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How to Start a Used Tire Business

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Used Tire Business

Fast Facts

Investment range

$51,550 - $104,100

Revenue potential

$234,000 - $936,000 p.a.

Time to build

1 – 3 months

Profit potential

$70,000 - $280,000 p.a.

Industry trend

Growing

Commitment

Full-time

Every vehicle needs tires, and new ones can be expensive. That’s why more and more people are opting to buy used, which cost half as much. You could source from junkyards and tire dealers, start your own used tire business and provide a much-needed product while making good money in a steadily growing $35 billion US industry. 

But before you jump into the junkyard to start digging for gold, you’ll need to know how to launch and market your business, and to learn some financial aspects of business as well. Luckily, this step-by-step guide has you covered with all the information you need to launch a successful used tire business. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a used tire business has pros and cons to consider before deciding if it’s right for you.

Pros

  • Good Money – Acquire tires for cheap and mark them up
  • Large Market – All vehicles need tires
  • Provide Value – Many people can’t afford new tires

Cons

  • High Startup Costs – Garage, equipment, and inventory can be expensive
  • Crowded Market – Compete with many other used tire businesses

Used tire industry trends

Industry size and growth

used tire industry size and growth
  • Industry size and past growth – The US tire dealers industry is worth $35 billion after modest growth during the previous five years.((https://www.ibisworld.com/united-states/market-research-reports/tire-dealers-industry/)) 
  • Growth forecast – The US tire dealers industry is projected to continue to grow for the next five years. 
  • Number of businesses – In 2022, 31,895 tire dealers are operating in the US.
  • Number of people employed – In 2022, the US tire dealers industry employs 170,753 people.

Trends and challenges

used tire industry Trends and Challenges

Trends in the used tire industry include:

  • People are getting back out as the pandemic winds down, and putting more miles on their tires, which should boost the used tire industry.
  • Inflation has people seeking to cut costs, which means more people are likely to opt for used tires instead of new ones.

Challenges in the used tire industry include:

  • Used tires that fail quickly are a potential liability for used tire businesses.
  • Labor shortages are making it difficult for used tire businesses to find workers.

Demand hotspots

used tire industry demand hotspots
  • Most popular states  The most popular states for tire technicians are Iowa, North Dakota, and Oklahoma.((https://www.zippia.com/tire-technician-jobs/best-states/))
  • Least popular states The least popular states for tire technicians are Utah, Massachusetts, and Colorado.

What kind of people work in used tires?

used tire industry demographics
  • Gender –  3.5% of tire technicians are female, while 96.5% are male.((https://www.zippia.com/tire-technician-jobs/demographics/))
  • Average level of education – The average tire technician is high school educated.
  • Average age -The average tire technician in the US is 35.7 years old.

How much does it cost to start a used tire business?

Startup costs for a used tire business range from $50,000 to $100,000 or more. Costs include a garage rental, equipment, inventory, and an operating budget. 

You can take online courses and become certified as a tire technician through the Tire Industry Association. Courses are self-study and cost about $1,000 in total.

You’ll need a handful of items to successfully launch your used tire business, including: 

  • Floor jacks
  • Air impact gun
  • Sockets
  • Screwdrivers
  • Tire spreader
  • Wheel balancer
Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$100 - $300$200
Insurance$100-$300$200
Business cards and brochures$200 - $300$250
Website setup$1,000 - $3,000$2,000
Garage space rental$3,000 - $5,000$4,000
Equipment to change tires$2,000 - $5,000$3,500
Tire inventory$20,000 - $40,000$30,000
Labor budget$10,000 - $20,000 $15,000
Operating budget$15,000 - $30,000$22,500
Total$51,550 - $104,100$77,825

How much can you earn from a used tire business?

used tire business earnings forecast

The average cost of a used tire is about $90 and scrap tires will generally cost much less, especially if you’re able to partner with a junkyard. Your profit margin after rent and labor should be about 30%. 

In your first year or two, you could sell 50 tires a week bringing in $234,000 in annual revenue. This would mean $70,000 in profit, assuming that 30% margin. As your shop gains recognition, sales could climb to 200 tires a week. With annual revenue of $936,000, you’d make an outstanding profit of more than $280,000.

What barriers to entry are there?

There are a few barriers to entry for a used tire business. Your biggest challenges will be:

  • Funding the startup costs of your tire inventory and operating budget
  • Standing out and drawing business in a crowded market

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
How to Start a Used Tire Business

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Step 2: Hone Your Idea

develop a business idea

Now that you know what’s involved in starting a used tire business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research used tire businesses in your area to examine their products/services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a business that recycles old tires or shredded tires, or a used tire business that also offers automotive repair services.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as a certain tire brand, or used tires with more than the required tread depth.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

If you have the skills, in addition to selling and installing used tires, you could offer automotive repair. You could also sell new tires, tire rims, and other car products.

How much should you charge for used tires?

Prices for used tires are generally about 50% of their original cost. After all your costs, you should aim for a profit margin of about 30%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be broad, so you should spread out your marketing to TikTok, Instagram, Facebook, and even LinkedIn.

Where? Choose the location for your used tire shop

The location of your used tire business is crucial to its success. Consider setting up a shop in an industrial area with a high concentration of trucking companies and transportation businesses. This will increase your chances of receiving business from those who require heavy-duty tires for their fleets.

A location near a major highway or interstate is also ideal, as it will attract customers traveling long distances who may need tire replacements. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

used tire business rating

Step 3: Brainstorm a Business Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “tires” or “used tires”, boosts SEO
  • Name should allow for expansion, for ex: “Second Life Tires” over “Commercial Used Tire Solutions”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Summarize your used tire business, highlighting its focus on selling quality, affordable used tires and related services to vehicle owners.
  • Business Overview: Describe your business’s specialization in sourcing, inspecting, and selling used tires for a variety of vehicles, including cars, trucks, and motorcycles.
  • Product and Services: Detail the types of used tires offered, including various sizes and brands, along with services like tire fitting, balancing, and rotation.
  • Market Analysis: Assess the demand for affordable tire options in your area, considering factors like vehicle ownership rates and economic conditions.
  • Competitive Analysis: Compare your business to other tire retailers and service centers, focusing on your advantages like lower prices, quality assurance, or customer service.
  • Sales and Marketing: Outline your strategy for attracting customers, such as through local advertising, partnerships with auto repair shops, or online marketplaces.
  • Management Team: Highlight the experience and qualifications of your team, especially in areas like automotive services, retail management, and customer relations.
  • Operations Plan: Describe the process of acquiring, inspecting, storing, and selling used tires, including inventory management and customer service protocols.
  • Financial Plan: Provide an overview of financial aspects, including startup costs, pricing strategy, and revenue projections.
  • Appendix: Include supplementary documents such as supplier agreements, market research data, or detailed business licenses and permits to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to used tire businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your used tire business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

types of business financing
  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a used tire business. 

Step 8: Apply for Licenses/Permits

Business Licenses and Permits

Starting a used tire business requires obtaining a number of licenses and permits from local, state, and federal governments.

Most states have tread depth requirements as well as condition requirements for used tires. Check with your state to make sure the tires you sell are in compliance.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your used tire business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Shopmonkey, ARI, or Mitchell1, to manage your scheduling, inventory, workflows, and invoicing. 

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

Marketing

Here are some powerful marketing strategies for your future business:

  • Partnerships with Auto Shops: Forge alliances with local auto repair shops to become their preferred used tire supplier, offering them competitive prices and reliable service.
  • Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
  • Community Events and Sponsorships: Participate in community events or sponsor local sports teams to increase brand visibility and build a positive reputation within your target market.
  • Social Media Engagement: Leverage social media platforms to showcase your inventory, share tire maintenance tips, and engage with potential customers, creating a strong online presence.
  • Referral Programs: Implement a referral program offering discounts or incentives to existing customers who refer new clients, fostering customer loyalty and expanding your customer base.
  • Mobile Tire Services: Offer a mobile tire service, allowing customers to purchase and install tires at their convenience, providing a unique selling point in the market.
  • Discounts for Fleet Accounts: Collaborate with local businesses with vehicle fleets to offer bulk discounts, providing cost-effective solutions and attracting consistent business.
  • Seasonal Promotions: Run promotions tailored to specific seasons or weather conditions, such as winter tire discounts in colder months or summer specials, to align with customers’ immediate needs.
  • Online Marketplaces: Utilize online marketplaces and classified ads to reach a wider audience, tapping into online communities where potential customers actively seek used tires.
  • Customer Testimonials and Reviews: Encourage satisfied customers to leave positive reviews and testimonials, building trust and credibility among potential buyers.
  • Educational Workshops: Organize workshops on tire maintenance and safety, positioning your business as an authority in the field and attracting customers seeking informative resources.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your used tire business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your used tire business could be:

  • Reliable used tires for less
  • Same-day used tire repair and installation
  • We bring great used tires to you, fast 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a used tire business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in used tires for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in used tires. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a used tire business include:

  • Tire Technicians – install used tires
  • General Manager – scheduling, ordering accounting
  • Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

Running a Business

Used tires are big business, with the industry worth $35 billion and expected to continue to grow in the next decade. By opening your own used tire business, you could make quite a good living. You can easily learn to be a tire technician, and with a bit of an investment, you could build a great company. It will take hard work, and a passion to serve your customers, but you can be very successful while providing a valuable service at the same time.

You’ve got the business part down now, so it’s time to get your lucrative used tire business up and running!

Used Tire Business FAQs

How profitable is a used tire business?

They may not sound like much, but there’s good money in used tires. You can buy as scrap and sell for a healthy markup. You just need to be dedicated to providing customers with real value and service, and you can be successful.

What types and sizes of used tires should I stock in my inventory?

The types and sizes of used tires you should stock in your inventory depend on the local demand, customer preferences, and the types of vehicles commonly seen in your area. It’s important to carry a diverse range of tire sizes to cater to different vehicles, including passenger cars, SUVs, trucks, and commercial vehicles. Focus on popular tire brands and models that are known for their quality and reliability.

Can I start a used tire business on the side?

Starting a used tire business on the side is possible, but it requires careful planning, time management, and adherence to local regulations and licensing requirements. Research the market demand and competition in your area. Ensure you have adequate storage space for the inventory, a reliable supply chain for sourcing used tires, and a suitable infrastructure for managing customer inquiries, sales, and deliveries. Evaluate the time and resources you can dedicate to the business while considering the demands of your primary job.

How do I properly inspect and assess the condition of used tires before selling them?

Check the tread depth using a tire tread depth gauge to determine if the tires have sufficient remaining tread life. Inspect the tire sidewalls for any cracks, bulges, or signs of damage. Look for signs of uneven wear or irregular tire wear patterns, which may indicate alignment or suspension issues. Verify the manufacturing date to ensure the tires are not too old or expired. Check for any repairs or patches and assess their quality. 

Comments

  1. Dennis Reese says:

    where does a used tire shop purchase inventory of used tires? where are used tires purchased in volume at a wholesale price?

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How to Start a Used Tire Business