The 21 Reasons I Lost $102,387.53 in My Small Used Car Business.

Dean Benson
8 min readMar 28, 2022


(Everything you need to know to totally ruin a used car business.)

My hope in writing this is that someone will learn from some of my pitfalls, mistakes, etc., and be able to succeed where I failed. I tried my best to remember all the things I ran into.

As in any human endeavor, your experience may be different. Good luck!

  1. Experience- I had none. I had only sold cars for 2 weeks in 1979 for a back-woods Ford dealership 30 m iles south of St. Louis, MO. and I failed at that, badly. I let the long-time salesmen run me out of the business. They were brutal. All they wanted was for me to be gone so the “ups” ( walk-in customers) would come to them. They did not want any competition for the walk-in trade. I also didn’t get any training, not even from my manager, etc. So I lacked any real knowledge of the car business, and I was arrogant enough to think once I started my business 35 years later, that I didn’t need it. Buy low, sell high, etc. It's gotta be that easy, right? WRONG, Dean!

2. Mechanical knowledge of cars. None. I was never a mechanic or even close. So I had to hire out all my work. My thought was that if it took 20 mins or was cosmetic, ie.l glue or screw it back on, I could do it. Almost everything was easy if you knew how to do it, but I didn’t. Then there were the things that were harder, fuel pumps, transmissions, etc. Even worse, I had to rely on mechanics close by the lot, and not the most reliable, quick, or inexpensive. I had to use retail work for a wholesale application… lost a ton of money that way!

3. Location: I didn’t think of scouting out a good location. I was starting with a small travel trailer in the back of a friends’ real estate company. No one knew I was there! I could not be seen from the road. I moved down the road, but still not a lot of road recognition. The one thing I did right was to be in a county-island, without city sales tax. I thought that was a really great thing, it was actually so so. Nowadays, you can sell almost anything on the internet, and the location is not quite as important, but still means a great deal!

4. Rules, laws, and regulations. I tried to find the laws, and regulations for dealerships, but I missed a couple, even after researching it. Luckily, the state MVD regulator was kind and helped me to understand and comply. (I got lucky, don’t count on that). The rules were long and deep, at least here in Maricopa County, Arizona. Research and ask questions. Get an appointment with the inspector in your area. In spite of what others told me, they were very helpful in getting me up and running. They even helped me with shortcuts and ways to work around items I couldn’t do

5. Other dealers nearby. This was good and bad. I made friends with one or two, but the others wanted me out. My friends and I would share ideas and things needed, like printed “Moroni stickers”, sales forms, generic stuff, etc. We even traded customers if we knew our friend had a car that fit a customer, and I didn’t. We would either pay a bird-dog fee or “ owe one”. Bird dogs being a fee, usually $100-$200, predetermined, thinking that was better than nothing, and it helped keep the customers away from the big dealers. That was good. The other dealers, though, just bad-mouthed me and tried to get me out of business.

6. The Internet: I did the website with a company I had used before, it was expensive and fairly useless. I got more business from Craigslist and eBay. I did not research pricing, etc. I paid way too much and ended up doing most of the web design, and upkeep personally, and that soaked up valuable time. Internet marketing is THE MOST IMPORTANT PART of marketing now. You cannot ignore the other marketing venues, as you need as many bullets in your “gun” as you can have. So don’t ignore any viable venue, and watch the costs, above all! Use social media too, it’s almost better than t.v.7.

7. Financing for buying cars. The auctions let me set up a flooring line (50 k for each of the two auctions I attended). The interest rate was about 10%, and it seemed o.k. if I sold the cars fast enough. (I never seemed to). The moral of this tip is to watch your finance flooring costs, and use your own money when you can. It will mean growth will take a little more time, but it will be more solid.

8. Financing for customers. The regular companies that finance used cars would not take me on as a client, as I was new and did not know anyone or anything for that matter. So I resorted to the high interest-tough money companies that were hard to work with, and I made no money due to the requirements of the loans. I resorted to making my own loans out of my personal finances… BIG mistake! This is what mainly drove me out of the business. Never use your own money to sell cars. Especially if you are a big “softie” and sell cars with low down payments, to people with horrible credit histories, and a lack of integrity.

9. Insurance. Getting the bond required was hard. Not many insurance companies will write a bond for someone who hasn’t been bonded before and as a brand new company. It cost me a small fortune. I should have shopped around more.

10. Licensing. It took me 6 weeks after I applied to get my dealer’s license. I had waited until everything was ready to apply. Don’t wait, try to time everything so it coincides. It took more money and time than I dreamed it would.

11. Liability insurance: I wasn’t aware that the bond did not cover my insurance, also… another big chunk of money. Be ready for this.

12. Where do you get cars to sell?? I tried ads that said we buy cars, etc. I answered for sale ads from individuals, who turned out to be curb-stoners, (unlicensed people), etc. Not a good thing., So I went to the auctions. I bought very well, but the cost of money, borrowing from credit cards, or getting a flooring line was expensive. Not a big deal if you sold the car quickly and paid the credit off, but bad if you didn’t. It never seemed fast enough! I did finally get the money to be able to buy at the auctions, and I did pretty well. If you go to the auctions, be careful that the seller isn’t bidding against you. Be friendly and courteous to the auctioneers, and the lane people, they can really help or hurt. I finally found a good reliable wholesaler, but a little too late. I would say to check in with these guys, but be careful when you are new, they can take advantage of your naivete easily.

13. Always use a Vehicle Identification Number decoder. We did not trust Carfax back then, it was new. I always checked the “VIN” number for the vehicle’s equipment, and if it looked fishy, throw it back.

14. Selling. This was my forte’. I was able to sell, just not the way I should have. I used friends, acquaintances, etc, which was fine until they stopped making the payments. Then it turned BAD. Lost a lot of friends or at least what I thought were friends, this way. I never got enough down payment, to cover the expenses when I had to repossess it because they would tear it up and not maintain the car. I would have to rehab the car to resell it if I could repossess it. I usually could, but it was a big fight every time, not worth the money. My own mechanic that I trusted bought a truck and when it broke down, the payments stopped. He hid the truck so I couldn’t find it to repossess it. Two years later, he brought it to a friend of mine, dropped it with the keys and said, “good luck”. I spent a few hundred repairing it, not to mention the money I lost in interest and the value of the truck.

15. Hiring.., I hired a very nice lady, who is still a friend. That was my only employee. I sent out my repairs, etc. I finally had to let go of my employee because I wasn’t making ends meet. She was great, but we did butt heads, as people do, but we got over that stuff. If the money was coming in, I would have had to hire more people, and that would be ok, but I am allergic to paperwork and that is intensive for me, so I would have to have help with that. More people, more money out. I needed to understand the tax and employment rules better.

15. I got dealer plates from MVD, they were cheap, but remember, they don’t make you invulnerable to fines, tickets, etc. You aren’t clergy… or are you?

16. Time: it’s a thief! When you think you are ahead, think again. Make sure you stay ahead. Never relax and watch old sitcoms or soap operas. It will bury you. Enough said.

17. Stick to cars and SUVs: I tried a couple of motorcycles and even a minibike. Better to just do what you know. I had a couple of trucks, I stayed with pickup trucks, no big commercial units, as I didn’t know much above a 1-ton pickup truck. If you know more about other vehicles, fine, go for it.

18. First impressions are important. I used a travel trailer for an office… not bad, but brick and mortar are much better. Look successful, that’s the way to get successful.

19. Build your brand, use your logo to promote your business! Get the word out. Find all the avenues that are free or cheap, so you don’t break the bank. I went as far as passing out flyers up and down the street, I was on. Even to a couple of businesses that weren’t too reputable, I was desperate.

20. Use network groups to promote. An hour here and there can get you more leads and sales than you can imagine. I poo-pooed these, thinking I didn’t have the time. Was I wrong! Again!


If I could find a way to do it again, You bet! Times, rules, and the market have changed, It isn’t a simple business anymore, but I would get right back in, once it is under your skin, it is hard to leave. I still look for bargains in cars that I could flip. Watch out for laws against that.

If you like this story, come listen to me on SKY 7 digital radio. I’m on the Only Classic Rock channel, playing Classic Rock 7 days a week from Noon to 3 pm Arizona time. Listen in, you may hear some of my “Dean-isms.”

Dean Benson

“The Dean of Rock and Roll”



Dean Benson

Looong time married, 2 daughters, you can't scare me easily. Been through a lot, but boy do I have stories and experience. I even remember some!!!