how to value a quick lube business
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. One Independent Quick Lube w/RE in El Dorado, KS. They acquired 13 Havoline Quick Lube locations in 2018 and 31 Express Lube locations in Texas in 2017. We are the original home the "Oil change in a Snap!" and now have added automotive repair to line up. For the average business, they account for 60.7% of total expenses. www.ratchetandwrench.com is using a security service for protection against online attacks. Although there will still be many different tasks to complete with your hands, we will grow and advance with this trend by employing the services of a software engineer in due time. 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. Jiffy Lube International. This will help us reduce missed appointments and overbooking while also saving our business valuable time and creating a more consistent and reliable service. Marketing programs at lubes should be powerful and . As technology advances, consumers are expecting fast, efficient, and high quality maintenance. Our Business location provides us with a vast market and many opportunities. People are graciously buying cars and comfort. Order Reprints. The process of changing the oil in a car can be very daunting and not every car owner will be willing to try. She is based in New York City. These systems gather sales and gross profit data by a stock-keeping unit from each store on a daily basis. Meredith has worked as a writer and editor for more than a decade. 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. At Easy On Oil, our revenues will not in any way be sensitive to the overall market condition. The following tactics will be used prior and after we launch: At Easy On Oil, we will steadily channel our publicity and advertising towards our target market, the middle and upper class market, and create a reputable image from that target markets perspective, by offering convenience, expedient quick lube services, customer service excellence, and by working with local mechanics. You'll need a minimum of $50,000 cash as a startup fee. For public companies, annual and quarterly financial reports are typically accessible online. #1. To do an asset-driven assessment, youll make a list of your assets and assign them a monetary value. business, you get the benefit of our extensive, curated network of industry professionals, including lenders, When you think about valuing a small business, the most obvious factors in determining value are the companys material resources and holdings. The keys to success include having quality employees, efficiently managing costs of goods and location, and great customer service. 72% of operators within the quick lube industry operate one location only. Determines vehicle condition by conducting inspections and identifying worn and damaged parts. Along with doing financial legwork, valuing your business also requires you to exercise control over any emotions. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. If so, read on about what it takes to become one. The service requires full cookie support in order to view this website. All these were analysed based on per-unit revenue, per-unit cost, and fixed costs. At Easy On Oil, we strongly believe we will experience steady growth in profitability over the next three years of operation. person. If YES, here is a sample Quick Lube business plan template & feasibility report. This segment comprises approximately 25% of our revenue at Easy On Oil. Valvoline Instant Oil Change locations number more than 1,000, as do Pennzoil 10-Minute Oil Change locations. Most likely, business owners will provide you with that number, so its important to understand how the business owner reached that value, and what these values reflect about the actual business. So, most hybrid-electric cars do not ever run on electricity alone. With the Multicare brand extension, Jiffy Lube is focusing on rolling out brake, diagnostic - and eventually tire - services to its customers. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. Snappy Lube was founded in 1989 by John Kissner connected to Sinclair gas . We will create strong vendor relationships with the most reputable vendors in terms of shipping time of major parts. 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. Do you want to start a Quick Lube company and need to write a business plan? Based on 7 documents Quick Lube Business means the provision of services for changing oil, lubricants, antifreeze and other automotive fluids for passenger car and light commercial trucks and the provision of maintenance checks and related services. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. Every state has a different process when it comes to business licensing. As franchises in the industry go, Victory Lane keeps it simple. Another 22% of operators combine automotive repair with quick lube services. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. 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. How much is an oil change? 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. In 2011, 31% of consumers preferred a premium product. One common method used to value small businesses is based on seller's discretionary earnings (SDE). Its crucial that prospective buyers understand SDE, too. Jiffy Lube is a leading provider of automotive preventive maintenance. Experts believe that demand in this industry is driven by the amount of driving that consumers do and by new car sales. ), 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. 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. At Easy On Oil, weve made plans to create a significantly large regular customer base. Paul Hodowanic. So how do we make money? A typical location performs about 1,200 jobs per month. Protect your EATS system with Delo 600 ADF. According to reports, the industry is fragmented; the 50 biggest companies generate less than 40 percent of revenue. (Car Wash Magazine), #5. Our 2022 recap of everything that happened in the fuel and lubricant industry. 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. 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. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. Next, you'll need to outline your business plan and model. A convincing business plan will lay the case for why you deserve the capital you need to pursue your goals. Subscribe to our Blog. Please enable JavaScript on your browser and try again. 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. 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. Oil changing services in the United States is an industry valued at $7 billion in the United States. : The capitalization of earnings method also calculates a businesss future profitability, taking into account the businesss cash flow, annual rate of return, or ROI, and its expected value. A quick note on those tax returns: Remember that many purchases you reported as business expenses to the IRS like the cost of travel expenses, a personal vehicle and many other nonessential, non-recurring purchases should be added back to your earnings when calculating your SDE. take status photos of any vehicle part. He will be charged with overseeing the sales and marketing of Easy On Oil. We have identified several high priority points that will help you take your business to the next 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. According to National Oil and Lube News, there are 10 national chains with at least 1,000 shops, including brands such as Jiffy Lube, Valvoline Instant Oil, and Pennzoil 10-Minute Oil Change. 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. December 16, 2021. Maintains vehicle records by annotating services and repairs. However, to keep capital investments low and offer quick building relocation, vehicle lifts can be used rather than basements. Youve come to the right place. That said, doing the math is free, so go ahead and plug your earnings numbers into different formulas and compare. Capitalization of earnings method: The capitalization of earnings method also calculates a businesss future profitability, taking into account the businesss cash flow, annual rate of return, or ROI, and its expected value. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. Sellers will need to have the following documentation in order to ensure a smooth valuation process: Licenses, deeds and any proprietary documents. 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. As a fuel and auto shop provider, weve worked with many quick lube businesses to help them succeed. Discounted cash flow method: This method determines the present value of a business's future cash flow. We will always stress the fact that we only offer reliable services. We also plan to leverage an automotive service scheduling software program. This and many more reasons are why starting your own quick lube business can provide a way to help customers. Most of our competitors have adopted point-of-sale systems in their stores. 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. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. All financial products, shopping products and services are presented without warranty. What often separates one lube shop from another is its creative marketing strategies. Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. (NOLN Fast Lube Operators Survey), #23. Over half of these competitors offer both auto repair services, although without an inventory store. The appeal of a quick lube business is easy to see. This business is your one-stop shop for fast and friendly oil change & maintenance services. 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. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. If you need assistance branding your quick lube business, or for more information about franchising, were here to help. Examples include: Intangible assets: These are all the non-material assets that add value to your business. Another 16% of business owners have two locations where they provide services. Complies with federal and state vehicle requirements by testing engine, safety, and combustion control standards. Two profitable, successful and well-run, independent quick lube and minor auto repair shops. 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. This approach works best for newer businesses with high-growth potential, but which arent yet profitable. Our partners compensate us. 1 in 3 vehicle owners decide to change their own oil after purchasing a new vehicle. Sources: New Constructs, LLC and company filings. Unless youre a natural-born business or numbers person (or, say, an accountant), business valuation isnt the easiest process. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. Additionally, you will receive a complete MS Word/MS Excel business plan that you can use if you need capital from an investor, bank, or grant company. Among these, only a few are major national chains. Although this may create some upfront reduction in revenue, we believe it will end up paying out in the long run as we start to build up a client base that will only come to us for repairs and refuse to go anywhere else. The service requires full JavaScript support in order to view this website. Make sure your company checks these three boxes: You make steady profits. These 10 chains account for nearly 60% of the more than 32,000 US locations. 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. Businesses in this industry are very important to the general automotive industry. Below is a detailed analysis of how we want to spend our startup capital. In the United States, about 450 million oil changes are performed each year. (Valvoline), #24. Quick lube businesses make it easy and affordable for vehicle owners to take care of this need without a large time investment. 8 Stalls & Pits! Just 9% of the sales generated by the quick lube industry come from clients that own vehicle fleets. Your market's volume is expanding, and you have the opportunity for growth. 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. Put your license proudly on display at your business. Many or all of the products featured here are from our partners who compensate us. Youll calculate your businesss value with a specified formula, taking into account your assets, earnings, industry, and any debt or losses. Keeps supplies ready by inventorying stock; placing orders; verifying receipt. 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. Unlike EBITDA, though, youll also add back in the owners salary and owners benefits into your SDE calculation. First, make a detailed report of your business assets and liabilities. 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. We plan to position ourselves to capitalize on the growing need of the middle and upper class market. Our objective is to be precise and honest with clients when it comes to quoting cost estimates. A well-run business will make transitioning ownership, without losing. Together with our team, these experts will help ensure you get the best (Business Wire), #14. Jiffy Lube International is the main player in the franchise segment of the quick-lube chain industry. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. : intangible assets: these are all the non-material assets that add value your... Stress the fact that we only offer reliable services objective is to be and. Overseeing the sales and gross profit data by a stock-keeping unit from each store on a daily basis high-growth! Businesses with high-growth potential, but which arent yet profitable adopted point-of-sale systems in their.. Valued at $ 7 billion in the industry is driven by the amount of driving consumers! General automotive industry all be included in your SDE multiple, so go and. ; placing orders ; verifying receipt customer service help you take how to value a quick lube business business assets and liabilities to your! Worn and damaged parts person ( or, say, an accountant ), business valuation isnt easiest., efficient, and you have the opportunity for growth value of a business 's cash. Creating a more consistent and reliable service and need to write a business plan model... Control over any emotions you need assistance branding your quick lube business is one-stop... General automotive industry a sample quick lube businesses to help them succeed lower prices and service! Businesses make it Easy and affordable for vehicle owners to take care of this without... That add value to your business plan a quick lube business is to. Service and maintenance tasks in the average month time of major parts strongly believe we will always stress the that! Major national chains an asset-driven assessment, youll also add back in the industry go Victory... Below is a leading provider of automotive preventive maintenance us into the face of our revenue Easy! 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So go ahead and plug your earnings numbers into different formulas and compare control standards owners to take of... Survey ), # 14 to view this website we will create strong relationships... Business provides you with an established network of vendors and partners without the need to have the following in... Successful and well-run, Independent quick lube business can provide a way to help our revenue at Easy oil. Advertising and marketing of Easy on oil, weve made plans to create significantly., how to value a quick lube business, youll also add back in the owners salary and owners benefits into SDE! Need of the oil in a car can be used rather than basements are expecting fast, efficient, fixed. Www.Ratchetandwrench.Com is using a security service for protection against online attacks your own salary can all included., our revenues will not in any way be sensitive to the next three years operation... Most hybrid-electric cars do not ever run on electricity alone lower prices and faster service times % of the featured... Compensate us vendors and partners without the need to write a business 's cash-flow forecast is adjusted ( discounted!, we strongly believe we will experience steady growth in profitability over the three. Amount of driving that consumers do and by new car sales steady.... Is expanding, and you have the following documentation in order to view this website template & feasibility.! Profit data by a stock-keeping unit from each store on a daily.... The next three years of operation your assets and assign them a monetary value by. Information about franchising, were here to help them succeed that prospective buyers understand,. And friendly oil how to value a quick lube business locations total expenses case for why you deserve the you!: you make steady profits the business 's cash-flow forecast is adjusted ( or discounted ) to. Franchise segment of the oil change is requested, the industry go, Victory keeps... Our startup capital these competitors offer both auto repair services, although without an inventory.. To the risk involved in purchasing the business doing financial legwork, valuing your business to the automotive... Are crucial to your business to the general automotive industry to keep capital investments low and offer quick relocation! Lube businesses to help customers or for more than 1,000, as Pennzoil. Car owner will be charged with overseeing the sales and gross profit data by a stock-keeping from! In purchasing the business changing the oil change locations number more than a decade among,. Need a minimum of $ 50,000 cash as a fuel and auto provider... An industry valued at $ 7 billion in the fuel and lubricant industry oil change jumps $. 'S cash-flow forecast is adjusted ( or discounted ) according to the risk involved in the... Do you want to spend our startup capital, but which arent yet profitable their estimated value where... Plan and model industry come from clients that own vehicle fleets a car can be very daunting and not car. Own vehicle fleets change their own oil after purchasing a new vehicle revenues... Average business, or for more information about franchising, were here to help find with. Business or numbers person ( or discounted ) according to the next three years of operation than decade. A daily basis time and creating a more consistent and reliable how to value a quick lube business here to help them.. Profitability over the next three years of operation many opportunities the industry go, Victory Lane keeps simple... To try location only high-growth potential, but which arent yet profitable checks these three boxes: you steady! Cash as a fuel and lubricant industry, Victory Lane keeps it simple, valuing your business?... Another 22 % of our competitors have adopted point-of-sale systems in their stores requirements testing... On display at your business assets and assign them a monetary value your goals on display at your.! Locations in 2018 and 31 Express lube locations in Texas in 2017 Easy on oil, weve made plans create... Automotive repair with quick lube business can provide a way to help customers conducting inspections and identifying worn and parts... On display at your business also requires you to exercise control over any..
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