Why does this business fail repeatedly?

[Fly Rod]

Re: Why does this business fail repeatedly?

#1 Location, location location. Your just off of highway, people R busy going to and from work,traffic volume, they wait and do it on weekend in their local. i know you couldn't put up a bigger picture of area, could be not in residential area. Talking to a midas guy owns several, the one between where I live and Boston sees a million cars a day, suicide to pull off and on road going to close it when lease runs out. He went from 39 bucks to 25 bucks, his over head cost per lube is 32 bucks before making a profit can't survive unless you offer other services.

#2 Price. Why pay 40-50 bucks for oil change when up the road its 19.95 for oil and lube. My mechanic guy charges 50 bucks for oil change, he does not do my oil change.

#3 Personality also plays into it.

JB...... You are right quick lubes try to fleech you. When first opened went to one they had a lady spending 100 bucks,came out with a drop of dirty lube on a white card and tried to tell her she needed more.

One other thing.... Another gimmick,you do not need oil change every 3000 miles, 7000-10000 with oil is fine, longer with syntheic.

 

[LippCJ7]

Re: Why does this business fail repeatedly?

Yeah if you have the basics for a decent shop, plan far enough in advance, you could easily change direction depending on your customer base needs. Diversifying within reason cannot be a bad idea especially in this economy. Just don't go crazy and make sure you thoroughly research these other areas before you dump alot of money into another area of business, another area that may be good for easy money is a cheap welder for exhaust work, but remember, exhaust work is busy work, not much money but also not much to invest in assets either, again if you have the lifts why not right? the worst thing you can see in this business is empty bays/lifts!

 

[Alwhite00]

Re: Why does this business fail repeatedly?

Was it caled the same thing each time? Was it a franchise? (Pennzoil, jiffy lube) does the wal mart do oil changes? LK

 

[chriscraft254]

Re: Why does this business fail repeatedly?

Valvoline here in my parts is very good and make sure they get you in and out. I think that is key. They will ask you if you want other services, but that is based on the vehicles recommended periodic maintenance schedule from the factory.

The location you are showing to me is not the most ideal. If the people have to fight a busy entrance for other businesses like walmart, they may go elsewhere. Most the quik change locations here are right on the main thoroughfairs, not back in shopping centers.

They will even put a guy out on the road waving a sign saying bay open to draw people in. This works because people just don't want to wait for services, thus the reason for "quik change"! These were not designed to be full service, drop your car off type places. they were designed to offer a quik alternative for those people on the go, that don't have time to make an appointment for a service on there car. Especially for just an oil change.

I would not combine businesses. I would keep the detailing a completely differnet business with very deliberate pricing and services listed.

Kinda like restaurants that offer alot of different choices on the menu. Keep it simple and your overhead and manpower will work like a well oiled machine. Make it confusing for you employees and customers, the business will not survive. I would also think very carefully about having a partner. Parnerships are always one sided. there is always atleast one half of the partnership that is or thinks they are getting the worst of the deal. Instead, profit share and have incentives for employees to be your hired partners. Good luck

 

[rbh]

Re: Why does this business fail repeatedly?

Not to Hijack this but here's my idea for this morning.
most likely the oil pipeline will be a go out in the west, the biggest thing that is required is accomodations and food.
Grab old camp trailers (45 footer atco type) kitchen, washroom, sleeping ETC.
Find out the route, set up the camp locations every 25 miles (as the work moves so does the camp) and offer bussing/transport to and from the work site.
Charge per man $100-$150 per day +- as they will be getting a good LOA from the contractors.

Oil projects pay good $$$$$$

 

[LippCJ7]

Re: Why does this business fail repeatedly?

Hey Bubba, does the Walmart super center have a automotive service center?

Not sure I may have missed it somewhere...

 

[Tail_Gunner]

Re: Why does this business fail repeatedly?

You really need to see the books on gross income and total expenditures for the last three years. There is a reason why it has failed three times in four years and before investing your hard earned coin you need to know why.

Absolutely agreed. Most new business ventures are under capitalized and poolry thought out.. I have a rule of 7 times earnings..for every dollar spent 7 comes back...Now use that in a calculation and it will become apparent jus how good the investment is...... or how risky...Most business is pretty scary stuff.

Id be willing to bet the failures are due to high overhead aka RENT...Location is like a beautiful woman..read into that what youd like.....

 

[puddle jumper]

Re: Why does this business fail repeatedly?

The only thing I could add here is; is the aria flooded with auto shops. I know from past shops I worked at that ,that these shops will not think twice about cutting down another shop to gain buisnes. Quick oil change places are easy targets.

 

[natemoore]

Re: Why does this business fail repeatedly?

What kind of advertising did the previous owners do? I'm self-employed and run my own kitchen remodeling business. There is a tendency to not want to "waste" money on advertising, but you've got to do something to get the customers in the door. I get very good results advertising on conservative talk radio. I do at least one 30 second commercial per day, every day, 365 days a year for two years now. I'm one of the few kitchen remodeling contractors who has survived this prolonged recession/depression, although it's just me and my tool belt now. But I had a good year this past year.

I'm not sure what percentage of gross sales should be spent on advertising in that particular business type, but you can certainly find out. Did they consistently do coupons and mailers? My local quick oil change place does a coupon every week it seems, in the Val-Pak, Sunday circulars, or other mailings.

Oh, and I quit using that oil change place because their technicians kept stripping out the threaded inserts on the black plastic engine cowl underneath. Even when I'd caution them beforehand, they'd still strip it out or not even bother to put the bolts back. I bought a $70 vacuum pump oil changer that makes oil and transmission changes very easy.

 

[Steve102C3]

Re: Why does this business fail repeatedly?

I owned and operated 2 quick lubes for over 10 years. Here are a few thoughts:

Competition from Wal-Mart was not a problem; their price is lower, but I didn't compete on price. You'll always have to compete against shops, dealers, etc., who use the oil change as a loss leader to get you in the door.

I told many customers that I know I'm the highest priced lube shop in town, but you get what you pay for. If you're a DIFM customer, price is not primary, convenience and quality is. The DIY people seemed to care more about price. (These of course are generalizations.)

From looking at your picture, I would say location is the problem. I learned that oil changes are an impulse item, in that most people know about when they need an oil change, but wouldn't stop if my bays were full. If I just bought groceries at Wal-Mart my next stop is home. If I'm on my way home from the office and your shop has an empty bay, I'm more likely to stop.

There are some additional services that complement the quick oil change, but in my experience any additional service had to be maintenance in nature, easy for the customer to understand a need for, and quick to do.

I had to stock several major brands of oil in bulk tanks to be competitive; I had to stock many more brands of oil in bottles to have "my favorite brand."

A lot of times, motor oil went up when crude went down. Motor oil always went up when crude went up. Motor oil never went down.

Being independent is better than being branded.

Air filters, wiper blades, tire rotations were good to do. One of my old shops now sells tires.

The quick lube business can be very good if run well. I was not an absentee owner; some owners are absentee and very successful.

In real estate and business it's all about location, location, location. Since the road to Wal-Mart seems to be a dead end in your picture, I think the location is not as prime as it first appears.

Steve

I sold my shops in 2008. I talked to one of the new owners recently and he's doing very well, but new oil specs from different manufacturers is increasing the cost of doing business.

 

[southkogs]

Re: Why does this business fail repeatedly?

Bubba - I haven't heard much about the demographics (might of missed it somewhere), but here in our area I'd be interested to see how the quick change places are doing. The reason is that even though this area is mostly sub-urban, $50K-$100K type of demographic, I see the guys at the local Valvoline place standing out front holding "no waiting" cards all the time. Does your demographic fit 1.) an oil change shop and 2.) the level of service type of shop (for example: do folks want the friendly neighborhood garage, or the upscale "leave a mint on your driver's seat" type of place).

Also, each time the business has changed hands has it changed identity? Sometimes you can get by with "under new management," and sometimes you really just need to change the name and be someone altogether different.

 

[Gun Dog]

Re: Why does this business fail repeatedly?

Many Quick lube shops keep their heads above water with Fleet maintenance contracts to fill the voids. Fleet maintenance is a huge business. It's a big plus to get your shop listed with a few providers. The folks who have company cars being serviced will often patronize the same with their personal vehicles.

 

[Gun Dog]

Re: Why does this business fail repeatedly?

Just another thought, coming from a Franchise Marketing Specialist in the automotive industry. Given all demographics are appropriate, most failures are from under capitalization combined with the lack of business plans.

 

[Smuggler's Blues]

Re: Why does this business fail repeatedly?

If you know the names of the previous businesses, have you tried going online to check what the customer reviews were. If there were any? Just a thought.

 

[TilliamWe]

Re: Why does this business fail repeatedly?

Most Walmart Supercenters have their own low cost Oil change service, you did not go into details about that particular Walmart. But if it offers that and is right next door? Sounds like a bad location already.

One wrong filter choice, or bad install, and a customer's engine goes south because of that, and the damages incurred from just one of those can negate profits fairly quickly. Sometimes a customer's engine will go out and it may not be the fault of the oil change but if you were the last one "in" so to speak it can fall on you in this litigious society. Sometimes the installer can inadvertently lean on a connection of some kind and break it or cause it to leak or come loose, and you are liable for those damages as well. I bet the bonding/insurance fees are high for this type of business.

There are lots of different type of oil filters, air filters, etc. Keeping them in stock can be a problem. Getting one you do not have on the shelf within an hour can be a problem. If you get too many of those "non-stocking" customers (that you have to make wait) in a row and word gets out.

Just sayin'...

I agree with this post 100%.

And I want to elaborate on one point, in which I am an expert:
I worked many an insurance claim where we insured a quick lube, and just because they were the last person near the car, we had to buy an engine for some piece of CRUD car that was junk when it was brought in. I can't imagine the premiums we had to charge after a $2000+ engine replacement bill. But I'll guarantee it was more than $2000/yr after that!

 

[MTboatguy]

Re: Why does this business fail repeatedly?

I've looked at the books (as much as they would let me) from the previous owners and the trend was the same with all three.

Hmmmmm

"As much as they would let me"

I would walk away in a heartbeat if they would not let me look at the whole books.. What are they hiding?

 

[joewithaboat]

Re: Why does this business fail repeatedly?

I would run if they wont show ALL of the books!!

The one near me does oil changes and state inspections. I go there for inspections only.
I am pretty observant and run my own business. I am always looking and thinking about other peoples business's.
They are always busy. They are polite but quick and to the point. The guy that is there to open and close, owns it. He is easy to spot, he is moving twice as fast as everyone else.

They stick to oil and fluids, and simple stuff to get a car thru an inspection. Wipers, gas cap, tail light bulb etc. No mechanic work.
The work area is very well laid out. No extra walking. Clean!!

For the customers, comfortable seating in the waiting room, lots of magazines, smells good, clean restrooms. Snack and vending machines, serviced by another (i know that guy to). They have a good computer system to pay.... very quick with debit or merchant account transactions. I think this is very important. They also mail coupons to your house. They must get address info thru the inspections process.

They are right next door to a car-wash and promote each other. They have a coupon for a discount for each others services. It has an expiration!!!

They are spitting distance from a new Walmart and it seems to have made them busier if nothing else. More people drawn to the area.
They have small but flashy signs that twirl around in the wind out front.

Hope maybe some of this helps.

 

[jay_merrill]

Re: Why does this business fail repeatedly?

As someone else said - location, location, location.

You are on a dead end road (limited drive by/customer traffic) and you are right next to a major competitor. Say what you want about sellling quality, but you aren't going to win that battle when the entirety of your drive by "advertising," is directed towards people going to and from a discount outlet. They don't buy designer jeans and they aren't going to pay extra for an oil change.

Don't walk away from this deal, run.

 

[nwcove]

Re: Why does this business fail repeatedly?

not sure of the whole situation, but the key in todays economy is all about friends......ie.....if you, (bubba) have ten friends that will use your " potential" new shop and have a more than good experience.....and each one of those ten friends has ten friends that they recommend going to you for a service, and they have a more than good experience, and recommend your shop.....etc etc etc. you can see where im going with this, in todays economy, you need to do the social network thing. even in a large city...its a small world.

 

[JB]

Re: Why does this business fail repeatedly?

If that was a reference to me please note I have an OEM dealer background, and I strongly believe in that model. Not sure to what you are referring . . .

QC=Quick Change. No thought of referring to you, QC.