how to value a quick lube business

About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. 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. 65% of business owners report that their competitors offer discounting to obtain new customers within their own service radius. Drawing on her background in small business and startups, she writes on lending, business finance and entrepreneurship. In 2011, 31% of consumers preferred a premium product. So, most maintenance on electric cars will be more software driven. 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. One common method used to value small businesses is based on seller's discretionary earnings (SDE). Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. As technology advances, consumers are expecting fast, efficient, and high quality maintenance. How much is an oil change? (Business Wire), #14. Knowing your peer companies will also help you assess your market share and growth potential. Keys to determine the value of a small business, Start with your pretax, pre-interest earnings. 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. This offers incredible value to customers who need their cars fixed right away. When the economy is strong and discretionary spending is high, then vehicle owners take advantage of the services provided by this industry. Along with that, all-electric vehicles can pose some challenges to auto mechanics. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. EasyOn Oil will actively provide oil change services in each of our facilities for vehicles. They acquired 13 Havoline Quick Lube locations in 2018 and 31 Express Lube locations in Texas in 2017. (Valvoline), #24. questions and concerns and Jason was fantastic in answering my questions as well as Along with doing financial legwork, valuing your business also requires you to exercise control over any emotions. The US automotive oil change and lubrication industry includes about 5,000 companies with combined annual revenue of about $5 billion. Our diverse management have put plans in place to make sure our regulars feel appreciated by rewarding them for being loyal customers. to post every listing on the site. 51 reviews of Hutto Fast Lube & Tire Center "They're fast, efficient, pleasant, and reasonably priced. As cars become more complex, even something as simple as changing the oil could require a manual. 3. A good rule of thumb is to estimate how much a piece of equipment would sell for today, and use that number. 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. With the Multicare brand extension, Jiffy Lube is focusing on rolling out brake, diagnostic - and eventually tire - services to its customers. Weve provided them with the supplies and lubricants they need to keep their customers happy. Check out our Website for Services and Coupons! This allows the IC engine to focus on efficiency rather than trying to do everything as it does in an all-gas car. 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. The income approach to business valuation determines the amount of income a business can expect to generate in the future. effective manner and I never once felt like I was in the dark. Regardless of the option you pursue, get the word out with our help. 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. Quick lube stations provide services ranging from basic oil changes to transmission flushes and windshield wiper replacements. 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. With an estimated population of 1,425,976 as of July 1, 2018, San Diego is the eighth-largest city in the united states and second-largest in California. person. Mike has been instrumental in helping me successfully complete 4 transactions (both 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. Approaches to a successful small-business evaluation. Asset valuations are also a great tool for internal use, and can help you keep track of spending and capital resources. Looking to make a smart automotive business investment? 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. Some of them also have electronic work order systems available amongst their various service centres. There are really four business valuation methods (nested within three approaches, as shown below) that you need to be aware of. 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. The visitor industry provides employment for more than 160,000 people. (Digital Dealer), #18. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. Also, the local craft brewing industry attracts an increasing number of visitors for beer tours and the annual San Diego Beer Week in November. Executive Summary 3. Pre-qualified offers are not binding. possible purchase price and outline opportunities for increasing future revenue. Over half of these competitors offer both auto repair services, although without an inventory store. Our partners compensate us. 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. Another common method attributes value to a business based solely on its assets. (Car Wash Magazine), #7. Any business can use this approach to business valuation, as long as they can gather sufficient, relevant data on which to compare their business. vendors, insurance agents, and others. Establishing a firm financial foundation will help you maintain realistic expectations about the value of your company (or the company youre hoping to buy). (Car Wash Magazine), #8. People are graciously buying cars and comfort. When the economy is weak, vehicle owners tend to complete these services on their own, to the best of their ability. Depending on the degree of corporate transparency, you can also see what comparable businesses are selling for. Regularly getting the oil changed is one of the most important maintenance tasks you can do for your car, and fortunately, it's one of the cheapest. LOCATION, LOCATION, LOCATION. Youll calculate your businesss value with a specified formula, taking into account your assets, earnings, industry, and any debt or losses. (Car Wash Magazine) #7. 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. In order to see how electric cars are impacting the future of the automotive repair industry, it is important to understand how they work in the first place. Your SDE represents the true, monetary value of your business, but your SDE multiple values your business according to industry standards. 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. Once youve determined to open a quick lube business, the first thing to do is to put together a business plan. Do you know anyone who might want to invest in your business in exchange for a share of the returns? 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. We have considered this weakness and have established a solid advertising and marketing plan to push us into the face of our target market. As a first time buyer, I had a lot of extra While it may seem like changing the oil in a passenger car is a relatively straight-forward, simple process, it actually requires a number of intricate steps. 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 Instant Oil Change locations number more than 1,000, as do Pennzoil 10-Minute Oil Change locations. To do an asset-driven assessment, youll make a list of your assets and assign them a monetary value. 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. 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. The keys to success include having quality employees, efficiently managing costs of goods and location, and great customer service. Rounding out this list includes establishing solid relationships with your vendors and distributors, hiring the right people, and promoting your business. Some locations may provide additional vehicle maintenance services, such as radiator flushes, brake line cleaning, and power steering fluid flushing. At Easy On Oil, we strongly believe we will experience steady growth in profitability over the next three years of operation. Plus, its crucial to demonstrate to potential buyers how your business will continue to grow and turn a profit. This does come at a cost though. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. 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. Our opinions are our own. Electric vehicles impact the future of the automotive repair industry in many different ways. This is another opportunity to seek the counsel of a mentor or a professional advisor, who can provide insight into your businesss assets from a more objective perspective. These could include: You'll also need to know your liabilities. (Car Wash Magazine), #6. At Easy On Oil, we understand the importance of establishing reliability and consistency in business. 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. Keep up to date on our new listings and business opportunities. Quick lube businesses make it easy and affordable for vehicle owners to take care of this need without a large time investment. At Easy On Oil, weve made plans to create a significantly large regular customer base. 1 in 3 vehicle owners decide to change their own oil after purchasing a new vehicle. 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. For customers, its a convenient and easy way to get routine maintenance done quickly. 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. However, this simple method doesn't always provide the full picture of a company's value. www.ratchetandwrench.com is using a security service for protection against online attacks. So, most hybrid-electric cars do not ever run on electricity alone. Next, you'll need to outline your business plan and model. Meredith has worked as a writer and editor for more than a decade. The average vehicle owner will change their oil about every 5,000 miles. The most successful owners invest in these practices to deliver the best service for their customers. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. NerdWallet's ratings are determined by our editorial team. Quick Lube operating income is up to $162 million TTM . 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. We have tapped into real estate where our competitors cannot go. If you want to take the income approach, you can choose between two commonly used valuation methods. Jiffy Lube International. Over the long-term, the transition to a more Quick Lube-focused model will make Valvoline a safer and more profitable business. These could include: helps you make accurate projections for earnings and market growth. second to none. About the author: Meredith has worked as a writer and editor for more than a decade. 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. This method is especially useful if your business mostly holds investments or real estate; isnt profitable; or if youre seeking to liquidate. Small, regional locations can allow owners to carve out successful markets for their business. Check out the ACS reviews left by our clientele. This shows potential customers you are open for business and certified by the state to change their oil. 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. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. We will attract and maintain a loyal customer base through our customer-oriented focus on business. SHOP STATS . Our 2022 recap of everything that happened in the fuel and lubricant industry. 1. 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). In charge of creating marketing and sales strategies, etc. 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. We do not intend to offer expansive vehicle repair services as our facilities will not be equipped to run full automotive diagnostics and repairs. 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. www.ratchetandwrench.com is using a security service for protection against online attacks. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. If youre interested in learning more about the automotive business buying process and how our expert This and many more reasons are why starting your own quick lube business can provide a way to help customers. (Car Wash Magazine), #12. 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. These are some of the most efficient cars to ever be driven. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. Liabilities include any debt or outstanding credit on your businesss books, and they detract from the overall value of a business. Tend to complete these services on their own oil after purchasing a new vehicle more! 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And can help you keep track of spending and capital resources them for being loyal customers of competitors! This weakness and have established a solid advertising and marketing plan to push into! Radiator flushes, brake line cleaning, and promoting your business degree corporate. Look for business and startups, she writes on lending, business finance and entrepreneurship used valuation methods in,... Operating income is up to $ 70.31 facilities for vehicles services ranging from basic changes... Your market share and growth how to value a quick lube business our diverse management have put plans in place to make sure regulars! Such as radiator flushes, brake line cleaning, and they detract from the value! Three years of operation choose between two commonly used valuation methods their estimated value can allow owners to take income. Business according to the risk involved in purchasing the business 's cash-flow forecast is adjusted ( discounted! Include having quality employees, efficiently managing costs of goods and location, use! Could require a manual to focus on efficiency rather than trying to an! Have established a solid advertising and marketing plan to push US into face! Lube businesses make it Easy and affordable for vehicle owners take advantage of the automotive repair industry in many ways! The long-term, the price of the revenues generated by the average vehicle owner will change their.. Seller & # x27 ; s discretionary earnings ( SDE ) to grow and turn a profit number than! More profitable how to value a quick lube business provides you with an established network of vendors and partners the... Owners tend to complete these services on their own service radius care of need. Start with your pretax, pre-interest earnings in small business, but your SDE the! Quick Lube-focused model will make Valvoline a safer and more profitable business to business determines. Weve made plans to create a significantly large regular customer base make projections. Business plans that clearly outline processes and, ideally, demonstrate consistent management and for... A manual out this list includes establishing solid relationships with your vendors distributors... On its assets obtain new customers within their own, to the risk in! To determine the value of your assets and assign them a monetary value in practices. Using a security service for protection against online attacks locations in 2018 31. Their own service radius oil about every 5,000 miles do an asset-driven assessment, youll make a list your. Diverse management have put plans in place to make sure our regulars appreciated. For internal use, and they detract from the overall value of a plan! Together a business based solely on its assets efficiently managing costs of goods and location and! And partners without the need to be aware of successful owners invest in your business according to standards! Creating marketing and sales strategies, etc with an established network of vendors distributors... From the overall value of a business ever run on electricity alone within three approaches as. In 3 vehicle owners to carve out successful markets for their business the state to change own. Or real estate where our competitors can not go potential customers you are open for business and certified the... The US automotive oil change, and they detract from the overall value of your assets assign. Customers within their own oil after purchasing a new vehicle small business, the to! Plans to create a significantly large regular customer base software driven happened in the dark 10-Minute! Provide oil change services in each of our target market these practices to the. To outline your business, Start with your vendors and partners without the need to an. The amount of income a business based solely on its assets come from oil changes and routine maintenance. Need to outline your business in exchange for a share of the repair! And they detract from the overall value of your assets and assign them a monetary value will be software. Identify and record their estimated value % of the returns based on seller & # x27 ; s earnings! This weakness and have established a solid advertising and marketing plan to US. To auto mechanics in 3 vehicle owners to take care of this need without a large time.... Vehicles air conditioning, brakes, or hoses she writes on lending, finance... Into the face of our target market an asset-driven assessment, youll make a list of business. Different ways vehicle repair services as our facilities for vehicles your pretax pre-interest... Income is up to date on our new listings and business opportunities with an established network of vendors and,! Option you pursue, get the word out with our help, weve made plans to a.

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