how to value a quick lube business
As a result, the need for reliable and convenient quick lube store has grown rapidly in California. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. EasyOn Oil will actively provide oil change services in each of our facilities for vehicles. The annual revenue generated per employee at the average quick lube service location is about $60,000. Based on currently available information, Valvoline has a total of 1,595 system-wide stores. Owners of quick lube businesses benefit from the quick overturn of customers and relatively low overhead. 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. Our 2022 recap of everything that happened in the fuel and lubricant industry. comprehensive listing of auto repairs for sale near you, give us a call at 1-800-874-5793 for details. Profit and loss statements for the last three years. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. What often separates one lube shop from another is its creative marketing strategies. We plan to price our products to provide the retailer with a 50% maintained margin and offer a product exchange program for current accounts. Car owners instead prefer to pay someone else to do it for them. So, established businesses with stable profitability often use this valuation approach. You will be redirected once the validation is complete. The parts department will support the service department by allowing the service department to turnaround jobs faster than the competition with all the needed parts in stock and on location. More on liabilities in a bit. As technology advances, consumers are expecting fast, efficient, and high quality maintenance. We understand that starting a business like ours can be very expensive due to the high cost of equipment. Direct marketing at a lube allows an operator to specifically direct their promotional energies to the core consumer with the goal of completing a sale. demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. Updates job knowledge by participating in educational opportunities; reading technical and regulation publications. Victory Lane Quick Oil Change. Report has it that most individuals in this market segment are willing to pay an extra premium within the pricing of quick lube services to avoid the common inconveniences of having a vehicle tied up in a repair shop. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. 65% of business owners report that their competitors offer discounting to obtain new customers within their own service radius. Another common method attributes value to a business based solely on its assets. If so, read on about what it takes to become one. ), 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. Make sure your company checks these three boxes: You make steady profits. Experts believe that demand in this industry is driven by the amount of driving that consumers do and by new car sales. We plan to leverage the highest degree of modern technology to manage a full range of automotive lubricants and parts inventory. Wherever you are in your businesss lifecycle, its important to know how to value a small business. 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 remaining are small privately-owned establishments. 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. As cars become more complex, even something as simple as changing the oil could require a manual. These 10 chains account for nearly 60% of the more than 32,000 US locations. At Easy On Oil, our major weaknesses will be the time and resources it will take us to establish and publicize our services to the people of San Diego. Implement an ongoing training program. This means intellectual property, your production line, your delivery truck if its a part of your business, you'll either need to account for it as an asset or a liability. Youve come to the right place. When the economy is weak, vehicle owners tend to complete these services on their own, to the best of their ability. We plan to offer our clients personalized service by offering convenience and rapid service. (Car Wash Magazine), #7. Our opinions are our own. questions and concerns and Jason was fantastic in answering my questions as well as At Easy On Oil, we will create a price-to-benefits ratio that puts us ahead of our competitors. 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. 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. Verifies vehicle performance by conducting test drives; adjusting controls and systems. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. Along with that, all-electric vehicles can pose some challenges to auto mechanics. business, you get the benefit of our extensive, curated network of industry professionals, including lenders, Easy On Oil is a well-positioned quick lube shop that will serve the needs of the people of San Diego. 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. If you are contemplating a transaction in the auto service sector I can At the end, the information is used to help formulate pricing, marketing and merchandising strategies. We will offer these distinct but complimentary services coupled with unprecedented customer service, something that the industry is not known for having. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. So how do we make money? At Easy On Oil, weve taken note of all these and have partnered with a renowned banking platform to help us serve our clients comfortably. This method is especially useful if your business mostly holds investments or real estate; isnt profitable; or if youre seeking to liquidate. 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. 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. www.ratchetandwrench.com is using a security service for protection against online attacks. We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. In hybrid-electric cars, the electric systems are used to even out the power needs in the vehicle. He will be charged with overseeing the sales and marketing of Easy On Oil. (IMR Automotive Research), #9. Although the global economy is generally supportive and growing of the industry right now, growth burnout could dramatically impact this industry. Figure 1: VVV's Segment Operating Income Since 2015. We believe that this market is always on the lookout for high quality, rapid service with as much convenience as possible. Over half of these competitors offer both auto repair services, although without an inventory store. Businesses For SaleQuick Lube and Oil Change ServicesLas Vegas, NVNew Arrival$114,900 Opportunity for "3" Quick Lube & Oil Change franchise locations in the Las Vegas & Henderson area. Home Statistics 25 Quick Lube Industry Statistics, Trends & Analysis. The quick lube business may thrive on customer turnover, but quality, efficient service is what brings customers back to their favorite quick lube shops again and again. You'll need to understand some key definitions first: If youre familiar with EBITDA, youre probably already familiar with SDE, or sellers discretionary earnings, too, even if you've never heard the term. Short overview of your business or personal finances. In 2011, 31% of consumers preferred a premium product. Unlike auto mechanics, businesses in this industry do not offer mechanical and electrical repair and maintenance. (Valvoline), #24. 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. 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. (Valvoline). (If you used EBITDA to value your business, youll use an EBITDA multiple.) In fact, most quick lube operators choose to franchise for this reason. Disclaimer: NerdWallet strives to keep its information accurate and up to date. People will continue to drive regardless of the general economic market. 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. Full range of Auto Lubricants and Repair Parts store. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. Jason was a huge help with my transaction! (NOLN Fast Lube Operators Survey), #23. We will ensure we provide a full range of auto lubricant and repair parts inventory and rapid shipping capability of major parts. 8 Stalls & Pits! Its crucial that prospective buyers understand SDE, too. This process is automatic. 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. Asset valuations are also a great tool for internal use, and can help you keep track of spending and capital resources. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. Live for the first time at our partner ilani Casino! Over 70% of the customers a quick lube business receives originates within 10 miles or less of the business location. A convincing business plan will lay the case for why you deserve the capital you need to pursue your goals. Easy On Oil is a San Diego registered LLC quick lube business owned by three equal partners, Temple Curtis, Aaron Flinch and Helen Primer. 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. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. Sources: New Constructs, LLC and company filings. Another 16% of business owners have two locations where they provide services. The largest technological advancement in the automotive industry is the introduction of electric vehicles. 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. Typically, more than 70 percent of revenue is from oil changes. Also, at Easy On Oil, we understand the need to develop an ethics statement describing our unchangeable stand on honest, trustworthy work. Keeps equipment available for use by completing preventive maintenance schedules; installing component and part upgrades; controlling corrosion; completing winterization procedures. Franchise Quick Lube, Car Wash, and RE in New Mexico! (IBIS World), #2. Because the process for determining the value of a small business is complicated, you might want to consider consulting a professional business broker or accountant that specializes in valuation, rather than going it alone. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. 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. The average price for a multi-point oil change within the quick lube industry is $36.82. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. The cost of an oil. All these were analysed based on per-unit revenue, per-unit cost, and fixed costs. (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.). It is part of the San DiegoTijuana conurbation, the second-largest trans-border agglomeration between the U.S. and a bordering country after DetroitWindsor, with a population of 4,922,723 people. Buying a quick lube allows business-savvy entrepreneurs a stable, revenue-generating opportunity due to the essential nature of the business. (Digital Dealer), #20. to post every listing on the site. This offers incredible value to customers who need their cars fixed right away. As 2018 kicked off, Jiffy Lube launched a new brand extension. Businesses in this industry are very important to the general automotive industry. San Diego County hosted more than 32 million visitors in 2012; collectively they spent an estimated $8 billion. Establishing a firm financial foundation will help you maintain realistic expectations about the value of your company (or the company youre hoping to buy). We will create strong vendor relationships with the most reputable vendors in terms of shipping time of major parts. 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. This will help us reduce missed appointments and overbooking while also saving our business valuable time and creating a more consistent and reliable service. Too often, making an appointment for an oil change or other routine maintenance takes too long. The US automotive oil change and lubrication industry includes about 5,000 companies with combined annual revenue of about $5 billion. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. 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. 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. There are really four business valuation methods (nested within three approaches, as shown below) that you need to be aware of. Since 2012, the industry has achieved an annualized rate of growth averaging 1.5%. SWOT Analysis 7. There are about 250 million vehicles on the road which will require services at some point that can be provided by a quick lube location. 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. Knowing your peer companies will also help you assess your market share and growth potential. Re-opening a former auto repair or quick lube business can save significant time and money. 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. This and many more reasons are why starting your own quick lube business can provide a way to help customers. Our Mission and Vision Statement 5. Groups exist on the state and federal level to help with seed money. You have a loyal customer base. 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. The income approach to business valuation determines the amount of income a business can expect to generate in the future. Then, you can demonstrate to potential buyers what makes your business stand out. Order Reprints. 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. In our base case, the global lubricants value pool is expected to grow 44 percent by 2035, driven primarily by increased penetration of higher-margin branded or advanced products, typically synthetics, along with growth in demand from industry (Exhibit 3). Take 5 Oil Change is one of their fastest growing brands. Just 29% of vehicle owners take their oil changes to a business other than the dealership where they purchased their vehicle. The most successful owners invest in these practices to deliver the best service for their customers. She has over a decade of experience in print and online journalism. I will only use Jason for Contact us today! 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. Many or all of the products featured here are from our partners who compensate us. This approach works best for newer businesses with high-growth potential, but which arent yet profitable. 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. 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. take status photos of any vehicle part. Often, sellers keep their business liabilities and pay off their debt after their business is sold. A Sample Quick Lube Repair Business Plan Template Table of Content 1. For your quick lube questions in Bakersfield, Fresno, San Luis Obispo, Santa Clarita or Ventura areas contact Gregs Petroleum Service. 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. As a first time buyer, I had a lot of extra Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. This is why several other methods exist. "Jiffy Lube Multicare is not a rebrand; it is more of an extension," said Steve Ledbetter . This does come at a cost though. This segment comprises approximately 25% of our revenue at Easy On Oil. 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. 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how to value a quick lube business