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. Another 16% of business owners have two locations where they provide services. (IMR Automotive Research), #9. 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. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. Our plan at Easy On Oil is to service the middle and upper income markets. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. Succeeding in business is never easy theres a reason why most small businesses never make it past three years but if you do it right, success wont be far away. automotive business brokers can help you conduct a successful, lucrative business investment, contact our team today! Easy On Oil is a well-positioned quick lube shop that will serve the needs of the people of San Diego. Before you can think about putting shovel to dirt, you must make a business plan outlining the services you will offer and how you plan to make a profit. Keep up to date on our new listings and business opportunities. The remainder of the required financing will come from a ten year Small Business Administration (SBA) loan and a short-term loan. Discounted cash flow method: This method determines the present value of a business's future cash flow. Below is a detailed analysis of how we want to spend our startup capital. Then, you can demonstrate to potential buyers what makes your business stand out. Here, business assets include anything that adds value to your company. This method can be used to value a business for sale as well as raising capital. Keeps shop equipment operating by following operating instructions; troubleshooting breakdowns; maintaining supplies; performing preventive maintenance; calling for repairs. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. Learn more about financial projections, income statements, balance sheets and cash flow. New Constructs, LLC. Since 2012, the industry has achieved an annualized rate of growth averaging 1.5%. In comparison, leasing costs are just 9% of the overall expenses for the average location. How to Valuate a Business One way to calculate a business's valuation is to subtract liabilities from assets. Pre-qualified offers are not binding. This approach works best for newer businesses with high-growth potential, but which arent yet profitable. Jiffy Lube International. 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. 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. (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.). The Top Automotive Oil Change Franchises of 2023. Theres a different SDE multiple for every industry. comprehensive listing of auto repairs for sale near you, give us a call at 1-800-874-5793 for details. Many owners may even pursue franchising or opening several different locations to earn extra income. KEYWORDS oil change Operations Quick Lube. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. The health of the quick lube industry is tied to the health of the general economy. questions and concerns and Jason was fantastic in answering my questions as well as Note that industry operations are labor-intensive: annual revenue per employee is just $60,000. At Easy On Oil, weve made plans to create a significantly large regular customer base. Also our cash flow is impaired and business hours are limited for a retail establishment (Monday through Friday 9:00 a.m. to 6:00 p.m.). Protect your EATS system with Delo 600 ADF. Do you know anyone who might want to invest in your business in exchange for a share of the returns? You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. Print 1,500 flyers advertising the grand opening of the business, List the website on search engines, local business databases, auto repair shop databases and the Yellow Pages, The principals and additional staff handing out business cards and wearing Easy On Oil shirts to promote the opening, Running ads in the local papers about the grand opening, The grand opening, a five-day event, will consist of a promotion giving introductory branded products, Create a basic website with contact information and directions, the prices for services, images of products for sale in the shop and prices, Printing flyers periodically promoting discounts and new products and posting them in the area. : 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. Investigate numbers that dont seem right, and dont be afraid to call in an accountant for extra help. It can gather data to . 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. About Your Results Internet companies or buyers interested in the tech sector can use online directories like Crunchbase and platforms like AngelList, which provide information about startups, funding, investors, and more. This information may be different than what you see when you visit a financial institution, service provider or specific products site. 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. Valvoline Instant Oil Change locations number more than 1,000, as do Pennzoil 10-Minute Oil Change locations. Youve come to the right place. With the Multicare brand extension, Jiffy Lube is focusing on rolling out brake, diagnostic - and eventually tire - services to its customers. (Business Wire), #15. This shows potential customers you are open for business and certified by the state to change their oil. Victory Lane includes basic maintenance checks such as flushes and fills, antifreeze and wiper fluids. However, this simple method doesn't always provide the full picture of a company's value. Once youve determined to open a quick lube business, the first thing to do is to put together a business plan. The most popular brand-name for freestanding businesses is Jiffy Lube. (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.). Oil changing services in the United States is an industry valued at $7 billion 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. 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. 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. Put your license proudly on display at your business. Industry revenue decreased leading up to the reporting period due to falling prices. 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. 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. 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. This information may be different than what you see when you visit a financial institution, service provider or specific products site. We will also provide cleanings, basic auto maintenance, and emergency repairs for our customers as part of our menu of services. We also plan to leverage an automotive service scheduling software program. (Car Wash Magazine), #12. 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. (Business Wire), #13. Make sure your company checks these three boxes: You make steady profits. We will give a guarantee on all our repairs for a certain amount of miles or time. Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. Although the global economy is generally supportive and growing of the industry right now, growth burnout could dramatically impact this industry. www.ratchetandwrench.com is using a security service for protection against online attacks. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. 72% of operators within the quick lube industry operate one location only. In fact, most quick lube operators choose to franchise for this reason. We understand that starting a business like ours can be very expensive due to the high cost of equipment. 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. Performing services on brake systems to coolant flushes. 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. Your market's volume is expanding, and you have the opportunity for growth. There are many things that go into running a quick lube business, but there are three key items you should focus on if you want to retain customers. Marketing programs at lubes should be powerful and . A good rule of thumb is to estimate how much a piece of equipment would sell for today, and use that number. A typical location performs about 1,200 jobs per month. 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. Typically, more than 70 percent of revenue is from oil changes. As 2018 kicked off, Jiffy Lube launched a new brand extension. Here is a list of our partners. Through 2028, the quick lube industry is expected to see lower levels of growth than in the past 5 yeas. Most of our competitors have adopted point-of-sale systems in their stores. When evaluating offers, please review the financial institutions Terms and Conditions. San Diegos Spanish and Mexican heritage is reflected in many historic sites across the city, such as Mission San Diego de Alcala and Old Town San Diego State Historic Park. Quick Lube operating income is up to $162 million TTM . These 10 chains account for nearly 60% of the more than 32,000 US locations. www.ratchetandwrench.com is using a security service for protection against online attacks. As revenues have increased, however, net profits have decreased by 2.3%. 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. The service requires full cookie support in order to view this website. 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. At Easy On Oil, we understand the importance of establishing reliability and consistency in business. In fact, with our location distribution we cover the market. Read more. 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. Regardless of the option you pursue, get the word out with our help. Most online business valuation calculators use a variation of the income approach. Operating income for the Quick Lube segment grew from $95 million in 2015 to $153 in 2018, or . This is why several other methods exist. Among these, only a few are major national chains. 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. We believe that this will establish a healthy, consistent revenue base to ensure stability of the business. These systems gather sales and gross profit data by a stock-keeping unit from each store on a daily basis. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. This allows households to save a little money on the aftermarket needs of their vehicle. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. These could include: You'll also need to know your liabilities. Determines vehicle condition by conducting inspections and identifying worn and damaged parts. Raising a new round of funding, applying for small-business loans, transferring ownership every financing event in a small businesss lifetime requires some way of estimating the companys value. According to reports, the industry is fragmented; the 50 biggest companies generate less than 40 percent of revenue. If so, read on about what it takes to become one. 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. Home Statistics 25 Quick Lube Industry Statistics, Trends & Analysis. Even though quick lube locations are seeing a reduction in the number of cars being serviced each day, the number of oil changes being performed is rising. Paul Hodowanic. What often separates one lube shop from another is its creative marketing strategies. It's likely that any sellers you're working with will want to see your credit report and basic financial profile. Quick lube stations provide services ranging from basic oil changes to transmission flushes and windshield wiper replacements. (Valvoline). While you may not be able to meet their commercial fuel requirements, you certainly can help them with just about anything else. We will hire professionals to help us achieve our objective of excellent service and unprecedented customer service. 1. Most locations achieve this figure with just 2-5 service bays available to them. About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. For a full breakdown of the quick lubes we have for sale, as well as a (Car Wash Magazine), #5. Employee outings, charitable donations, one-time purchases and your own salary can all be included in your SDE. From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. This is where you come in! 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. If you need assistance branding your quick lube business, or for more information about franchising, were here to help. 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. Sally Lauckner is an editor on NerdWallet's small-business team. into the automotive business. Groups exist on the state and federal level to help with seed money. Why do diesel exhaust fluid (DEF) prices keep rising and falling? Pittsburgh, PA:For Sale: this 10-unit Quick Lube Oil Change business that has outstanding locations. Car owners instead prefer to pay someone else to do it for them. There are many services that go beyond the simple passenger and commercial fuel needs of the public and businesses. Jiffy Lube has the most locations in the United States for the quick lube industry, with over 1,900 facilities as of February 2017. I also like doing business with a local firm vs. a national chain. The remaining are small privately-owned establishments. Pre-qualified offers are not binding. Let us help you stock your shops so that you can be the favorite quick lube destination in the neighborhood. vendors, insurance agents, and others. But as a seller, you have to put some number on your operation, especially if you want to be compensated for what you've built, taking into account all kinds of equity. She is based in New York City. Easy On Oil is a San Diego registered LLC quick lube business owned by three equal partners, Temple Curtis, Aaron Flinch and Helen Primer. Keeps supplies ready by inventorying stock; placing orders; verifying receipt. Over the long-term, the transition to a more Quick Lube-focused model will make Valvoline a safer and more profitable business. Order Reprints. demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. On the sell side, a deep understanding of your industrys trends can help you reach an informed valuation that reflects your business assets as well as the current market. More on liabilities in a bit. The income approach to business valuation determines the amount of income a business can expect to generate in the future. You will be redirected once the validation is complete. Small, regional locations can allow owners to carve out successful markets for their business. Joe handled every aspect and obstacle that presented itself throughout the sales This offers incredible value to customers who need their cars fixed right away. In any of those cases, buyers will be interested in the individual value of your investments or equipment. 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. Easy On Oil is a San Diego registered LLC quick lube business that will provide high quality oil changes at a reasonable price. Hybrid cars are a mix between a traditional internal combustion engine and an electric drive-train. If you ever want to learn . NerdWallet Compare, Inc. NMLS ID# 1617539, NMLS Consumer Access|Licenses and Disclosures, California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812, Property and Casualty insurance services offered through NerdWallet Insurance Services, Inc. (CA resident license no. 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. There are two asset categories, and theyre weighted differently when calculating a businesss total value: Tangible assets: When you think about valuing a small business, the most obvious factors in determining value are the companys material resources and holdings. 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. 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. NerdWallet's ratings are determined by our editorial team. In 2016, 45% of consumers asked for premium products from their preferred quick lube business. At Easy On Oil, we know that the economic growth of the past years has clearly increased disposable income. The appeal of a quick lube business is easy to see. 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. Figure 1: VVV's Segment Operating Income Since 2015. Take 5 Oil Change is one of their fastest growing brands. 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. 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