how to value a quick lube businesshow to value a quick lube business

In fact, most quick lube operators choose to franchise for this reason. Make sure your company checks these three boxes: You make steady profits. 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. ), Monitor quality and appropriateness of services and care, Provide guidance and leadership for performance guidelines, Manage staffs relations and/or representation, Manages external research and coordinate all the internal sources of information to retain the organizations best customers and attract new ones, Models demographic information as it relates to those who need our services, In charge of promoting the companys image. To attract additional financing, the owners may consider taking Easy On Oil public several years down the road. Note that each of the three co-owners will invest an equal amount. (Digital Dealer), #18. About the author: Meredith has worked as a writer and editor for more than a decade. Car owners instead prefer to pay someone else to do it for them. Check out our Website for Services and Coupons! Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. Keeps shop equipment operating by following operating instructions; troubleshooting breakdowns; maintaining supplies; performing preventive maintenance; calling for repairs. Maintaining the website with new trends and advises. Performing services on brake systems to coolant flushes. We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. Small, regional locations can allow owners to carve out successful markets for their business. Executive Summary 3. Conversion: Converting a facility that is open and operating under a different brand. We plan to offer our clients personalized service by offering convenience and rapid service. She is based in New York City. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. At Easy On Oil, we understand the importance of establishing reliability and consistency in business. San Diego County hosted more than 32 million visitors in 2012; collectively they spent an estimated $8 billion. Although the global economy is generally supportive and growing of the industry right now, growth burnout could dramatically impact this industry. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. I will only use Jason for 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. This allows households to save a little money on the aftermarket needs of their vehicle. 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. Operating expenses and labor are the two largest costs facing the quick lube industry. possible purchase price and outline opportunities for increasing future revenue. In hybrid-electric cars, the electric systems are used to even out the power needs in the vehicle. Unlike EBITDA, though, youll also add back in the owners salary and owners benefits into your SDE calculation. Updates job knowledge by participating in educational opportunities; reading technical and regulation publications. 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. When you think about valuing a small business, the most obvious factors in determining value are the companys material resources and holdings. We plan to give our clients a few business cards to hand out to friends when they talk about our quick lube services or buying new parts. 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. 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. NerdWallet strives to keep its information accurate and up to date. Theres a different SDE multiple for every industry. 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. One Independent Quick Lube w/RE in El Dorado, KS. unconditionally recommend Mike and his team. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. You should have already done your location homework, so landing the future home of your quick lube business should not be a problem. At Easy On Oil, our mission is to provide fast, reliable, and cost effective oil change and lubrication services for vehicle owners in San Diego, California. We have considered this weakness and have established a solid advertising and marketing plan to push us into the face of our target market. The service requires full JavaScript support in order to view this website. The most popular brand-name for freestanding businesses is Jiffy Lube. 1. We also plan to leverage an automotive service scheduling software program. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. All-in-all, electric vehicles are more efficient and environmentally friendly and they are only getting better. Here is a list of our partners and here's how we make money. Learn more about financial projections, income statements, balance sheets and cash flow. We believe everyone should be able to make financial decisions with confidence. Our Business location provides us with a vast market and many opportunities. In fact, most quick lube operators choose to franchise for this reason. 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. First, though, you have to get your financial information in order. (Business Wire), #16. Also, electronic parts catalogs are available in many competitor stores along electronic commercial invoicing systems that offer commercial parts delivery. As 2018 kicked off, Jiffy Lube launched a new brand extension. We plan to reduce our employee turnover rate by treating our employees equally and well, giving good benefits and paying them well. Once you've determined to open a quick lube business, the first thing to do is to put together a business plan. 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. Even if you don't adjust the asset's worth according to the current market, you can still get a good sense of a businesss material value. Our opinions are our own. At some point, every vehicle requires ongoing maintenance to keep it functioning properly. In total, Driven Brands has 1,100-plus locations across North America. So, established businesses with stable profitability often use this valuation approach. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. Some locations may provide additional vehicle maintenance services, such as radiator flushes, brake line cleaning, and power steering fluid flushing. Customers have to arrange to drop off and pick up their vehicle and may even lose time from work. Another competitive advantage we plan to leverage at Easy On Oil will be our unprecedented customer approach to service. (IHS Automotive), #22. Examples include: These are all the non-material assets that add value to your business. Unless youre a natural-born business or numbers person (or, say, an accountant), business valuation isnt the easiest process. (Car Wash Magazine), #5. The average price for a multi-point oil change within the quick lube industry is $36.82. Entities are ready to back gas stations and those serving commercial fuel needs. You will be redirected once the validation is complete. : This method determines the present value of a business's future cash flow. Quick lube businesses make it easy and affordable for vehicle owners to take care of this need without a large time investment. Feeling confident in your appraisal will help you accurately determine how to pitch investors and raise funding, or price your business to find the right buyer. As we mentioned earlier, a businesss SDE multiple and the method of valuation varies according to a few factors, including the strength of the industry. We will attract and maintain a loyal customer base through our customer-oriented focus on business. Competition discounting is a major issue within the quick lube industry at the local level. Every state has a different process when it comes to business licensing. The profitability of individual companies depends on convenient location and good marketing. Why do diesel exhaust fluid (DEF) prices keep rising and falling? (Car Wash Magazine), #11. buying and selling) over the last 15 years. 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. To reach our local customer base, we will employ a marketing manager. (Business Wire), #13. The largest technological advancement in the automotive industry is the introduction of electric vehicles. 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. Jiffy Lube has the most locations in the United States for the quick lube industry, with over 1,900 facilities as of February 2017. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. Contact us today! Over the long-term, the transition to a more Quick Lube-focused model will make Valvoline a safer and more profitable business. It can be an especially useful approach for rapidly growing businesses and industries. The appeal of a quick lube business is easy to see. Business plan: A strong business plan helps you make accurate projections for earnings and market growth. One common method used to value small businesses is based on seller's discretionary earnings (SDE). The average vehicle owner will change their oil about every 5,000 miles. All financial products, shopping products and services are presented without warranty. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. Cost of incorporating the Business $750. On top of that, he communicated everything in an This allows the IC engine to focus on efficiency rather than trying to do everything as it does in an all-gas car. 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. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. If you want to take the income approach, you can choose between two commonly used valuation methods. Note that convenience, steady referrals from local mechanics, and high quality, rapid service are necessary to capture this segment of the market. (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 will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. This shows potential customers you are open for business and certified by the state to change their oil. At Easy On Oil, we strongly believe we will experience steady growth in profitability over the next three years of operation. (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.). Franchised Oil Change & Repair Shop in Solano County. These systems gather sales and gross profit data by a stock-keeping unit from each store on a daily basis. Keeps supplies ready by inventorying stock; placing orders; verifying receipt. You'll need a minimum of $50,000 cash as a startup fee. Together with our team, these experts will help ensure you get the best These could include: You'll also need to know your liabilities. This system establishes a service history for each vehicle, provides customers with a comprehensive sales document, and enables the service centre to maintain a service custom. When only stand-alone quick lube locations are examined in the industry, about 5,000 firms currently operate in this space and produce revenues of about $5 billion annually. We believe that this market is always on the lookout for high quality, rapid service with as much convenience as possible. Next, you'll need to outline your business plan and model. EasyOn Oil will actively provide oil change services in each of our facilities for vehicles. Before buyers can confidently make an offer on a business, theyll need to become well-versed (if not an expert) on that businesss industry. 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. 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. From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. The work done here is every bit as good or better than the nationals, the price seems at least a bit better, and I had a better experience overall. Sample 1 Sample 2 Sample 3 Based on 6 documents If a synthetic oil change is requested, the price of the oil change jumps to $70.31. Disclaimer: NerdWallet strives to keep its information accurate and up to date. Once youve determined to open a quick lube business, the first thing to do is to put together a business plan. We have identified several high priority points that will help you take your business to the next level. Similarly, make sure your business doesn'tcheck any of these boxes: Your current products and services still need reworking. Below is well detailed outline of the services we will offer at Easy On Oil facilities in exchange for cash and referrals; Note that our sales forecast at Easy On Oil is based on the averages of the first-year figures for total sales by units, and for operating expenses. Our sales forecast at Easy On Oil is as follows; At Easy On Oil, our marketing and sales strategy will focus on reaching our target audience. Its crucial that prospective buyers understand SDE, too. A lube operator not advertising during slow economic periods will likely find that the competition is. From our detailed research, we hope that provisions for ongoing expenses are adequate to meet our needs as the business generates cash flow sufficient to support operations. There are many services that go beyond the simple passenger and commercial fuel needs of the public and businesses. 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. However, this simple method doesn't always provide the full picture of a company's value. Entrepreneurs looking to buy an existing business should also be familiar with valuations, and feel comfortable estimating value independently of the business owner or brokers asking price. "Jiffy Lube Multicare is not a rebrand; it is more of an extension," said Steve Ledbetter . The incredible breadth of skill sets and knowledge that the management team possesses will allow us to reach our expected goals. We will also differentiate our business by having 5 spacious bays at every location. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. A convincing business plan will lay the case for why you deserve the capital you need to pursue your goals. Great reputation and a long history of loyal employee and customer satisfaction. With ever-increasing vehicle ownership in the United States, consumer demand for oil changes has a low potential for fluctuation due to the fact that drivers lack the necessary training, materials, and resources to successfully perform their own oil changes. 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. 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. We will also strengthen our relationships with local mechanics to capture repair needs of the local and highway traffic. 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. These 10 chains account for nearly 60% of the more than 32,000 US locations. Aaron boasts of a prosperous career in the automotive industry, 12 years as a Engine Technician at Ford Inc. Lastly, Helen brings 8 years of finance and administration experience. Our partners compensate us. Operating income for the Quick Lube segment grew from $95 million in 2015 to $153 in 2018, or 17% compounded annually. Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. (Car Wash Magazine) #7. Then, you can demonstrate to potential buyers what makes your business stand out. We also handle Hi-Performance and collector cars as well as foreign performance vehicles! 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. More than 33,000 firms are currently engaged in the oil change services industry right now in the United States. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. This is why several other methods exist. second to none. In 2013, there were an average of 37.8 vehicles serviced per location, with 32.9 oil changes performed per day. About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. So how do we make money? This approach works best for newer businesses with high-growth potential, but which arent yet profitable. The higher your SDE multiple, as you might expect, the more your business is worth. 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. They are responsible for the direct employment of almost 90,000 people. Additionally, franchising a business comes with an entirely different set of understandings and obligations. 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. vendors, insurance agents, and others. She was trained at Ford and later took a position at Chevrolet. A well-run business will make transitioning ownership, without losing profits in the process, significantly easier. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. If so, read on about what it takes to become one. 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.

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