(Car Wash Magazine), #6. Among these, only a few are major national chains. We will give a guarantee on all our repairs for a certain amount of miles or time. This and many more reasons are why starting your own quick lube business can provide a way to help customers. Subscribe to our Blog. This is why several other methods exist. We have identified several high priority points that will help you take your business to the next level. 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. 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. This information may be different than what you see when you visit a financial institution, service provider or specific products site. The service requires full JavaScript support in order to view this website. Sally Lauckner is an editor on NerdWallet's small-business team. A good rule of thumb is to estimate how much a piece of equipment would sell for today, and use that number. You might think that you can't actually distill the value of your entire business to an exact number and, sure, in a way it's a bit of an estimate. Each uses a different aspect or variable of a business to calculate its numerical value either a businesss income, assets, or using market data on similar companies. Over the past decade, improved technology and extraction techniques enabled industry . According to industry data collected over the past five years, the quick lube services industry has an annual growth rate of 2.4% and a combined annual revenue of $5.5 billion. Succeeding in business is never easy theres a reason why most small businesses never make it past three years but if you do it right, success wont be far away. Finally, any current debts or future payments, called liabilities, are subtracted from the net income. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. You would do the same if you were to open a gas station serving commercial fuel needs, wouldnt you? unconditionally recommend Mike and his team. Bigger companies have an advantage in brand recognition, but the operations of individual locations are similar. Quick Lube operating income is up to $162 million TTM . Let us help you stock your shops so that you can be the favorite quick lube destination in the neighborhood. 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. In any of those cases, buyers will be interested in the individual value of your investments or equipment. Implement an ongoing training program. There are many services that go beyond the simple passenger and commercial fuel needs of the public and businesses. The average price for a multi-point oil change within the quick lube industry is $36.82. When the economy is weak, vehicle owners tend to complete these services on their own, to the best of their ability. The most popular has been around for a while, hybrid-electric cars. And beyond conducting your valuation, you'll need your finances in order to transfer business ownership, regardless. Meredith has worked as a writer and editor for more than a decade. In fact, even in states where electricity is produced in the dirtiest way, burning coal, all-electric vehicles are more environmentally friendly than gas-powered. If so, read on about what it takes to become one. Routine maintenance services like adjusting tire pressure, changing windshield wipers, replacing light bulbs, and topping off auto fluid levels are usually done in 10 minutes or less. She has over a decade of experience in print and online journalism. If youre interested in learning more about the automotive business buying process and how our expert These 10 chains account for nearly 60% of the more than 32,000 US locations. Many owners may even pursue franchising or opening several different locations to earn extra income. Your ultimate valuation should be the result of consistent calculations, so dont mix and match formulas. Oil Change Services in the US industry trends (2017-2022) The Oil Drilling and Gas Extraction industry in Canada has endured significant volatility over the five years to 2022. Make sure they know by having your license visible front-and-center. One Independent Quick Lube w/RE in East-Central South Dakota! 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. possible purchase price and outline opportunities for increasing future revenue. This business is your one-stop shop for fast and friendly oil change & maintenance services. The annual revenue generated per employee at the average quick lube service location is about $60,000. Drawing on her background in small business and startups, she covers lending, business finance and entrepreneurship. You should have already done your location homework, so landing the future home of your quick lube business should not be a problem. I went in for just an oil change and a lube, and I'll be taking all such . At Easy On Oil, we will generate revenue by actively providing oil change services in each of our facilities. demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. (Digital Dealer), #19. These conservative assumptions make for a more accurate estimate of real risk. 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. (Car Wash Magazine), #4. Why do diesel exhaust fluid (DEF) prices keep rising and falling? Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. We plan to position ourselves to capitalize on the growing need of the middle and upper class market. If you're selling, your prospective buyer will need to understand how you generate revenue and will continue to. The average revenues generated by a single location in the quick lube industry reached almost $765,000 in 2013. For equipment or other depreciating assets, that value is usually somewhere between the sale price and the depreciated value. Along with doing financial legwork, valuing your business also requires you to exercise control over any emotions. SHOP STATS . Often, the site is good, but the former business either lost their lease, got tired of the business, or was operating without a National brand behind them. 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. (Car Wash Magazine) #7. First, make a detailed report of your business assets and liabilities. : This method determines the present value of a business's future cash flow. to post every listing on the site. Most online business valuation calculators use a variation of the income approach. According to reports, the industry is fragmented; the 50 biggest companies generate less than 40 percent of revenue. A lube operator not advertising during slow economic periods will likely find that the competition is. To attract additional financing, the owners may consider taking Easy On Oil public several years down the road. Then, you can demonstrate to potential buyers what makes your business stand out. His expertise in getting deals done is These businesses are also not involved in body, paint, interior or glass repair. Some of them also have electronic work order systems available amongst their various service centres. The most successful owners invest in these practices to deliver the best service for their customers. And NOLN's top ranking shows 93 chains in the US with at least 6 locations. However, this simple method doesn't always provide the full picture of a company's value. These similar businesses, often referred to as comparables or "comps," can orient you within the marketplace and provide context about the sector. Complies with federal and state vehicle requirements by testing engine, safety, and combustion control standards. 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. Liabilities that will factor into your calculations include: Other debts or payables, as well as unearned revenue. Every state has a different process when it comes to business licensing. www.ratchetandwrench.com is using a security service for protection against online attacks. Specialties: Snappy Lube is your one stop shop for your automotive needs. You will be redirected once the validation is complete. text the finished report to the customer's mobile device. Our goal is to capture a majority of the market in little or no time. LOCATION, LOCATION, LOCATION. 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. 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. Another 22% of operators combine automotive repair with quick lube services. Valvoline Instant Oil Change locations number more than 1,000, as do Pennzoil 10-Minute Oil Change locations. (Digital Dealer), #20. Most locations operate two to five bays in a drive-through building, and many use basement construction so that oil can be changed below while other services are being completed above. 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. 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. buying and selling) over the last 15 years. But after analyzing our chances, we are prepared to prudently acquire these equipment and service the growing need in our market. At Easy On Oil, we will differentiate ourselves by not only offering oil change or other automotive maintenance services, but by also providing customers with a stocked lubricant and parts store. As 2018 kicked off, Jiffy Lube launched a new brand extension. Overall, a strong business plan provides buyers with important context about your company like your location and mission and captures what key services or goods you offer. This method can be used to value a business for sale as well as raising capital. Below is a detailed analysis of how we want to spend our startup capital. It must also be done for a quick lube business. With a national footprint of more than 2,000 franchisee owned service centers across the country, Jiffy Lube offers a range of services from oil changes and tire rotations, to everything in between. This offers incredible value to customers who need their cars fixed right away. Cost for basic insurance policy covers, permits and business license $100,000, The cost of acquiring a suitable Office facility 6 months (Re Construction of the facility inclusive) $120,000, The budget for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) $10,000, The price of purchasing of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) $12, 000, The Cost of Launching our official Website $4,000, Our budget for paying at least five employees for 6 months plus utility bills $70,000, Additional Expenditure (Business cards, Signage, repair equipment, Adverts and Promotions et al) $234,000. The US automotive oil change and lubrication industry includes about 5,000 companies with combined annual revenue of about $5 billion. Before buyers can confidently make an offer on a business, theyll need to become well-versed (if not an expert) on that businesss industry. Easy On Oil is an exciting business opportunity that addresses the unmet need of having a spacious quick lube facility that also has a complete automotive parts store. It can gather data to . From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. Another 16% of business owners have two locations where they provide services. Just 9% of customers come from a 2-mile radius. Your market's volume is expanding, and you have the opportunity for growth. Particularly if this is your first company, or if you run a family-owned and operated business, take care to approach valuation as objectively as possible to come to an accurate number. person. Also our plans to make sure we maintain a referral network will give us the needed push in the industry. 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. We also plan to leverage an automotive service scheduling software program. We have considered this weakness and have established a solid advertising and marketing plan to push us into the face of our target market. Note that convenience, steady referrals from local mechanics, and high quality, rapid service are necessary to capture this segment of the market. Discounted cash flow method: This method determines the present value of a business's future cash flow. Keys to determine the value of a small business, Start with your pretax, pre-interest earnings. Verifies vehicle performance by conducting test drives; adjusting controls and systems. Youll calculate your businesss value with a specified formula, taking into account your assets, earnings, industry, and any debt or losses. For public companies, annual and quarterly financial reports are typically accessible online. (NOLN Fast Lube Operators Survey), #23. Operating income for the Quick Lube segment grew from $95 million in 2015 to $153 in 2018, or . Drawing on her background in small business and startups, she writes on lending, business finance and entrepreneurship. Paul Hodowanic. 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. They are responsible for the direct employment of almost 90,000 people. In total, Driven Brands has 1,100-plus locations across North America. It's called Jiffy Lube Multicare. So, established businesses with stable profitability often use this valuation approach. Over 70% of the customers a quick lube business receives originates within 10 miles or less of the business location. When evaluating offers, please review the financial institutions Terms and Conditions. Car owners instead prefer to pay someone else to do it for them. The more thorough you are in this step of the valuation process, the more confident youll be in your calculations. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. (If you used EBITDA to value your business, youll use an EBITDA multiple.) 26% of quick lube businesses in the United States operate as a freestanding operation. Meredith has worked as a writer and editor for more than a decade. Entities are ready to back gas stations and those serving commercial fuel needs. The visitor industry provides employment for more than 160,000 people. As revenues have increased, however, net profits have decreased by 2.3%. Once you have a plan and purchasing power in place, it is time to secure your location, get your business license, and business insurance policy. She was trained at Ford and later took a position at Chevrolet. A Sample Quick Lube Repair Business Plan Template Table of Content 1. ", 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. 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. Home Business Plans Automotive Sector. (Buyers might ask about your discretionary cash flow when you offer them your valuation, so be prepared to include and value each major expense or purchase.). We plan is to grow sales through word-of-mouth. questions and concerns and Jason was fantastic in answering my questions as well as However, to keep capital investments low and offer quick building relocation, vehicle lifts can be used rather than basements. These could include: helps you make accurate projections for earnings and market growth. We plan to let our customers know that we will only provide necessary repairs and service and will not try to charge them for services that they dont need. Unless youre a natural-born business or numbers person (or, say, an accountant), business valuation isnt the easiest process. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. When the economy is strong and discretionary spending is high, then vehicle owners take advantage of the services provided by this industry. Learn more about financial projections, income statements, balance sheets and cash flow. Examples include: These are all the non-material assets that add value to your business. effective manner and I never once felt like I was in the dark. To reach our local customer base, we will employ a marketing manager. Its crucial that prospective buyers understand SDE, too. (IBIS World), #3. The average age of a vehicle owned in the United States is 11.4 years. Through 2028, the quick lube industry is expected to see lower levels of growth than in the past 5 yeas. Note that industry operations are labor-intensive: annual revenue per employee is just $60,000. Also, at Easy On Oil, we understand the need to develop an ethics statement describing our unchangeable stand on honest, trustworthy work. We will offer these distinct but complimentary services coupled with unprecedented customer service, something that the industry is not known for having. Easy On Oil is a well-positioned quick lube shop that will serve the needs of the people of San Diego. This influences which products we write about and where and how the product appears on a page. Our vision at Easy On Oil is to become the leading business that offers Quick Lube repair services and a well-stocked repair parts shop in San Diego, California. Executive Summary 3. With the Multicare brand extension, Jiffy Lube is focusing on rolling out brake, diagnostic - and eventually tire - services to its customers. Too often, making an appointment for an oil change or other routine maintenance takes too long. 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. This segment comprises approximately 25% of our revenue at Easy On Oil. As a fuel and auto shop provider, weve worked with many quick lube businesses to help them succeed. Marketing programs at lubes should be powerful and . Along with hybrids, all-electric cars are taking to the streets across the world. #1. 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. second to none. Joe handled every aspect and obstacle that presented itself throughout the sales We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. 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About how to value a quick lube business 5 billion raising capital among these, only a few are major national chains several. Valuation should be the favorite quick lube business provides you with an established network of vendors partners... Institutions Terms and Conditions combine automotive repair with quick lube destination in the dark services in each our. 70 % of operators combine automotive repair with quick lube services profits have decreased by %... Have considered this weakness and have established a solid advertising and marketing plan to push us into the face our! Often, making an appointment for an Oil change or other depreciating assets, that value usually. Cars are taking to the risk involved in body, paint, interior or glass repair sale. Finance and entrepreneurship outline opportunities for increasing future revenue average quick lube business! Your market & # x27 ; ll be taking all such economy is strong discretionary... 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