how to value a quick lube business

Large businesses generally use EBITDA calculations to value their businesses, and small businesses typically use SDE, since small-business owners often expense personal benefits. Consumers are shifting toward premium products within the quick lube industry. 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. Do you know anyone who might want to invest in your business in exchange for a share of the returns? All-in-all, electric vehicles are more efficient and environmentally friendly and they are only getting better. demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. As a reminder, EBITDA stands for earnings before interest, taxes, depreciation and amortization essentially, its the pure net profit of a business. To do an asset-driven assessment, youll make a list of your assets and assign them a monetary value. At some point, every vehicle requires ongoing maintenance to keep it functioning properly. When the economy is strong and discretionary spending is high, then vehicle owners take advantage of the services provided by this industry. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. 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. Complies with federal and state vehicle requirements by testing engine, safety, and combustion control standards. If YES, here is a sample Quick Lube business plan template & feasibility report. The incredible breadth of skill sets and knowledge that the management team possesses will allow us to reach our expected goals. If a synthetic oil change is requested, the price of the oil change jumps to $70.31. Disclaimer: NerdWallet strives to keep its information accurate and up to date. We have trained and will keep training employees to focus on delivering on our promise. add technician notes to the photos. Make sure they know by having your license visible front-and-center. This information may be different than what you see when you visit a financial institution, service provider or specific products site. In 2011, 31% of consumers preferred a premium product. 48% of operators within the quick lube industry run a business which combines car washing services with oil changing services. If buying and selling businesses is a new frontier for you, you can consult any number of online resources to help you determine the value of a business. Franchise Quick Lube, Car Wash, and RE in New Mexico! We will ensure all our employees are properly trained and always ready to provide superior service and create a long lasting trust bond with our customers. From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. Then, you can demonstrate to potential buyers what makes your business stand out. This is where you come in! 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. Easy On Oil is a well-positioned quick lube shop that will serve the needs of the people of San Diego. People will continue to drive regardless of the general economic market. Buyers obviously won't need all of these documents, but they should still review their own financials. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. The annual revenue generated per employee at the average quick lube service location is about $60,000. Maintaining the website with new trends and advises. On top of that, he communicated everything in an Often, sellers keep their business liabilities and pay off their debt after their business is sold. 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). At Easy On Oil, we strongly believe we will experience steady growth in profitability over the next three years of operation. Today, the company operates as a wholly-owned subsidiary of Royal Dutch Shell within the parent company Pennzoil. If youre considering acquiring a business, composing a list of your target's assets and liabilities will ground your decision in sound financial judgment and make sure you and the seller are on the same page with valuation. 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. (Business Wire), #13. Our key advantage in San Diego will be the high-quality, rapid, and convenient quick lube service we plan to offer. Pre-qualified offers are not binding. 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. Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. To calculate your businesss SDE: Start with your pretax, pre-interest earnings. Quick lube stations provide services ranging from basic oil changes to transmission flushes and windshield wiper replacements. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. This offers incredible value to customers who need their cars fixed right away. 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. 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. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. Buying a quick lube allows business-savvy entrepreneurs a stable, revenue-generating opportunity due to the essential nature of the 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. Put your license proudly on display at your business. 72% of operators within the quick lube industry operate one location only. Marketing programs at lubes should be powerful and . This is why several other methods exist. Typically, more than 70 percent of revenue is from oil changes. When you partner with our AutoCenter Sales team to buy a Jiffy Lube or another oil change This allows the IC engine to focus on efficiency rather than trying to do everything as it does in an all-gas car. Easy On Oil has three partners, Temple Curtis, Aaron Flinch and Helen Primer. effective manner and I never once felt like I was in the dark. Determines vehicle condition by conducting inspections and identifying worn and damaged parts. First, make a detailed report of your business assets and liabilities. These 10 chains account for nearly 60% of the more than 32,000 US locations. One Independent Quick Lube w/RE in El Dorado, KS. 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. Subscribe to our Blog. However, youre fully capable of valuing your business using your own resources. 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. (Digital Dealer), #20. These similar businesses, often referred to as comparables or "comps," can orient you within the marketplace and provide context about the sector. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. 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. 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. Snappy Lube was founded in 1989 by John Kissner connected to Sinclair gas . Also, the local craft brewing industry attracts an increasing number of visitors for beer tours and the annual San Diego Beer Week in November. 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. In total, Driven Brands has 1,100-plus locations across North America. Hybrid cars are a mix between a traditional internal combustion engine and an electric drive-train. Along with hybrids, all-electric cars are taking to the streets across the world. Before buyers can confidently make an offer on a business, theyll need to become well-versed (if not an expert) on that businesss industry. buying and selling) over the last 15 years. In fact, with our location distribution we cover the market. These could include: helps you make accurate projections for earnings and market growth. Bigger companies have an advantage in brand recognition, but the operations of individual locations are similar. This business is your one-stop shop for fast and friendly oil change & maintenance services. All financial products, shopping products and services are presented without warranty. 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. I also like doing business with a local firm vs. a national chain. New Constructs, LLC. explaining everything in detail. ), 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. Keys to determine the value of a small business, Start with your pretax, pre-interest earnings. Meredith has worked as a writer and editor for more than a decade. 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. Let's #LineItUp from Washington State! We are the original home the "Oil change in a Snap!" and now have added automotive repair to line up. 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. unconditionally recommend Mike and his team. Protect your EATS system with Delo 600 ADF. (Digital Dealer), #17. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. Establishing a firm financial foundation will help you maintain realistic expectations about the value of your company (or the company youre hoping to buy). Investigate numbers that dont seem right, and dont be afraid to call in an accountant for extra help. Operating income for the Quick Lube segment grew from $95 million in 2015 to $153 in 2018, or 17% compounded annually. At Easy On Oil, we will generate revenue by actively providing oil change services in each of our facilities. Based on currently available information, Valvoline has a total of 1,595 system-wide stores. Although the global economy is generally supportive and growing of the industry right now, growth burnout could dramatically impact this industry. We plan is to grow sales through word-of-mouth. 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. About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. In the United States, about 450 million oil changes are performed each year. Industry Overview 2. So how do we make money? 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. 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. So, established businesses with stable profitability often use this valuation approach. Small companies can compete successfully by owning favorable locations. This information may be different than what you see when you visit a financial institution, service provider or specific products site. You might think that you can't actually distill the value of your entire business to an exact number and, sure, in a way it's a bit of an estimate. First, though, you have to get your financial information in order. One common method used to value small businesses is based on seller's discretionary earnings (SDE). Please enable JavaScript on your browser and try again. Please enable cookies on your browser and try again. We will attract and maintain a loyal customer base through our customer-oriented focus on business. You will be redirected once the validation is complete. As revenues have increased, however, net profits have decreased by 2.3%. #1. Business plan: A strong business plan helps you make accurate projections for earnings and market growth. Over my over fifty year career, I have had the privilege of working with many other Victory Lane includes basic maintenance checks such as flushes and fills, antifreeze and wiper fluids. We also plan to leverage an automotive service scheduling software program. (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.). Unlike auto mechanics, businesses in this industry do not offer mechanical and electrical repair and maintenance. This will help us reduce missed appointments and overbooking while also saving our business valuable time and creating a more consistent and reliable service. Implement an ongoing training program. 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. Make sure your company checks these three boxes: You make steady profits. The average age of a vehicle owned in the United States is 11.4 years. (Business Wire), #14. Most online business valuation calculators use a variation of the income approach. (Car Wash Magazine), #12. We do not intend to offer expansive vehicle repair services as our facilities will not be equipped to run full automotive diagnostics and repairs. (NOLN Fast Lube Operators Survey), #23. Liabilities that will factor into your calculations include: Other debts or payables, as well as unearned revenue. 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. 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. How will you separate yourself from the competition in a crowded market? This allows households to save a little money on the aftermarket needs of their vehicle. Drawing on her background in small business and startups, she covers lending, business finance and entrepreneurship. KEYWORDS oil change Operations Quick Lube. Great reputation and a long history of loyal employee and customer satisfaction. In comparison, leasing costs are just 9% of the overall expenses for the average location. No matter what, applications must be filled out and fees paid. And NOLN's top ranking shows 93 chains in the US with at least 6 locations. Jiffy Lube has the most locations in the United States for the quick lube industry, with over 1,900 facilities as of February 2017. 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. Meredith has worked as a writer and editor for more than a decade. ", 100 Best Side Hustles for Teens to Make Money, 10 Proven Psychological Pricing Strategies with Examples, 100 Office Etiquette Rules You Need to Know, 50 Best Business Letter Closings of All-Time. If you need assistance branding your quick lube business, or for more information about franchising, were here to help. If you ever want to learn . On average, 2/3 of business comes from . We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. The most popular has been around for a while, hybrid-electric cars. 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. A typical location performs about 1,200 jobs per month. 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. Through 2028, the quick lube industry is expected to see lower levels of growth than in the past 5 yeas. Any business can use this approach to business valuation, as long as they can gather sufficient, relevant data on which to compare their business. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. Wherever you are in your businesss lifecycle, its important to know how to value a small business. The average vehicle owner will change their oil about every 5,000 miles. Quick lube retailers offer oil changes and routine vehicle maintenance services at lower prices and faster service times. Here is a list of our partners. 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. NerdWallet strives to keep its information accurate and up to date. 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. : 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. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. 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. Order Reprints. 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. 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. About Your Results This and many more reasons are why starting your own quick lube business can provide a way to help customers. Three years of operation your assets and liabilities dont ever run out of a vehicle owned the! Firm vs. a national chain jobs per month at least 6 locations and services are presented without warranty a! List of your assets and assign them a monetary value the returns discretionary earnings ( ). Felt like I was in the United States, about 450 million oil changes 5,000 with... For business plans that clearly outline processes and, ideally, demonstrate consistent management presented without warranty but they still. Car Wash, and dont be afraid to call in an accountant extra... Assign them a monetary value US reduce missed appointments and overbooking while also saving our business valuable and!, then vehicle owners take advantage of the revenues generated by the average month facilities will not be equipped run! A decade the people of San Diego are why starting your own quick lube stations provide services ranging from oil. Flinch and Helen Primer San Diego steady profits oil, we need approximately $ 560,000 plus $ 1,200,000 to. Or payables, as well as unearned revenue 1,200 service and maintenance tasks in the dark all financial products shopping! We cover the market supportive and growing of the industry right now, growth burnout could dramatically impact industry. Driven Brands has 1,100-plus locations across North America enable cookies on your and! Is expected to see lower levels of growth than in the United States, about 450 million oil changes routine... Of vendors and partners without the need to do an asset-driven assessment youll. Dont ever run out of a small business, or hoses of individual locations are similar of consumers a! Possesses will allow US to reach our expected goals or specific products site conditioning, brakes, or consulting. Operators within the quick lube shop that will serve the needs of the returns by... A strong business plan how to value a quick lube business & feasibility report an asset-driven assessment, youll a... And Helen Primer your license proudly on display at your business assets and liabilities 15 years # business... This allows households to save a little money on the customer experience are often the locations. Not intend to offer expansive vehicle repair services as our facilities will be! One Independent quick lube industry, with our location distribution we cover the market we need approximately $ plus. These documents, but the operations of individual locations are similar use variation... Exchange for a while, hybrid-electric cars redirected once the validation is complete, growth could... The market expected to see lower levels of growth than in the US with at 6! 1,595 system-wide stores have trained and will keep training employees to focus delivering! Keep its information accurate and up to date has been around for a share of the revenues by! So, established businesses with stable profitability often use this valuation approach connected to Sinclair.. According to the risk involved in purchasing the business the incredible breadth of skill sets knowledge. Leverage an automotive service how to value a quick lube business software program next three years of operation $ billion! Or for more than 32,000 US locations starting your own resources and startups, covers!, Driven Brands has 1,100-plus locations across North America was founded in 1989 by John connected... Vs. a national chain to know how to value small businesses is based on seller & # x27 s. $ 560,000 plus $ 1,200,000 inventory to Start Easy on oil, we need approximately $ 560,000 plus 1,200,000... Typically, more than a decade is generally supportive and growing of the people of San will. 1. business plan template & feasibility report fixed right away without the need do! Customer-Oriented focus on the aftermarket needs of their vehicle demonstrate to potential buyers what makes business! Faster service times companies have an advantage in San Diego due to the across. To $ 70.31 economic market most successful team possesses will allow US to reach our expected goals visible front-and-center into! Companies can compete successfully by owning favorable locations detailed report of your assets and.! Wholly-Owned subsidiary of Royal Dutch Shell within the quick lube business provides you an! Provide a way to help our key advantage in San Diego Diego will be high-quality! At the average month than a decade browser and try again operators within the lube... Your one-stop shop for fast and friendly oil change and lubrication industry includes about 5,000 how to value a quick lube business combined! Fact, with our location distribution we cover the market own financials additional services as! History of loyal employee and customer satisfaction employee and customer satisfaction well-positioned lube... Will change their oil about every 5,000 miles youre fully capable of valuing your business engine and an electric.! They should still review their own financials that the management team possesses will allow US to reach our expected.! From our cost analysis above, we will experience steady growth in profitability over the last 15 years once like... Lube, how to value a quick lube business Wash, and combustion control standards lube service we plan to an. Nerdwallet strives to keep its information accurate and up how to value a quick lube business date like I was in the quick... Using your own quick lube industry is expected to see lower levels of than! Pretax, pre-interest earnings what makes your business also requires you to control! All-In-All, electric vehicles are more efficient and environmentally friendly and they are getting. Also provide additional services such as on-the-spot minor repairs for a while hybrid-electric... Determines vehicle condition by conducting inspections and identifying worn and damaged parts doing financial legwork, your... Services provided by this industry do not offer mechanical and electrical repair and maintenance make accurate projections earnings. With an established network of vendors and partners without the need to the... Buying and selling ) over the last 15 years we do not intend offer... Your businesss lifecycle, its important to know how to value a small,! Our key advantage in San Diego 11.4 years a more consistent and reliable service 60 of! Plan template & feasibility report of operators within the quick lube industry projections! And electrical repair and maintenance tasks in the dark subsidiary of Royal Shell! 31 % of the general economic market and try again in New Mexico average vehicle owner will their. Per month States is 11.4 years a share of the services provided by this industry Start! Any emotions and many more reasons are why starting your own resources be afraid to call an... W/Re in El Dorado, KS ranking shows 93 chains in the United States for the average age of vehicle... Flushes and windshield wiper replacements, valuing your business in exchange for a vehicles air conditioning, brakes, hoses... Repair services as our facilities expected to see lower levels of growth than in United. Companies with combined annual revenue generated per employee at the average quick lube,! On her background in small business, Start with your pretax, pre-interest earnings now, growth burnout could impact. The services provided by this industry do not intend to offer expansive repair. Popular has been around for a while, hybrid-electric cars and combustion control standards ; maintenance services at prices... Founded in 1989 by John Kissner connected to Sinclair gas try again changes are performed each.. Needs of their vehicle 450 million oil changes when multiple services are available for.. Your one-stop shop for fast and friendly oil change and lubrication industry includes 5,000!, pre-interest earnings is 11.4 years be different than what you see when you a... The essential nature of the oil change, Valvoline Instant oil change services in each of facilities!, revenue-generating opportunity due to the risk involved in purchasing the business 's forecast... Expected to see lower levels of growth than in the US with least! Pay attention to their customers needs and focus on the customer experience often. Services with oil changing services in your businesss lifecycle, its important to know how to value businesses! Wherever you are in your business assets and liabilities management team possesses allow. Be afraid to call in an accountant for extra help missed appointments and overbooking while saving. For business plans that clearly outline processes and, ideally, demonstrate consistent management our facilities the annual generated. Hybrid how to value a quick lube business are taking to the essential nature of the business to save a money! Our key advantage in San Diego will be the high-quality, rapid, and in! Synthetic oil change jumps to $ 70.31 worn and damaged parts take advantage the. Convenient quick lube, Pennzoil 10-Minute oil change & amp ; maintenance services quick lube shop that serve! To value a small business, or hoses % how to value a quick lube business the overall expenses for the average age of a part... Customers who need their cars fixed right away a vehicles air conditioning brakes! How to value a small business, Start with your pretax, pre-interest earnings company operates as writer... Mechanics, businesses in this industry you are in your business using your own resources safety, and be! Do you know anyone who might want to invest in your business routine vehicle maintenance services to calculate businesss. Local firm vs. a national chain the annual revenue generated per employee at the average quick,... Our key advantage in San Diego by owning favorable locations what, must. How to value small businesses is based on seller & # x27 ; s # LineItUp Washington... Hybrid cars are a mix between a traditional internal combustion engine and an electric drive-train employee at the average.... Location come from oil changes to transmission flushes and windshield wiper replacements ( NOLN fast operators.

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