how to value a quick lube business

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). Conversion: Converting a facility that is open and operating under a different brand. We will always stress the fact that we only offer reliable services. As technology advances, consumers are expecting fast, efficient, and high quality maintenance. A well-run business will make transitioning ownership, without losing profits in the process, significantly easier. Industry revenue decreased leading up to the reporting period due to falling prices. The average price for a multi-point oil change within the quick lube industry is $36.82. When evaluating offers, please review the financial institutions Terms and Conditions. She was trained at Ford and later took a position at Chevrolet. Here is a list of our partners. This does come at a cost though. These could include: helps you make accurate projections for earnings and market growth. Together with our team, these experts will help ensure you get the best Copyright 2023 Profitable Venture Magazine Ltd | All Rights Reserved | See About Us | Contact Us | Privacy Policy | Disclaimer. 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. (IBIS World), #2. We have considered this weakness and have established a solid advertising and marketing plan to push us into the face of our target market. (Car Wash Magazine), #10. However, this does not influence our evaluations. The Oil Change Services in the US industry consists of Conventional oil changes, semi-synthetic oil changes, full synthetic oil changes, automotive oil changes, car washing and cleaning services, other maintenance services and high-mileage oil changes. 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. When the economy is weak, vehicle owners tend to complete these services on their own, to the best of their ability. Buyers obviously won't need all of these documents, but they should still review their own financials. One Independent Quick Lube w/RE in East-Central South Dakota! The more thorough you are in this step of the valuation process, the more confident youll be in your calculations. : 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. If youre interested in learning more about the automotive business buying process and how our expert A valuation represents your companys total worth. 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. We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. 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. (NOLN Fast Lube Operators Survey), #23. 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. Our diverse management have put plans in place to make sure our regulars feel appreciated by rewarding them for being loyal customers. This information may be different than what you see when you visit a financial institution, service provider or specific products site. In the United States, about 450 million oil changes are performed each year. One Independent Quick Lube w/RE in El Dorado, KS. This is where you come in! 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. More than 33,000 firms are currently engaged in the oil change services industry right now in the United States. With Easy On Oil as a technologically savvy business with computerized monitoring of all automotive lubricant and repair parts inventory, we plan to make sure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Quick lube businesses make it easy and affordable for vehicle owners to take care of this need without a large time investment. These 10 chains account for nearly 60% of the more than 32,000 US locations. A typical location performs about 1,200 jobs per month. Pittsburgh, PA:For Sale: this 10-unit Quick Lube Oil Change business that has outstanding locations. Additionally, franchising a business comes with an entirely different set of understandings and obligations. And with hundreds of millions of vehicles on U.S. roadways, all of which require routine oil changes, that translates to serious revenue for your portfolio. Car owners instead prefer to pay someone else to do it for them. Franchised Oil Change & Repair Shop in Solano County. Subscribe to our Blog. text the finished report to the customer's mobile device. The MS Word and MS Excel documents feature a completely automated table of contents, industry research, and specific marketing plans that are for a Quick Lube Oil Change. As a reminder, EBITDA stands for earnings before interest, taxes, depreciation and amortization essentially, its the pure net profit of a business. 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. He will be charged with overseeing the sales and marketing of Easy On Oil. 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. There are really four business valuation methods (nested within three approaches, as shown below) that you need to be aware of. Our Products and Services 4. 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. 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. One common method used to value small businesses is based on seller's discretionary earnings (SDE). (Car Wash Magazine), #11. unconditionally recommend Mike and his team. (Car Wash Magazine), #8. Wherever you are in your businesss lifecycle, its important to know how to value a small business. business, you get the benefit of our extensive, curated network of industry professionals, including lenders, 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. The two PEGs that own Express Oil LLC now have more than 700 stores. Greg's Petroleum works with dozens of quick lubes with our Valvoline and Havoline lines, and we have decades of quick lube experience on our staff. Check out the ACS reviews left by our clientele. Why do diesel exhaust fluid (DEF) prices keep rising and falling? 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. 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. We will also provide cleanings, basic auto maintenance, and emergency repairs for our customers as part of our menu of services. On top of that, he communicated everything in an (IHS Automotive), #22. Jiffy Lube International is the main player in the franchise segment of the quick-lube chain industry. Knowing your peer companies will also help you assess your market share and growth potential. Businesses in this industry change motor oil, lubricate the chassis of automotive vehicles and provide other automotive repair and maintenance services, such as tire rotations and liquid flushes. In total, Driven Brands has 1,100-plus locations across North America. Our plan at Easy On Oil is to service the middle and upper income markets. Over the past decade, improved technology and extraction techniques enabled industry . We will attract and maintain a loyal customer base through our customer-oriented focus on business. 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. We will offer these distinct but complimentary services coupled with unprecedented customer service, something that the industry is not known for having. Regardless of the option you pursue, get the word out with our help. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. 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. 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. Keeps shop equipment operating by following operating instructions; troubleshooting breakdowns; maintaining supplies; performing preventive maintenance; calling for repairs. Over the long-term, the transition to a more Quick Lube-focused model will make Valvoline a safer and more profitable business. Easy On Oil has three partners, Temple Curtis, Aaron Flinch and Helen Primer. Franchise Quick Lube, Car Wash, and RE in New Mexico! Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. The cost of an oil. 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. The remaining are small privately-owned establishments. This shows potential customers you are open for business and certified by the state to change their oil. Temple worked as a top sales rep at Chevrolet for over 13 years. Please enable JavaScript on your browser and try again. Keeps supplies ready by inventorying stock; placing orders; verifying receipt. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. 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. When it comes to all-electric cars, consumers either have an inexpensive car with very low range or a very expensive car with comparable range to an ICE car. Before buyers can confidently make an offer on a business, theyll need to become well-versed (if not an expert) on that businesss industry. To attract additional financing, the owners may consider taking Easy On Oil public several years down the road. 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. This influences which products we write about and where and how the product appears on a page. At Easy On Oil, we understand the importance of establishing reliability and consistency in business. We have identified several high priority points that will help you take your business to the next level. Theres a different SDE multiple for every industry. Our Services are guaranteed to exceed your vehicles new car warranty standards! SHOP STATS: Midas Kalkaska Location: Kalkaska, Mich. . For a full breakdown of the quick lubes we have for sale, as well as a Paul Hodowanic. Jiffy Lube International. The process of changing the oil in a car can be very daunting and not every car owner will be willing to try. We also have plans to send them coupons for discounted work or give them a free oil change from time to time. 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. At QUICKLUBE / EXPRESS LUBE we specialize in Full Service oil changes on all makes and models of passenger cars/light trucks and vans as well as some motorhomes. 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. 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. If you need assistance branding your quick lube business, or for more information about franchising, were here to help. Verifies vehicle performance by conducting test drives; adjusting controls and systems. Performing services on brake systems to coolant flushes. Drawing on her background in small business and startups, she covers lending, business finance and entrepreneurship. I help you make the necessary changes that will remove you from the daily grind and fire-fighting so you can create new value and make additional impact in other areas. 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. You have a loyal customer base. 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. (Car Wash Magazine), #6. She has over a decade of experience in print and online journalism. Approaches to a successful small-business evaluation. Depending on the degree of corporate transparency, you can also see what comparable businesses are selling for. 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. person. Regardless of the option you pursue, get the word out with our help. Marketing programs at lubes should be powerful and . That said, doing the math is free, so go ahead and plug your earnings numbers into different formulas and compare. (Car Wash Magazine), #12. The most popular has been around for a while, hybrid-electric cars. Over 70% of the customers a quick lube business receives originates within 10 miles or less of the business location. The service requires full cookie support in order to view this website. Weve provided them with the supplies and lubricants they need to keep their customers happy. To reach our local customer base, we will employ a marketing manager. If you want to take the income approach, you can choose between two commonly used valuation methods. 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. 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. buying and selling) over the last 15 years. Once you've determined to open a quick lube business, the first thing to do is to put together a business plan. Also, the local craft brewing industry attracts an increasing number of visitors for beer tours and the annual San Diego Beer Week in November. Our objective is to be precise and honest with clients when it comes to quoting cost estimates. Here's a quick example: If the present value of your current business earnings/excess compensation amounts to $500,000 and you select a discount for lack of marketability of 10%, $50,000 (10% x $500,000) will be subtracted, resulting in an estimated business value of $450,000. 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. Just 9% of the sales generated by the quick lube industry come from clients that own vehicle fleets. 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. Over my over fifty year career, I have had the privilege of working with many other Also, our wide range of auto lubricants and repair parts inventory that is (nearly) never out of stock will further cement our place as a reckoning force in the industry. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. 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. Finally, any current debts or future payments, called liabilities, are subtracted from the net income. 8 Stalls & Pits! Investigate numbers that dont seem right, and dont be afraid to call in an accountant for extra help. Examples include: These are all the non-material assets that add value to your business. We will create strong vendor relationships with the most reputable vendors in terms of shipping time of major parts. Make sure your company checks these three boxes: You make steady profits. 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. In 2011, 31% of consumers preferred a premium product. This segment comprises approximately 25% of our revenue at Easy On Oil. At Easy On Oil, weve made plans to create a significantly large regular customer base. All financial products, shopping products and services are presented without warranty. However, youre fully capable of valuing your business using your own resources. 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. We plan to price our products to provide the retailer with a 50% maintained margin and offer a product exchange program for current accounts. Our Mission and Vision Statement 5. 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. Among these, only a few are major national chains. Similarly, make sure your business doesn'tcheck any of these boxes: Your current products and services still need reworking. (Valvoline), #24. 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. If you are contemplating a transaction in the auto service sector I can 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. (If you used EBITDA to value your business, youll use an EBITDA multiple.) The income approach to business valuation determines the amount of income a business can expect to generate in the future. Updates job knowledge by participating in educational opportunities; reading technical and regulation publications. First, though, you have to get your financial information in order. Note that industry operations are labor-intensive: annual revenue per employee is just $60,000. 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. 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. 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. Job Roles and Responsibilities 6. This company offers true quick oil change and a new filter. (Valvoline). For that reason, projections of growth for the industry are as low as 0.7% within the forecast period in some markets. In comparison, leasing costs are just 9% of the overall expenses for the average location. This approach works best for newer businesses with high-growth potential, but which arent yet profitable.

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