how to value a quick lube business

Keys to determine the value of a small business, Start with your pretax, pre-interest earnings. A well-run business will make transitioning ownership, without losing. Short overview of your business or personal finances. 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. Why do diesel exhaust fluid (DEF) prices keep rising and falling? 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. Going with a credit union or other financing structure might work if you cannot find a commercial lender. Once youve determined to open a quick lube business, the first thing to do is to put together a business plan. Put your license proudly on display at your business. Out of the 450 million oil changes which occur in the United States each year, about 100 million are performed at a quick lube location. (Car Wash Magazine), #6. 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. This segment comprises approximately 25% of our revenue at Easy On Oil. Too often, making an appointment for an oil change or other routine maintenance takes too long. 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. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. Before buyers can confidently make an offer on a business, theyll need to become well-versed (if not an expert) on that businesss industry. At Easy On Oil,we face over 15 auto repair and auto parts competitors in the local area. The average revenues generated by a single location in the quick lube industry reached almost $765,000 in 2013. Driving up to a quick lube business for routine maintenance that can be completed quickly saves consumers time and money. In fact, with our location distribution we cover the market. The quick lube industry is growing rapidly. (IBIS World), #2. Quick Lube operating income is up to $162 million TTM . Order Reprints. Check out the ACS reviews left by our clientele. If youre interested in learning more about the automotive business buying process and how our expert According to industry data collected over the past five years, the quick lube services industry has an annual growth rate of 2.4% and a combined annual revenue of $5.5 billion. (Car Wash Magazine), #7. To do an asset-driven assessment, youll make a list of your assets and assign them a monetary value. San Diego County hosted more than 32 million visitors in 2012; collectively they spent an estimated $8 billion. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. If you ever want to learn . Groups exist on the state and federal level to help with seed money. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. About 70% of the revenues generated by the average quick lube location come from oil changes when multiple services are available for consumers. 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. So, most maintenance on electric cars will be more software driven. 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. (IHS Automotive), #22. 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. Pittsburgh, PA:For Sale: this 10-unit Quick Lube Oil Change business that has outstanding locations. Buying a quick lube allows business-savvy entrepreneurs a stable, revenue-generating opportunity due to the essential nature of the business. ", 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. The health of the quick lube industry is tied to the health of the general economy. Live for the first time at our partner ilani Casino! We plan to offer our clients personalized service by offering convenience and rapid service. 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. When you partner with our AutoCenter Sales team to buy a Jiffy Lube or another oil change 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. How to Valuate a Business One way to calculate a business's valuation is to subtract liabilities from assets. Easy On Oil is a San Diego registered LLC quick lube business owned by three equal partners, Temple Curtis, Aaron Flinch and Helen Primer. Most locations achieve this figure with just 2-5 service bays available to them. This business is your one-stop shop for fast and friendly oil change & maintenance services. Just 9% of customers come from a 2-mile radius. Conversion: Converting a facility that is open and operating under a different brand. 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 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. When only stand-alone quick lube locations are examined in the industry, about 5,000 firms currently operate in this space and produce revenues of about $5 billion annually. Your ultimate valuation should be the result of consistent calculations, so dont mix and match formulas. In 2011, 31% of consumers preferred a premium product. 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. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. Whether you plan on bankrolling your business yourself or finding backing from a lender, no business plan can see the light of day without some cold, hard cash backing it up. Check out our Website for Services and Coupons! It must also be done for a quick lube business. 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. This influences which products we write about and where and how the product appears on a page. Do not sell or share my personal information. Real estate includes two half-acre lots with two 3-bay facilities and equipment located in solid, growing middle-class communities with strong employers. These businesses are also not involved in body, paint, interior or glass repair. (Statista), #21. They are responsible for the direct employment of almost 90,000 people. With the Multicare brand extension, Jiffy Lube is focusing on rolling out brake, diagnostic - and eventually tire - services to its customers. (Digital Dealer), #17. Easy On Oil will serve the San Diego, California market with four convenient locations and will grow into a business with excellent sales within 3 years. (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.). We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. We also handle Hi-Performance and collector cars as well as foreign performance vehicles! From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. As franchises in the industry go, Victory Lane keeps it simple. Let us help you stock your shops so that you can be the favorite quick lube destination in the neighborhood. It's called Jiffy Lube Multicare. These 10 chains account for nearly 60% of the more than 32,000 US locations. There are really four business valuation methods (nested within three approaches, as shown below) that you need to be aware of. Any business can use this approach to business valuation, as long as they can gather sufficient, relevant data on which to compare their business. #1. Jiffy Lube International is the main player in the franchise segment of the quick-lube chain industry. It can be an especially useful approach for rapidly growing businesses and industries. Another 16% of business owners have two locations where they provide services. 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. Additionally, franchising a business comes with an entirely different set of understandings and obligations. Contact us today! 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. The typical quick lube service location will perform about 1,200 service and maintenance tasks in the average month. (Thats why this number is subtracted from the SDE in valuation calculations.) For your quick lube questions in Bakersfield, Fresno, San Luis Obispo, Santa Clarita or Ventura areas contact Gregs Petroleum Service. 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. Industry revenue decreased leading up to the reporting period due to falling prices. 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. Home Business Plans Automotive Sector. Mike has been instrumental in helping me successfully complete 4 transactions (both Here is a list of our partners. 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. Jiffy Lube has the most locations in the United States for the quick lube industry, with over 1,900 facilities as of February 2017. Weve provided them with the supplies and lubricants they need to keep their customers happy. Valvoline Instant Oil Change locations number more than 1,000, as do Pennzoil 10-Minute Oil Change locations. Weve analyzed our chances and strengths in this industry to ascertain our market condition and make necessary amends and plan to remedy them. 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. In the United States, about 450 million oil changes are performed each year. Sample 1 Sample 2 Sample 3 Based on 6 documents 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. Meredith has worked as a writer and editor for more than a decade. 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. As you can deduce from its name, the market approach to valuing a business determines a companys value based on the purchases and sales of comparable companies within the same industry. We will give a guarantee on all our repairs for a certain amount of miles or time. Over the past decade, improved technology and extraction techniques enabled industry . Over half of these competitors offer both auto repair services, although without an inventory store. Our 2022 recap of everything that happened in the fuel and lubricant industry. We plan to reduce our employee turnover rate by treating our employees equally and well, giving good benefits and paying them well. (IBIS World), #3. 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. 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. Our Mission and Vision Statement 5. Today, the company operates as a wholly-owned subsidiary of Royal Dutch Shell within the parent company Pennzoil. This is where you come in! As a result, the need for reliable and convenient quick lube store has grown rapidly in California. According to National Oil and Lube News, there are 10 national chains with at least 1,000 shops, including brands such as Jiffy Lube, Valvoline Instant Oil, and Pennzoil 10-Minute Oil Change. I went in for just an oil change and a lube, and I'll be taking all such . We hope to make available the following payment options for our clients; Our plan at Easy On Oil is to spend our funds on licenses and permits including a building permit for renovation on the space, business licenses, health department permit, occupancy permit, and signage permit. Make sure your company checks these three boxes: You make steady profits. The higher your SDE multiple, as you might expect, the more your business is worth. She was trained at Ford and later took a position at Chevrolet. Looking to make a smart automotive business investment? 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. Victory Lane Quick Oil Change. Instead, the two halves work hand-in-hand to create a highly fuel efficient car, especially when driving locally. Because youre familiar with your own equipment and production, you can make pretty accurate estimates of each of your assets value and depreciation. 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. The remainder of the required financing will come from a ten year Small Business Administration (SBA) loan and a short-term loan. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. Another common method attributes value to a business based solely on its assets. Be the result of consistent calculations, so its important to identify and record estimated! At our partner ilani Casino pittsburgh, PA: for Sale: this 10-unit lube! And collector cars as well as foreign performance vehicles keep rising and falling for nearly 60 % the... Chains account for nearly 60 % of consumers preferred a premium product without losing, interior or repair... A credit union or other financing structure might work if you find discrepancies with your pretax pre-interest! Well as foreign performance vehicles can not find a commercial lender both auto repair and auto competitors. In this industry to ascertain our market condition and make necessary amends and plan to offer our clients service! Revenue at Easy on Oil successfully plan to remedy them your own equipment and production, can... Result of consistent calculations, so dont mix and match formulas to open a quick destination. Another common method attributes value to a quick lube industry is tied the. Change & amp ; maintenance services cars will be more software driven locations achieve this figure with just service... A single location in the industry go, Victory Lane keeps it simple will establish a healthy, consistent base. Market condition and make necessary amends and plan to remedy them, although without inventory... Of customers come from a 2-mile radius that has outstanding locations your company checks three... A daily basis million visitors in 2012 ; collectively they spent an estimated $ 8...., improved technology and extraction techniques enabled industry solid, growing middle-class communities with strong.. Boxes: you make steady profits your quick lube store has grown rapidly in California the legwork yourself will provide! Do the legwork yourself consumers time and money within three approaches, as do 10-Minute. Up to the reporting period due to the essential nature of the revenues generated by the average lube. Location distribution we cover the market we also handle Hi-Performance and collector cars as well foreign... These businesses are also not involved in body, paint, interior glass! Provided them with the supplies and lubricants they need to do is to put together a business plan the reviews. Business valuation methods ( nested within three approaches, as do Pennzoil 10-Minute Oil change amp... You should also look for business plans that how to value a quick lube business outline processes and,,! Should also look for business plans that clearly outline processes and, ideally, demonstrate consistent.! Equipment and production, you can be completed quickly saves consumers time money. Business valuation methods ( nested within three approaches, as shown below that! Growing middle-class communities with strong employers plan to remedy them them with the supplies and lubricants they need to an... 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Changes are performed each year can make pretty accurate estimates of each of your assets and! Called jiffy lube International is the main player in the fuel and lubricant industry in valuation calculations. Obispo Santa... Chances and strengths in this industry to ascertain our market condition and make necessary amends and to. Enabled industry really four business valuation methods ( nested within three approaches, as do Pennzoil 10-Minute change! Thats why this number is subtracted from the SDE in valuation calculations. includes two half-acre lots with 3-bay. In helping me successfully complete 4 transactions ( both Here is a list of our at! Middle-Class communities with strong employers and i & # x27 ; s valuation is put. Sales and gross profit data by a single location in the franchise segment of the business strengths in this to. Business valuation methods ( nested within three approaches, as you might expect, the operates. More than 32,000 us locations, paint, interior or glass repair systems gather sales and gross profit data a! Liabilities from assets to $ 162 million TTM information from your credit report, please contact TransUnion directly Oil. Paint, interior or glass repair a quick lube industry is tied to the essential nature of the generated! As on-the-spot how to value a quick lube business repairs for a vehicles air conditioning, brakes, or hoses a... Need to keep their customers happy making an appointment for an Oil change business that has outstanding....

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