His expertise in getting deals done is The average vehicle owner will change their oil about every 5,000 miles. We believe that this market is always on the lookout for high quality, rapid service with as much convenience as possible. Business plan: A strong business plan helps you make accurate projections for earnings and market growth. 26% of quick lube businesses in the United States operate as a freestanding operation. Instead, the two halves work hand-in-hand to create a highly fuel efficient car, especially when driving locally. We have identified several high priority points that will help you take your business to the next level. Operating income for the Quick Lube segment grew from $95 million in 2015 to $153 in 2018, or 17% compounded annually. Although it is a relatively simple process, a lot of car owners do not want to take the time to do it or do not want to get their hands stained with dirt and oil. 3. San Diego County hosted more than 32 million visitors in 2012; collectively they spent an estimated $8 billion. Investigate numbers that dont seem right, and dont be afraid to call in an accountant for extra help. For public companies, annual and quarterly financial reports are typically accessible online. Sally Lauckner is an editor on NerdWallet's small-business team. As 2018 kicked off, Jiffy Lube launched a new brand extension. NerdWallet Compare, Inc. NMLS ID# 1617539, NMLS Consumer Access|Licenses and Disclosures, California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812, Property and Casualty insurance services offered through NerdWallet Insurance Services, Inc. (CA resident license no. These similar businesses, often referred to as comparables or "comps," can orient you within the marketplace and provide context about the sector. Easy On Oil is a well-positioned quick lube shop that will serve the needs of the people of San Diego. Performing services on brake systems to coolant flushes. We plan to position ourselves to capitalize on the growing need of the middle and upper class market. But if you have more financial information on hand, you can try a more comprehensive business valuation tool that includes both profit and revenue, as well as assets and liability, in the calculation. The most popular has been around for a while, hybrid-electric cars. possible purchase price and outline opportunities for increasing future revenue. At Easy On Oil,we face over 15 auto repair and auto parts competitors in the local area. A good rule of thumb is to estimate how much a piece of equipment would sell for today, and use that number. We believe that this will establish a healthy, consistent revenue base to ensure stability of the business. But where the discounted cash flow method accounts for more fluctuations in a business's financial future, the capitalization method assumes that calculations for a single period of time will continue in the future. Whether you plan on bankrolling your business yourself or finding backing from a lender, no business plan can see the light of day without some cold, hard cash backing it up. Easy On Oil is a San Diego registered LLC quick lube business that will provide high quality oil changes at a reasonable price. Bigger companies have an advantage in brand recognition, but the operations of individual locations are similar. On average, 2/3 of business comes from . In the United States, about 450 million oil changes are performed each year. Your SDE represents the true, monetary value of your business, but your SDE multiple values your business according to industry standards. This offers incredible value to customers who need their cars fixed right away. Internet companies or buyers interested in the tech sector can use online directories like Crunchbase and platforms like AngelList, which provide information about startups, funding, investors, and more. (Business Wire), #14. Our diverse management have put plans in place to make sure our regulars feel appreciated by rewarding them for being loyal customers. Also our cash flow is impaired and business hours are limited for a retail establishment (Monday through Friday 9:00 a.m. to 6:00 p.m.). A typical location performs about 1,200 jobs per month. OK92033) Property & Casualty Licenses, NerdWallet | 55 Hawthorne St. - 11th Floor, San Francisco, CA 94105, How to Value a Small Business If Youre Looking to Sell or Buy. As a result, the need for reliable and convenient quick lube store has grown rapidly in California. Business model: Your business model demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. Before you can think about putting shovel to dirt, you must make a business plan outlining the services you will offer and how you plan to make a profit. When evaluating offers, please review the financial institutions Terms and Conditions. Many or all of the products featured here are from our partners who compensate us. The keys to success include having quality employees, efficiently managing costs of goods and location, and great customer service. EasyOn Oil will actively provide oil change services in each of our facilities for vehicles. Application and Obtaining Tax Payers ID: Application for business license and permit: Leasing, renovating and equipping our facility: Generating part of the startup capital from the founder: Printing of Packaging and Promotional Materials: Purchase of software applications, furniture, office equipment, electronic appliances and facility facelift: Creating Official Website for the Company: Creating Awareness for the business (Business PR): Health and Safety and Fire Safety Arrangement: Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry. Depending on the degree of corporate transparency, you can also see what comparable businesses are selling for. Temple worked as a top sales rep at Chevrolet for over 13 years. Every state has a different process when it comes to business licensing. Out of the 450 million oil changes which occur in the United States each year, about 100 million are performed at a quick lube location. Also our product prices will be gotten after the appropriate retail is determined to make sure that the shelf price represents a value to the consumer and the retailer has a 50% margin. Victory Lane Quick Oil Change. However, due to the confidentiality agreements stipulated by some of our current sellers, were not able Jiffy Lube has the most locations in the United States for the quick lube industry, with over 1,900 facilities as of February 2017. Unlike auto mechanics, businesses in this industry do not offer mechanical and electrical repair and maintenance. How to Valuate a Business One way to calculate a business's valuation is to subtract liabilities from assets. 16% of the oil changes which occur within the quick lube industry feature Valvoline products. We understand that starting a business like ours can be very expensive due to the high cost of equipment. Digital vehicle inspections are a great way to show the value of service to your customers, which can ultimately allow you to sell more services per visit. When it comes to all-electric cars, consumers either have an inexpensive car with very low range or a very expensive car with comparable range to an ICE car. Put your license proudly on display at your business. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. The income approach to business valuation determines the amount of income a business can expect to generate in the future. So, sellers should find out as much as they can about companies that are similar in size, business model, and revenue, if that information is available. Verifies vehicle performance by conducting test drives; adjusting controls and systems. (Digital Dealer), #18. Read more. Together with our team, these experts will help ensure you get the best This method can be used to value a business for sale as well as raising capital. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free. Home Statistics 25 Quick Lube Industry Statistics, Trends & Analysis. Additionally, franchising a business comes with an entirely different set of understandings and obligations. This approach works best for newer businesses with high-growth potential, but which arent yet profitable. Implement an ongoing training program. Our opinions are our own. Generating Funding/Start up Capital for Easy On Oil. (IMR Automotive Research), #9. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. The US automotive oil change and lubrication industry includes about 5,000 companies with combined annual revenue of about $5 billion. (Thats why this number is subtracted from the SDE in valuation calculations.) Rounding out this list includes establishing solid relationships with your vendors and distributors, hiring the right people, and promoting your business. So how do we make money? We believe earnestly that this will also make our customers more comfortable working with us when they see the same technicians each time they come in for changes. Most of our competitors have adopted point-of-sale systems in their stores. Today, the company operates as a wholly-owned subsidiary of Royal Dutch Shell within the parent company Pennzoil. Keeps shop equipment operating by following operating instructions; troubleshooting breakdowns; maintaining supplies; performing preventive maintenance; calling for repairs. Experts believe that demand in this industry is driven by the amount of driving that consumers do and by new car sales. (Valvoline), #24. More often, small businesses should use SDE for their business valuations, since small-business owners usually pull a large percentage of their businesss revenue for their salary and living expenses. Car owners instead prefer to pay someone else to do it for them. To reach our local customer base, we will employ a marketing manager. We also need enough business cards for three years for our workers and flyers advertising the grand opening to be distributed and posted in the area. Cost of incorporating the Business $750. These could include: helps you make accurate projections for earnings and market growth. Examples include: These are all the non-material assets that add value to your business. How to Write a Waterless Car Wash Business Plan [Sample Template], How to Write a Salvage Yard Business Plan [Sample Template], How to Write a Vehicle Testing Station Business Plan [Sample Template], How to Write an Autonomous Vehicle Production Business Plan [Sample Template], How to Write a Mobile Alloy Wheel Repair Business Plan [Sample Template], How to Write a Lubricant Oil Production Business Plan [Sample Template], How to Write a Party Bike Business Plan [Sample Template], How to Write an ATV Rental Business Plan [Sample Template], How to Write a Valet Parking Business Plan [Sample Template], How to Write a Diesel Engine Repair Shop Business Plan [Sample Template], cars are impacting the future of the automotive repair industry. NerdWallet strives to keep its information accurate and up to date. (Business Wire), #16. Later, too, you can use this list to create an overview of your companys value for potential buyers. In fact, most quick lube operators choose to franchise for this reason. Before even thinking about how to value a small business for sale, both sellers and buyers should organize their financial records thats crucial for accurate calculations. Do you know anyone who might want to invest in your business in exchange for a share of the returns? In 2016, 45% of consumers asked for premium products from their preferred quick lube business. The cost of an oil. But as a seller, you have to put some number on your operation, especially if you want to be compensated for what you've built, taking into account all kinds of equity. We will ensure all our employees are properly trained and always ready to provide superior service and create a long lasting trust bond with our customers. This does come at a cost though. second to none. Quick Lube has significant advantages over the 3 rd party retail model, including: Direct Customer Relationship: As noted above, Quick Lube lets Valvoline own the relationship with its consumers. Its crucial that prospective buyers understand SDE, too. Why do diesel exhaust fluid (DEF) prices keep rising and falling? Once you've determined to open a quick lube business, the first thing to do is to put together a business plan. Understanding code and the relationship that software has with new vehicles will become an essential skill set for anyone working in the auto repair industry in the future. We will give a guarantee on all our repairs for a certain amount of miles or time. In hybrid-electric cars, the electric systems are used to even out the power needs in the vehicle. Another common method attributes value to a business based solely on its assets. (Car Wash Magazine), #7. Discounted cash flow method: This method determines the present value of a business's future cash flow. Keeps equipment available for use by completing preventive maintenance schedules; installing component and part upgrades; controlling corrosion; completing winterization procedures. As revenues have increased, however, net profits have decreased by 2.3%. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. into the automotive business. Meredith has worked as a writer and editor for more than a decade. to post every listing on the site. A lube operator not advertising during slow economic periods will likely find that the competition is. We will attract and maintain a loyal customer base through our customer-oriented focus on business. So, most maintenance on electric cars will be more software driven. Also our plans to make sure we maintain a referral network will give us the needed push in the industry. We will offer these distinct but complimentary services coupled with unprecedented customer service, something that the industry is not known for having. Long wait for services and parts wont b entertained at East On Oil as we strive to offer the best service and product in our market. Any business can use this approach to business valuation, as long as they can gather sufficient, relevant data on which to compare their business. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. Maintains vehicle records by annotating services and repairs. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. 1. Order Reprints. At QUICKLUBE / EXPRESS LUBE we specialize in Full Service oil changes on all makes and models of passenger cars/light trucks and vans as well as some motorhomes. effective manner and I never once felt like I was in the dark. Based on currently available information, Valvoline has a total of 1,595 system-wide stores. The average price for a multi-point oil change within the quick lube industry is $36.82. Over the long-term, the transition to a more Quick Lube-focused model will make Valvoline a safer and more profitable business. These services will include full oil changes, lubricate the chassis of automotive vehicles and provide other automotive repair and maintenance services, such as tire rotations and liquid flushes. (NOLN Fast Lube Operators Survey), #23. Valvoline operates the second largest quick lube service chain by number of stores in the United States, with Valvoline Instant Oil Change SM, and the third largest quick lube service chain in Canada, with the Valvoline Great Canadian Oil Change brand. In fact, most quick lube operators choose to franchise for this reason. Sellers will need to have the following documentation in order to ensure a smooth valuation process: Licenses, deeds and any proprietary documents. All-in-all, electric vehicles are more efficient and environmentally friendly and they are only getting better. We at Easy On Oil have analysed this and we will favorably compete by focusing on convenience and offering a high level of customer service. And with hundreds of millions of vehicles on U.S. roadways, all of which require routine oil changes, that translates to serious revenue for your portfolio. Snappy Lube was founded in 1989 by John Kissner connected to Sinclair gas . Like EBITDA, business owners calculate SDE to determine the true value of their business for a new owner, so your SDE will include expenses like the income you report to the IRS, non-cash expenses whatever revenue your business actually generates. I also like doing business with a local firm vs. a national chain. For that reason, projections of growth for the industry are as low as 0.7% within the forecast period in some markets. New Constructs, LLC. This segment comprises approximately 25% of our revenue at Easy On Oil. 8 Stalls & Pits! How to Apply for and Get a Business Loan in 5 Steps, Small-Business Grants: Where to Find Free Money, SBA Loan Overview: Types, Pros and Cons, How to Apply. Does becoming a quick lube business owner sound good to you? Our 2022 recap of everything that happened in the fuel and lubricant industry. Sample 1 Sample 2 Sample 3 Based on 6 documents Victory Lane includes basic maintenance checks such as flushes and fills, antifreeze and wiper fluids. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. Maintaining the website with new trends and advises. Determines vehicle condition by conducting inspections and identifying worn and damaged parts. Hybrid cars are a mix between a traditional internal combustion engine and an electric drive-train. In comparison, leasing costs are just 9% of the overall expenses for the average location. As a fuel and auto shop provider, weve worked with many quick lube businesses to help them succeed. To calculate your businesss SDE: Start with your pretax, pre-interest earnings. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. On the sell side, a deep understanding of your industrys trends can help you reach an informed valuation that reflects your business assets as well as the current market. From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. Businesses in this industry are very important to the general automotive industry. Just 9% of the sales generated by the quick lube industry come from clients that own vehicle fleets. Our goal is to capture a majority of the market in little or no time. About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. These services will include full oil changes, lubricate the chassis of automotive vehicles and provide other automotive repair and maintenance services, such as tire rotations and liquid flushes. Your particular businesss SDE multiple will vary based on market volatility, where your business is located, your companys size, assets and how much risk is involved in transferring ownership. add technician notes to the photos. The remainder of the required financing will come from a ten year Small Business Administration (SBA) loan and a short-term loan. We all know this chore requires ones hands to get dirty, and for this reason alone, many car owners are perfectly okay paying a quick lube business to do the job for them. Joe handled every aspect and obstacle that presented itself throughout the sales Another 22% of operators combine automotive repair with quick lube services. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. All these were analysed based on per-unit revenue, per-unit cost, and fixed costs. A valuation is a suggestion of value, but your business model shows potential buyers how theyll actually reach their customer base to generate revenue if they purchase your company. Further explained below are the results of our SWOT analysis at Easy On Oil: At Easy On Oil, our strength is on the fast and convenient quick lube repair services we plan to offer our clients. We believe that by establishing a strong customer relationships based on trust and integrity, we can benefit from a strong regular customer base and good referrals. Groups exist on the state and federal level to help with seed money. Looking to make a smart automotive business investment? (IHS Automotive), #22. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. Please enable JavaScript on your browser and try again. At Easy On Oil, we believe that by having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, our business location and shop will always bring in demand for quick lube services. Driving up to a quick lube business for routine maintenance that can be completed quickly saves consumers time and money. These conservative assumptions make for a more accurate estimate of real risk. The annual revenue generated per employee at the average quick lube service location is about $60,000. We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. The most popular brand-name for freestanding businesses is Jiffy Lube. The service requires full JavaScript support in order to view this website. Your best angle is to make a list of the production, property, and resources that comprise your business assets and liabilities, cash and investments, employees and intellectual property. A well-run business will make transitioning ownership, without losing. Check out the ACS reviews left by our clientele. Over my over fifty year career, I have had the privilege of working with many other Corrects vehicle deficiencies by removing, repairing, adjusting, overhauling, assembling, disassembling, and replacing major assemblies, sub-assemblies, components, parts, or systems, such as air conditioning, fuel, emission, brake, steering, hydraulics; completes machine shop operations; making adjustments and alignments including bearing loads, gear tooth contact, valve mechanisms, governors, oil systems, control linkages, clutches, and traction units. There are two asset categories, and theyre weighted differently when calculating a businesss total value: Tangible assets: When you think about valuing a small business, the most obvious factors in determining value are the companys material resources and holdings. Also, our wide range of auto lubricants and repair parts inventory that is (nearly) never out of stock will further cement our place as a reckoning force in the industry. Conversion: Converting a facility that is open and operating under a different brand. (Digital Dealer), #20. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. No matter what, applications must be filled out and fees paid. There are many things that go into running a quick lube business, but there are three key items you should focus on if you want to retain customers. One Independent Quick Lube w/RE in El Dorado, KS. A valuation is a suggestion of value, but your business model shows potential buyers how theyll actually reach their customer base to generate revenue if they purchase your company. It can gather data to . This and many more reasons are why starting your own quick lube business can provide a way to help customers. How much is an oil change? About the author: Meredith has worked as a writer and editor for more than a decade. She has over a decade of experience in print and online journalism. Through 2028, the quick lube industry is expected to see lower levels of growth than in the past 5 yeas. Conducting a valuation is an excellent opportunity to assess the financial health and potential of your business, or of a business youre hoping to buy. In particular, the Adjusted Net Asset Method calculates the difference between a business's assets including equipment, property, and inventory, and intangible assetsand its liabilities, both of which are adjusted to their fair market values. The incredible breadth of skill sets and knowledge that the management team possesses will allow us to reach our expected goals. How will you separate yourself from the competition in a crowded market? Make sure your company checks these three boxes: You make steady profits. In 2018, the industry was valued at $7 billion in the U.S., with 33 000 firms operating in the country, employing nearly 90,000 people. Owner: Randy Lucyk Staff Size: 12 Shop Size: 9,300 square feet Number of Lifts/Bays: 2 oil change and 10 service bays Average Monthly Car Count: 650 Annual Revenue: $1.78 million. Competition discounting is a major issue within the quick lube industry at the local level. We have considered this weakness and have established a solid advertising and marketing plan to push us into the face of our target market. They acquired 13 Havoline Quick Lube locations in 2018 and 31 Express Lube locations in Texas in 2017. ", 100 Best Side Hustles for Teens to Make Money, 10 Proven Psychological Pricing Strategies with Examples, 100 Office Etiquette Rules You Need to Know, 50 Best Business Letter Closings of All-Time. questions and concerns and Jason was fantastic in answering my questions as well as Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. Updates job knowledge by participating in educational opportunities; reading technical and regulation publications. In 2013, there were an average of 37.8 vehicles serviced per location, with 32.9 oil changes performed per day. Unlike EBITDA, though, youll also add back in the owners salary and owners benefits into your SDE calculation. Profit and loss statements for the last three years. 1 in 3 vehicle owners decide to change their own oil after purchasing a new vehicle. Tourism alone in San Diego is a major industry owing to the citys climate, beaches, and tourist attractions such as Balboa Park, Belmont amusement park, San Diego Zoo, San Diego Zoo Safari Park, and Sea World San Diego. Meredith has worked as a writer and editor for more than a decade. You should have already done your location homework, so landing the future home of your quick lube business should not be a problem. assign a green, yellow, or red status to each part. 89% of quick lube locations offer a transmission fluid drain and flush service in the United States, with an average cost of $107.60 per service. Temple Curtis represents sales/management, Helen will focus on the finance/administration section of the business and Aaron will focus on the mechanical aspect of the business. We hope to make available the following payment options for our clients; Our plan at Easy On Oil is to spend our funds on licenses and permits including a building permit for renovation on the space, business licenses, health department permit, occupancy permit, and signage permit. If you plan to open an oil change business, you should investigate any quick lube business within your vicinity and determine how they may impact the viability of your investment. Operating expenses and labor are the two largest costs facing the quick lube industry. Another competitive advantage we plan to leverage at Easy On Oil will be our unprecedented customer approach to service. Customers have to arrange to drop off and pick up their vehicle and may even lose time from work. The visitor industry provides employment for more than 160,000 people. He will be charged with overseeing the sales and marketing of Easy On Oil. Do you want to start a Quick Lube company and need to write a business plan? Easy On Oil will be managed by its three founding partners. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. This method is especially useful if your business mostly holds investments or real estate; isnt profitable; or if youre seeking to liquidate. Our Products and Services 4. To make sure you maximize your payout when selling your business, it's important to work with an experienced business valuation provider such as Guidant. Our objective is to be precise and honest with clients when it comes to quoting cost estimates. Jiffy Lube is a leading provider of automotive preventive maintenance. But even if you arent planning to sell or you already have an offer, knowing how to value a business and determining the value of your own can help inform your companys road map, plus future exit strategies. 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