A good rule of thumb is to estimate how much a piece of equipment would sell for today, and use that number. (IBIS World), #3. 3. Even if you don't adjust the asset's worth according to the current market, you can still get a good sense of a businesss material value. 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. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. (Car Wash Magazine), #7. However, this simple method doesn't always provide the full picture of a company's value. Our partners compensate us. We will also provide additional services such as on-the-spot minor repairs for a vehicles air conditioning, brakes, or hoses. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. Too often, making an appointment for an oil change or other routine maintenance takes too long. 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. 8 Stalls & Pits! 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. At Easy On Oil, we understand the importance of establishing reliability and consistency in business. : 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 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. Short overview of your business or personal finances. Meredith has worked as a writer and editor for more than a decade. Industry revenue decreased leading up to the reporting period due to falling prices. 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. Maintains vehicle records by annotating services and repairs. He will be charged with overseeing the sales and marketing of Easy On Oil. Over the past decade, improved technology and extraction techniques enabled industry . These are some of the most efficient cars to ever be driven. Theres a different SDE multiple for every industry. In any of those cases, buyers will be interested in the individual value of your investments or equipment. Since 2012, the industry has achieved an annualized rate of growth averaging 1.5%. 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. Aaron boasts of a prosperous career in the automotive industry, 12 years as a Engine Technician at Ford Inc. Lastly, Helen brings 8 years of finance and administration experience. At Easy On Oil, we believe that by having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, our business location and shop will always bring in demand for quick lube services. These could include: helps you make accurate projections for earnings and market growth. Job Roles and Responsibilities 6. First, make a detailed report of your business assets and liabilities. As technology advances, consumers are expecting fast, efficient, and high quality maintenance. Buyers obviously won't need all of these documents, but they should still review their own financials. The most popular has been around for a while, hybrid-electric cars. Intangible assets are crucial to your SDE multiple, so its important to identify and record their estimated value. 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. add technician notes to the photos. We understand that starting a business like ours can be very expensive due to the high cost of equipment. (IMR Automotive Research), #9. She was trained at Ford and later took a position at Chevrolet. Businesses in this industry are very important to the general automotive industry. The process of changing the oil in a car can be very daunting and not every car owner will be willing to try. 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. We do not intend to offer expansive vehicle repair services as our facilities will not be equipped to run full automotive diagnostics and repairs. The Top Automotive Oil Change Franchises of 2023. How much is an oil change? (Digital Dealer), #20. Along with doing financial legwork, valuing your business also requires you to exercise control over any emotions. All financial products, shopping products and services are presented without warranty. Wherever you are in your businesss lifecycle, its important to know how to value a small business. Let us help you stock your shops so that you can be the favorite quick lube destination in the neighborhood. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. Check out the ACS reviews left by our clientele. This does come at a cost though. (Car Wash Magazine), #6. 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. Because youre familiar with your own equipment and production, you can make pretty accurate estimates of each of your assets value and depreciation. Liabilities include any debt or outstanding credit on your businesss books, and they detract from the overall value of a business. SWOT Analysis 7. Also our product prices will be gotten after the appropriate retail is determined to make sure that the shelf price represents a value to the consumer and the retailer has a 50% margin. At Easy On Oil, we will generate revenue by actively providing oil change services in each of our facilities. We will always stress the fact that we only offer reliable services. From our cost analysis above, we need approximately $560,000 plus $1,200,000 inventory to start Easy On Oil successfully. Its crucial that prospective buyers understand SDE, too. 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.). 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. Although this may create some upfront reduction in revenue, we believe it will end up paying out in the long run as we start to build up a client base that will only come to us for repairs and refuse to go anywhere else. (NOLN Fast Lube Operators Survey), #23. However, to keep capital investments low and offer quick building relocation, vehicle lifts can be used rather than basements. 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. 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. Approaches to a successful small-business evaluation. When the economy is weak, vehicle owners tend to complete these services on their own, to the best of their ability. Franchising a quick lube business provides you with an established network of vendors and partners without the need to do the legwork yourself. For that reason, projections of growth for the industry are as low as 0.7% within the forecast period in some markets. ", 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. You should also look for business plans that clearly outline processes and, ideally, demonstrate consistent management. Most of our competitors have adopted point-of-sale systems in their stores. demonstrates how you make money, be it a subscription-based service, direct-to-consumer e-commerce, or B2B consulting. These services will include full oil changes, lubricate the chassis of automotive vehicles and provide other automotive repair and maintenance services, such as tire rotations and liquid flushes. 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. She has over a decade of experience in print and online journalism. 72% of operators within the quick lube industry operate one location only. This company offers true quick oil change and a new filter. Disclaimer: NerdWallet strives to keep its information accurate and up to date. 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. (Business Wire), #16. Through 2028, the quick lube industry is expected to see lower levels of growth than in the past 5 yeas. One Independent Quick Lube w/RE in East-Central South Dakota! So, sellers should find out as much as they can about companies that are similar in size, business model, and revenue, if that information is available. 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. So, most maintenance on electric cars will be more software driven. Franchise Quick Lube, Car Wash, and RE in New Mexico! Our Business location provides us with a vast market and many opportunities. For a full breakdown of the quick lubes we have for sale, as well as a NerdWallet's ratings are determined by our editorial team. It's called Jiffy Lube Multicare. Unlike auto mechanics, businesses in this industry do not offer mechanical and electrical repair and maintenance. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. (Car Wash Magazine), #11. Copyright 2023, Greg's Petroleum Service, Inc, New Chevron Grease Cartridges to Premiere Soon, Gregs Petroleum Service Receives Chevrons Gold Lubrication Marketer Award. 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. "Jiffy Lube Multicare is not a rebrand; it is more of an extension," said Steve Ledbetter . Once you've determined to open a quick lube business, the first thing to do is to put together a business plan. A convincing business plan will lay the case for why you deserve the capital you need to pursue your goals. Profit and loss statements for the last three years. We plan to reduce our employee turnover rate by treating our employees equally and well, giving good benefits and paying them well. Great reputation and a long history of loyal employee and customer satisfaction. Conversion: Converting a facility that is open and operating under a different brand. If you need assistance branding your quick lube business, or for more information about franchising, were here to help. 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. Operating expenses and labor are the two largest costs facing the quick lube industry. Then, youll add back in any purchases that arent essential to operations, like vehicles or travel, that you report as business expenses. 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. 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. Why do diesel exhaust fluid (DEF) prices keep rising and falling? 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 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. 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. It can gather data to . Here is a list of our partners and here's how we make money. How to Valuate a Business One way to calculate a business's valuation is to subtract liabilities from assets. Unlike EBITDA, though, youll also add back in the owners salary and owners benefits into your SDE calculation. Owners who pay attention to their customers needs and focus on the customer experience are often the most successful. Discounted cash flow method: This method determines the present value of a business's future cash flow. 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. This approach works best for newer businesses with high-growth potential, but which arent yet profitable. Your best angle is to make a list of the production, property, and resources that comprise your business assets and liabilities, cash and investments, employees and intellectual property. We plan to offer our clients personalized service by offering convenience and rapid service. The business's cash-flow forecast is adjusted (or discounted) according to the risk involved in purchasing the business. The cost of an oil. Together with our team, these experts will help ensure you get the best You have a loyal customer base. 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. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. Instead, the two halves work hand-in-hand to create a highly fuel efficient car, especially when driving locally. Along with hybrids, all-electric cars are taking to the streets across the world. Easy On Oil is an exciting business opportunity that addresses the unmet need of having a spacious quick lube facility that also has a complete automotive parts store. The 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. automotive business brokers can help you conduct a successful, lucrative business investment, contact our team today! 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. Why do diesel exhaust fluid (DEF) prices keep rising and falling? There are about 250 million vehicles on the road which will require services at some point that can be provided by a quick lube location. This is why several other methods exist. At Easy On Oil, weve made plans to create a significantly large regular customer base. Protect your EATS system with Delo 600 ADF. Sellers will need to follow steps to properly take inventory of your assets. 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. Make sure they know by having your license visible front-and-center. At Easy On Oil, we strongly believe we will experience steady growth in profitability over the next three years of operation. We plan to make sure we dont ever run out of a specific part, while maximizing inventory turnover. We plan to let our customers know that we will only provide necessary repairs and service and will not try to charge them for services that they dont need. Paul Hodowanic. Future cash flow method: this method determines the present value of a specific part, while maximizing turnover. Across the world shops so that you can be very daunting and not every car will... 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