, here is a detailed sample salvage yard business plan template & FREE feasibility report. Salvage yards purchase unwanted, used, wrecked or junk vehicles, strip them of all usable parts and components, which are then refurbished, sold, or recycled. If you are interested in starting a salvage yard, then you should be ready to conduct thorough feasibility studies and market survey before committing your money and other resources to it.
A Sample Salvage Yard Business Plan Template
Table of Content
- 2. Executive Summary
- 5. Job Roles and Responsibilities
- 6. SWOT Analysis
- 7. MARKET ANALYSIS
- 13. Startup Expenditure (Budget)
1. Industry Overview
Salvage yards buy wrecked cars, whether they be not running or beyond repair, to sell the parts in their yards. The cars provide much more value to the yard than what they originally paid, because they can sell all of the parts individually, meaning they can buy the car for a higher price than metal scrap yards.
Reports published by IBISWORLD shows that the Used Car Parts Wholesaling industry is composed of small, auto recycling yards that dismantle old automobiles and derive revenue by selling used car parts to repair shops, manufacturers, and other individuals. Industry operators derive their revenue from sales to various markets, including operators in the Auto Mechanics and Auto Parts Manufacturing industries.
Exceptions to this include major companies LKQ Corporation and Schnitzer Steel Industries Inc., which maintain large used auto parts wholesaling operations across North America. Increased per capita disposable income has had mixed effects on demand for industry products over the past five years.
The Used Car Parts Wholesaling industry is a major sector of the economy of the united states and it generates over billion annually from about 2,743 registered and licensed used car parts wholesaling companies. The industry is responsible for the employment of over 35,987 people.
Experts project that the scrap metal used cars parts wholesaling cum recycling industry to grow at 2.8 percent annual rate between 2014 and 2019. LKQ Corporation and Schnitzer Steel Industries Inc. are the market leaders in the used cars parts wholesaling industry.
If you follow the trends in the used cars parts wholesaling industry, you will realize that players in this industry position their salvage yards close to clients to reduce transportation costs and turnover time. This is one of the major reasons why you can easily find salvage yards located in manufacturing cum industrial estates, as well as highly populated urban areas.
Good enough, manufacturing facilities also demand recycled ferrous and nonferrous metals from industry operators, hence a win – win operation.
The used car parts wholesaling industry has come to stay and the good part of it is that it enjoys the support of environmentalists and the government of various nations since it is a means to preserve the earth from degradation, greenhouse gas emissions and environmental pollution.
Despite the fact that establishing a salvage yard business requires huge startup capital and rigorous processes, but the fact remains that it is indeed a profitable venture. The market for used cars parts and recycled scrap metal is large and can accommodate loads of investors.
2. Executive Summary
Jeff Nelson® Auto Salvage Yard, LLC is a U.S based licensed salvage yard cum recycling company with strong bias for general auto recycling, specialized motor vehicle dismantling and parts sales business. We have been able to secure a well – positioned facility in an industrial estate in Fort Wayne – Indiana; a facility that is highly suitable for the kind of plant that we want to build. We are in the industry to contribute our quota in saving the earth.
Jeff Nelson® Auto Salvage Yard, LLC will initially be involved in the buying or purchase of unwanted, used, wrecked or junk vehicles, strip them of all usable parts and components, which are then refurbished, sold, or recycled but will in the nearest future.
Our business goal is to become one of the leading used cars parts wholesaling cum recycling companies in the United States of America and we will make sure that we do all we can to compete favorably with leaders in the industry. Our workers are going to be selected from a pool of certified auto recycling engineers and technicians in and around Fort Wayne – Indiana.
We will make sure that we take all the members of our workforce through the required trainings that will position them to meet the expectation of the company. At Jeff Nelson® Auto Salvage Yard, LLC our client’s best interest will always come first, and everything we do will be guided by our values and professional ethics.
We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.
Jeff Nelson® Auto Salvage Yard, LLC is a private registered business that will be owned by Engr. Jeff Nelson, a recycling engineer per excellence who graduated with from Illinois Institute of Technology with a degree in Metal & Metallurgical Engineering and his friend and business partner David Brown (B.Engr. Automobile Engineering).
They have a combined experience that can help them build Jeff Nelson® Auto Salvage Yard, LLC to favorably compete with other salvage yards in the United States of America.
3. Our Products and Services
Jeff Nelson® Auto Salvage Yard, LLC was established with the aim of maximizing profits in the used cars parts wholesaling cum recycling industry.
We want to compete favorably with the leading salvage yards in the United States which is why we have but in place a competent quality assurance team that will ensure that every recycled product that leaves our plant meets and even surpasss our customers’ expectations and meet with best practices in the industry. Our products and services are listed below;
- Wholesaling of used motor vehicle starters, alternators, engines, transmissions and other used parts
- Dismantling of vehicles for the purpose of selling used parts
- General auto recycling
4. Our Mission and Vision Statement
- Our vision is to create a standard salvage yard business whose products and brand will not only be accepted in Fort Wayne – Indiana but also in other cities in the United States of America.
- Our mission is to provide reliable used auto parts to customers and standard recycled metal materials (ferrous and non – ferrous metal) that will assist the relevant industries in saving cost and also to contribute our quota in saving our world from unnecessary degradation caused by buried metal material waste.
Our Business Structure
Jeff Nelson® Auto Salvage Yard, LLC intends starting small in Fort Wayne – Indiana, serving individuals and used car spare parts dealers and industries within our locations, but we hope to grow big in order to compete with leading salvage yards in the industry.
At Jeff Nelson® Auto Salvage Yard, LLC, we will ensure that we hire people that are qualified, hardworking, creative, customer centric and are ready to work to help us build a prosperous business that will benefit all our stakeholders.
As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company. In view of the above, we have decided to hire qualified and competent hands to occupy the following positions;
- Chief Executive Officer
- Head, Technical Services
- Human Resources and Admin Manager
- Sales and Marketing Executive
- Salvage Yards Technicians and Operators
- Client Service Executive
- Truck Drivers
5. Job Roles and Responsibilities
Chief Executive Officer – CEO:
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Creating, communicating, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
Head, Technical Services:
- Serve as project manager of the organization; works directly with employees in the salvage yard
- Develops strategic plan by studying technological and financial opportunities; presenting assumptions; recommending objectives.
- Accomplishes subsidiary objectives by establishing plans, budgets, and results measurements; allocating resources; reviewing progress; making mid-course corrections.
- Builds company image by collaborating with customers, government, community organizations, and employees; enforcing ethical business practices.
- Maintains quality service by establishing and enforcing organization standards.
- Makes certain that the technical department performs efficiently, coordinates employee efforts, and facilitate communications between management and salvage yard cum recycling plant technicians and machine operators
- Ensures that the organization work in line with international best practices as it relates to used car parts wholesaling
Admin and HR Manager
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Defining job positions for recruitment and managing interviewing process
- Carrying out induction for new team members
- Responsible for training, evaluation and assessment of employees
- Responsible for arranging travel, meetings and appointments
- Oversee the smooth running of the daily office activities.
Sales and Marketing Manager
- Convince owners of used and abandon cars to sell to us
- Writing winning proposal documents, negotiate fees and rates in line with organizations’ policy
- Responsible for handling business research, market surveys and feasibility studies
- Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
- Create new markets cum businesses for the organization
- Empower and motivates the sales team to meet and surpass agreed targets
- Responsible for paying used car owners who sold it to us
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides managements with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting for one or more properties.
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for Jeff Nelson® Auto Salvage Yard, LLC
- Serves as internal auditor for Jeff Nelson® Auto Salvage Yard, LLC
Salvage yard cum recycling plant Technicians/Machine Operators (8)
- Responsible for general auto recycling, specialized motor vehicle dismantling and parts sales
- Responsible for installing, maintaining and repairing of all the recycling machines in the plant
- Responsible for operating recycling machines in the plant
- Responsible for sorting, shearing, shredding, torching and baling scrap metal to be sold to downstream metal smelters for further processing.
- Operating facilities for separating and sorting used and condemned metals for recycling
- Handle any other job functions as it relates to recycling materials.
- Responsible for towing purchased abandoned cars to our salvage yard
- Assist in loading and unloading used auto parts, scrap metal materials and recycled materials.
- Maintain a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
- Keep a record of vehicle inspections and make sure the truck is equipped with safety equipment, such as hazardous material placards.
- Inspect vehicles for safety issues and perform preventative maintenance
- Comply with hazardous waste truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
- Collect and verify delivery instructions
- Report defects, accidents or violations
Client Service Executive
- Welcomes clients and potential clients by greeting them in person or on the telephone; answering or directing inquiries.
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries
- Receives parcels/documents for the company
- Distribute mails in the organization
- Handles any other duties as assigned by the line manager.
6. SWOT Analysis
Jeff Nelson® Auto Salvage Yard, LLC engaged the services of a professional in the area of business consulting and structuring to assist our organization in building a well – structured used car parts wholesaling cum salvage yard business that can favorably compete in the industry.
Part of what the team of business consultant did was to work with the management of our organization in conducting a comprehensive SWOT analysis for us. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Jeff Nelson® Auto Salvage Yard, LLC;
We can boast of having liquid cash for the instant purchase of unwanted used cars and we have a united workforce. Aside from the synergy that exists in our carefully selected workforce, our product will be guided by best practices in the industry and our salvage yard cum recycling plant is centrally positioned in an industrial estate and it is built to fit into the design of a 21st century salvage yard cum recycling plant.
As a new salvage yard in Fort Wayne – Indiana, it might take some time for our organization to break into the market and gain acceptance especially from top profile clients in the already highly competitive used cars parts wholesaling cum recycling industry; that is perhaps our major weakness. Another weakness is that we may not have the required cash to pump into promoting our business the way we would want to.
The number of vehicle miles driven is a way to measure car and car part usage. Car parts incur wear with every mile driven and require replacement more often as usage increases. Cyclical use drives demand for new and used replacement car parts, bolstering demand for industry goods and services.
Total vehicle miles are expected to increase in 2019, representing a potential opportunity for the industry. As the average age of the vehicle fleet rises, industry revenue will increase.
Consumers may opt to purchase new or remanufactured automotive parts, which are superior substitutes to used parts.
Consumers tend to be more price sensitive during economic downturns, and increasingly opt to repair their motor vehicles with used parts, which are relatively less expensive than new or remanufactured alternatives. External competition for the Used Car Parts Wholesaling industry is expected to increase in 2019, posing a potential threat to the industry.
7. MARKET ANALYSIS
- Market Trends
One obvious trend in the used cars parts wholesaling industry is that players in this industry leverage on saving the earth and balancing the ecosystem to promote their business. As a matter of fact, governments all over the world are in the forefront when it comes to campaigning in favor of recycling materials. This is so because it will help save energy and the earth we live in will be the better for it.
If you are a keen follower of the trends in the used car parts wholesaling industry, you will realize that players in this industry ensure that they position their salvage yard close to clients to reduce transportation costs and turnover time. This is one of the major reasons why you can easily find salvage yards located in manufacturing cum industrial estates, as well as highly populated urban areas.
In spite of obvious recessionary challenges and in the wake of consumer preference shift toward green products and growth in environmental regulations that encourage recycling of scrap metal, the used cars parts wholesaling cum recycling industry is expected to experience healthy growth going forward as purchases of metal related products drive demand for the recycling of obsolete products.
Lastly, more and more manufacturing industries are beginning to see the benefits of going for recycling materials as against going for virgin raw materials in the production of their products. This is the reason why the industry is expanding and becoming more profitable and viable.
8. Our Target Market
Before starting our salvage yard business in Fort Wayne – Indiana, we conducted a market survey and feasibility studies and we are certain that there is a wide range of used auto car spare parts dealers and manufacturing / production factories that cannot successfully run their businesses without sourcing for used car spare parts from us.
In view of that, we have created strategies that will enable us reach out to various used car companies who we know can’t afford to do without our products. Below is a list of the people and organizations that we have specifically market our products and services to;
- Used auto spare parts dealers
- Metal production/manufacturing companies
- Automobile manufacturing companies
- Roofing and construction companies
- Ship manufacturing companies
- Manufacturers and Distributors
- Entrepreneurs and Startups who would need recycled raw materials from us.
Our Competitive Advantage
The used cars parts wholesaling cum recycling industry is an emerging market that is yet to be fully embraced globally, therefore there is little or no competition in the industry at the moment. Although, there is a relationship between the emerging players as they cannot do without the other. Since the industry is a multi-stage one, there is need for collaboration among the players in order to have a win-win situation for all the players.
Interestingly, a high percentage of Indiana’s income is from manufacturing. According to the Bureau of Labor Statistics, nearly 17 percent of the state’s non-farm workforce is employed in manufacturing, the highest of any state in the U.S. The state’s five leading exports were motor vehicles and auto parts, pharmaceutical products, industrial machinery, optical and medical equipment, and electric machinery.
Our competitive advantage lies in the economy of scales that Indiana offers to businesses such as ours and of course working with some of the best hands in the industry. Aside from the synergy that exists in our carefully selected workforce, our product will be guided by best practices in the industry and our salvage yard is centrally positioned in an industrial estate and it is built to fit into the design of a 21st century salvage yard.
Lastly, all our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Jeff Nelson® Auto Salvage Yard, LLC is established with the aim of maximizing profits in the used cars parts wholesaling cum recycling industry and we are going to ensure that we do all it takes to meet and surpass the expectations of our clients.
Jeff Nelson® Auto Salvage Yard, LLC will generate income by;
- Wholesaling of used motor vehicle starters, alternators, engines, transmissions and other used parts
- Dismantling of vehicles for the purpose of selling used parts
- General auto recycling
10. Sales Forecast
We are well positioned to take on the used cars parts recycling industry and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operation and grow our salvage yard to enviable heights.
We have been able to examine the salvage yard market, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the sales projections for Jeff Nelson® Auto Salvage Yard, LLC, it is based on the location of our business and of course the wide range of our products and target market;
- First Fiscal Year (FY1): $340,000
- Second Fiscal Year (FY2): $650,000
- Third Fiscal Year (FY3): $900,000
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor within same location where our salvage yard is located or where our target market exists. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
Some environmental experts stated that the world market for waste, from collection to recycling is worth around 300 billion Euros (US $410 billion). The salvage yard business is therefore a growing business that has futuristic benefits; there are markets in the developing world that can be tapped into especially in Africa, Asia and Latin America.
We are mindful of the fact that there are stiff competitions in the used cars parts recycling industry especially in the United States; hence we have been able to hire some of the best marketing experts to handle our sales and marketing.
Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to be equipped to meet their targets and the overall business goal of Jeff Nelson® Auto Salvage Yard, LLC.
Our corporate goal is to grow Jeff Nelson® Auto Salvage Yard, LLC to become one of the top 5 salvage yards in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with.
Jeff Nelson® Auto Salvage Yard, LLC is set to make use of the following marketing and sales strategies to attract clients;
- Introduce our salvage yard cum auto recycling company by sending introductory letters alongside our brochure to used car spare parts dealers and manufacturing/production companies and other key stakeholders in the industry.
- Advertise our business in relevant business magazines, newspapers, TV and radio stations
- List our business on yellow pages ads (local directories)
- Attend relevant international and local expos, seminars, and business fairs et al
- Create different packages for different category of clients in order to work with their budgets and still deliver good used car spare parts
- Leverage on the internet to promote our business
- Engage direct marketing approach
- Join local chambers of commerce and industries with the aim of marketing our products
- Encourage word of mouth marketing from loyal and satisfied clients
11. Publicity and Advertising Strategy
We have been able to work with our in – house brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market.
We are set to become the number one choice for used car spare parts dealers and manufacturing/production companies in the whole of Fort Wayne – Indiana and beyond which is why we have made provisions for effective publicity and advertisement of our salvage yard cum recycling company.
Below are the platforms we intend to leverage on to promote and advertise Jeff Nelson® Auto Salvage Yard, LLC;
- Place adverts on both print (newspapers and automobile magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our products
- Install our billboards in strategic industrial locations all around Fort Wayne – Indiana
- Distribute our fliers and handbills in target areas
- Contact manufacturing/production companies by calling them up and informing them of Jeff Nelson® Auto Salvage Yard, LLC and the recycle materials we sell
- List our company in local directories / yellow pages
- Advertise our business in our official website and employ strategies that will help us pull traffic to the site.
- Ensure that all our staff members wear our branded shirts and all our vehicles, towing vans and trucks are well branded with our company logo et al.
12. Our Pricing Strategy
Junk yards or auto salvage yards can make a lot of money if run right in a populated area. Iron runs $100 a ton, Catalytic converter scrap runs from $15-200 depending on the size and type.
At Jeff Nelson® Auto Salvage Yard, LLC we will keep the prices of our used auto spare parts below the average market rate for all of our customers by keeping our overhead low. In addition, we will also offer special discounted rates to all our customers at regular intervals.
- Payment Options
The payment policy adopted by Jeff Nelson® Auto Salvage Yard, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Jeff Nelson® Auto Salvage Yard, LLC will make available to her clients;
- Payment via bank transfer
- Payment via online bank transfer
- Payment via mobile money
- Payment via Point of Sales Machines (POS Machines)
- Payment via check
In view of the above, we have chosen banking platforms that will enable our client make payment for used car spare parts and recycled metal purchase without any stress on their part.
13. Startup Expenditure (Budget)
The tools and equipment that will be used in setting up a salvage yard are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a standard salvage yard cum recycling plant; it might differ in other countries due to the value of their money.
However, this is what it would cost us to set up Jeff Nelson® Auto Salvage Yard, LLC in the United of America;
- Business incorporating fees in the United States of America will cost – $750.
- The budget for Liability insurance, permits and license will cost – $3,500
- Acquiring facility that will accommodate the design of salvage yard cum recycling plant we want to build will cost – $250,000.
- The amount required to purchase the needed dismantling and scrap metal recycling equipment and machines – $120,000
- Equipping the administrative office (computers, printers, projectors, markers, servers / internet facility, furniture, telephones, filing cabinets, and electronics) will cost – $30,000
- Amount required to purchase the needed software applications to run our business – $ 3,500
- The cost for start-up inventory (purchase of used and condemned cars) – $100,000
- Launching an official Website will cost – $500
- Amount need to pay bills and staff members for at least 2 to 3 months – $70,000
- Amount needed to acquire trucks – $50,000
- Additional Expenditure such as Business cards, Signage, Adverts and Promotions will cost – $5,000
Going by the report from the market research and feasibility studies conducted, we will need about six hundred and fifty thousand (650,000) U.S. dollars to successfully set up a medium scale but standard salvage yard cum auto recycling plant in the United States of America.
Generating Funds/Startup Capital for Jeff Nelson® Auto Salvage Yard, LLC
Jeff Nelson® Auto Salvage Yard, LLC will be owned and managed by Engr. Jeff Nelson and business partner, David Brown. They are the financiers of the business which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.
- Generate part of the startup capital from personal savings and sale of his stocks
- Generate part of the startup capital from friends and other extended family members
- Generate a larger chunk of the startup capital from the bank (loan facility).
N.B: We have been able to generate about $200,000 (Personal savings $170,000 and soft loan from family members $30,000) and we are at the final stages of obtaining a loan facility of $450,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
14. Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting Jeff Nelson® Auto Salvage Yard, LLC is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to sell our used auto spare parts a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.
Jeff Nelson® Auto Salvage Yard, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Securing a standard facility to build a standard salvage yard: Completed
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting Feasibility Studies: Completed
- Generating part of the startup capital from the founders: Completed
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents: In Progress
- Design of Logo for the business: Completed
- Purchase of repair and installation tools and equipment: Completed
- Printing of Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of the needed auto dismantling tools and equipment, recycling machines, equipment and trucks: In Progress
- Purchase of the needed furniture, office equipment, software applications, electronic appliances and facility facelift: In progress
- Creating Official Website for the business: In Progress
- Creating Awareness for the business: In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with vendors and key players in various industries and delivery points for used auto spare parts: In Progress