Why does this business fail repeatedly?

[Gun Dog]

Re: Why does this business fail repeatedly?

Have you touched base with any of the national lube franchises that may be in your area? Get the name of the rep. They would be able to provide some insight. Most franchise reps know all the locations and may have even approached the location in question. Have you looked into hooking up with a national franchise? In most cases the fee is well worth everything provided.

 

[joewithaboat]

Re: Why does this business fail repeatedly?

Have you touched base with any of the national lube franchises that may be in your area? Get the name of the rep. They would be able to provide some insight. Most franchise reps know all the locations and may have even approached the location in question. Have you looked into hooking up with a national franchise? In most cases the fee is well worth everything provided.

I know nothing at all about national oil lube franchises. However my brother in-law has a sandwich shop franchise. Lots of politics involved.

 

[PiratePast40]

Re: Why does this business fail repeatedly?

I don't buy into the idea that the previous owners books need to be open. If you want to buy the hardware and customer base then that's what you're buying. The previous owners finances are none of your business unless they're pushing the success and profits of the business and have commercial contracts they're selling as part of the deal. You really don't care about their finances if it's a failed business because you should be building a success, not a failure. Now, if you're going to keep the previous owner on a retainer as a consultant for a period of time, some financial insight may be helpful and they may be able to steer you in the right direction for consumables.

Unless you're picking up some of their financial liability, you shouldn't really care about the details of their failure.

 

[DaNinja]

Re: Why does this business fail repeatedly?

I don't buy into the idea that the previous owners books need to be open. If you want to buy the hardware and customer base then that's what you're buying. The previous owners finances are none of your business unless they're pushing the success and profits of the business and have commercial contracts they're selling as part of the deal. You really don't care about their finances if it's a failed business because you should be building a success, not a failure. Now, if you're going to keep the previous owner on a retainer as a consultant for a period of time, some financial insight may be helpful and they may be able to steer you in the right direction for consumables.

Unless you're picking up some of their financial liability, you shouldn't really care about the details of their failure.

Sorry, if I was investing a big chunk of change in a business, I would want to analyze every piece of data available. I want to see every success and failure before I start throwing money at a project.

 

[sublauxation]

Re: Why does this business fail repeatedly?

Not far from me a building housed at least 6+ restaurants in as many years that went out of business. We never bothered going to any because it just didn't look good. I always though it was a tainted location and nobody would make it. It sat empty for a couple years when an established local supper club burned down. They moved in to that spot about 20 years ago and are still going strong.

 

[Beefer]

Re: Why does this business fail repeatedly?

I read about half the posts, all good responses.

My take is that at first glance, the location looks great; Wal-Mart always brings people (assuming they don't do oil changes), an interstate right there, and it's a main road. Right? Worng!

1a) Wal-Mart - You would think Momma would find it convenient to drop off at the quick lube, do her shopping, then get her car afterwards. Nope, that's 1/8 of a mile that Momma won't walk, especially if she has kids in tow. They will drive right by on their way in, and on their way out. You may consider a shuttle to/from Wally World from the shop.

1b) Wal-Mart - typical shopper is a DIY'er, or lower income. There is the perception that it will always be less expensive to DIY, unless you do the math. Most WM shoppers can't do the math.

2a) Interstate (re; southbound traffic) - Those that can see you from the I35 are going somewhere else, and not getting off at your exit. Have you ever passed a quick lube on the interstate, gotten off at the next exit, and drove back to get your oil changed? The location is past the exit for the southbound traffic. By the time they've seen you, it's too late. If it was on the North side of Miller, it might help.

2b) Interstate (re; northbound traffic) - They can't see you. Even if they can, you're convenient for only half of those that take that exit.

3) Main Road (Miller St.) - Looking at Google Street View, you might as well be in the middle of the Mojave. There is no signage visible from Miller, and the shop is not readily visible. Main thoroughfares can be good, but most drivers are going too fast, or there is too much signage for them to actually see what is there. Think about when you're driving on Miller St (I'm guessing it's a road you use), there is so much signage and commercial spaces that they all blend together. Even with signage, good chance you still wouldn't be noticed.

There are 2 sayings that carry a lot of truth in business;

A business with no sign, is a sign of no business.
Location, location, location...

From what I can tell, both of those sayings were not taken into account completely when the first owner decided on his location. He saw Wal-Mart, he saw interstate, and he saw main road, all through rose-colored glasses. I'm guessing that the rent/lease is based on traffic, which is not benefiting this shop at all.

Buy the inventory only, and relocate to somewhere nearby that's less money, and you may have a chance. If a retail place doesn't produce enough in the first 5 (business)days of the month to pay the rent and half the over head, it won't succeed.

 

[Kiwi Phil]

Re: Why does this business fail repeatedly?

I don't buy into the idea that the previous owners books need to be open. If you want to buy the hardware and customer base then that's what you're buying. The previous owners finances are none of your business unless they're pushing the success and profits of the business and have commercial contracts they're selling as part of the deal. You really don't care about their finances if it's a failed business because you should be building a success, not a failure. Now, if you're going to keep the previous owner on a retainer as a consultant for a period of time, some financial insight may be helpful and they may be able to steer you in the right direction for consumables.

Unless you're picking up some of their financial liability, you shouldn't really care about the details of their failure.

I go along with this post, on the grounds you have not mentioned (or I missed it) exactly what you are buying.
I can't recall any mention of goodwill, stock on hand, plant & equipment, lease agreement, right of renewal, maintainance responsibilities of building and surrounds etc.

If the seller is just looking to get out, and if you want to continue this type of op (which you do) then maybe you should look at it as a WIWO deal based on the value of the plant, equipment, stock, not forgetting, if the lease does not have a right of renewal on it, then get on to that quickly.

Plant and Equipment - there will be a depreciation schedule attached to his books - but when did he introduce them to the business, and did he overvalue them at the time. (for loan purposes, or greater depreciation benefits to off-set tax)

Stock on Hand - what value does it hold? - is it in fact saleable at all?

Cheers
Phillip

 

[joewithaboat]

Re: Why does this business fail repeatedly?

Good posts from all...

I think complete books are important because it wont allow inflated claims of traffic to the location and best months sales used to estimate possible 12 month scenarios. I know i guy who was duped into a convince store/gas station based on only books from one month showing a major stocking of the shelves/filling of the tanks. This was used to falsely claim that it was a typical sales replacement that happened every month. Cash sales had been also been fudged/inflated. This all came out later in court. When full books and bank records were revealed. The mortgage company and eventually the state actually helped the new owner go after the old owner for fraud.

In this business i would think most of these customers will pay credit or debit. A full set of books will give a good understanding of the business and make it hard to misrepresent the potential. I would think it would be $$$ to move locations these buildings are pretty design specific.

 

[Fishing Dude too]

Re: Why does this business fail repeatedly?

I have no idea what kind of auto parts stores are in your area, or if this is a pit type oil change buisness. Pit type customers drive car in sit in car and oil is changed car lubed, tires checked, bill paid customer on their way in 10 min. Most of these in this area work with the local automotive tech schools for employees, so turn over is high but they gain skills, work ethicts, and a customer base if they go out on their own. I now use a shop that was started by 3 such students who use another national name of a auto owners club.

Why did I state about auto parts stores was not because of compitition but because of oil filters you may not carry can be gotten in timely manor. Then why training schools was you work around their class schedule they will stick with you for about 18 months that they are in school, making enough money to get by for their needs. I would recamend coveralls with brand logo patch and a sewn on name tag, having them washed by a local laundy that has drop off, would only need done about 3 times a week here the service cost abut $1 a lb. makes the workers look like a pro while keeping their and your cost down. If I drive in and the workers clothes are tattered I drive off, don't care about yourself why would you care about your work?

Last work with other buisnesses in area like WalMart bring the reciept from a receint visit for $1 off not much but that brings people in because of the "DEAL" factor. Check prices around area and keep in line with them or even less if you can.

Getting ride of waiste oil is expensive because of the EPA needs to go to refinery to be reworked, yes reworked. Here there are 5 refineries that take used oil mixes with cruide and processes it but getting it there cost. Might check into a waiste oil furnace to supply heat if needed, and can be used to reduce cost. Remember waiste oil is a hazzmat material.

 

[tpenfield]

Re: Why does this business fail repeatedly?

Have an opportunity(?) to partner with someone to take over a business (I supply financing and mentoring he provides the labor) in the local area. The problem is the business has failed 3 times in the last four years. It's a quick oil change shop that was built new 4 years ago and it *should* be a money maker but isn't, at least for the last three people that ran it. I've spoken with the all of the previous owners about why it failed and they all gave very different answers. That in itself suggests they don't know the real reason it failed.

It has a great location next to a Wal-Mart super center, right off the interstate, huge volume of traffic, has a very profitable car wash next door, etc. It *should* be a great location. (See Image)

The lease on the building is reasonable, utility costs are within expected norms and I can't see anything that I can point to and say "Ah, that?s why". I have a hard time saying all three of the previous owners were clueless but anything is possible I guess but I just don't think that is the case.

My biggest concern is that people are funny in that when a business goes under repeatedly it gets a certain stigmatism attached and they won't give it a try in the future. It could be I?m reaching for straws as to the why it failed but my gut instinct is that until I can come up with a real reason it?s failed so many times it?s a VERY questionable business investment. The flip side is that it could be a diamond in the rough and a real profit maker if I can find a way to polish it up.

Looking for any thoughts others may have.

Just my thoughts . . .

It is probably not a great location, based on the fact of repeated failures. National competitors probably have better locations and/or the advertising budgets to attract customers. It might be a good location for a car wash, because that takes 5 minutes, nobody has to get out of the car.

So, maybe the business will not stand on the location alone.

What else could be done to make it a viable business? What value could you add that would attract customers? Could you attract D-I-Y'ers for oil reclamation? Could you make $$$ in the waste oil market?

Could there possibly be such a thing as a truly 'drive through' oil change service; something that did a 'one-up-manship' on the national franchises? Something like going to a car wash, but instead getting your oil changed. . .

What other 'thinking outside the box' things could be done to differentiate this business from its competitors and get people talking about it.

Again, the location is probably not a good one for that type of business, so it is going to need a little help to make it successful.

 

[kenmyfam]

Re: Why does this business fail repeatedly?

Maybe I missed something here but I think I read all the posts accurately.
#1. Does the Wal Mart do oil changes ?????
#2. Never buy into a failed business without reviewing the books available.
#3. Know your "break even" cost per oil change based on what you find out from #2 and the best forecast you can make of expected business.

If the answer to #1 is "yes" then I would run in the opposite direction as fast as possible. I have used Wal Mart for oil changes a few times. The one I have used is actually extremely good and do not try to sell you any frills and extras. leave the car with them, go and do whatever shopping you need to do and when you are done shopping the car is finished and waiting for you.
Just my thoughts though.
Good Luck with whatever decision you make.

 

[chriscraft254]

Re: Why does this business fail repeatedly?

I think you would be better off turning this location into a self wash/ drive thru wash. I have a friend that owns 5 of them and he does very well. It would take some capital up front of coarse and permit/building approval for oil seperaters etc. I said before, this location imo does not work for an oil change service. It needs to be on the main thoroughfair, not back in a shopping center.

 

[joewithaboat]

Re: Why does this business fail repeatedly?

Folks keep mentioning waste oil being a problem.... Its not here in Texas. My friend who owns a mechanic shop sells his for .05 a gallon. The buyer supplies the "very nice" 500 gallon storage tank and comes to empty it within 24 of calling him. You can put any fluid from an automobile except water/antifreeze in it. Just thought i would throw that out there.

The self serve car wash is lucrative in some situations. I almost did this a few years ago. I researched it to death. My BIL owns one, yes same one with a sandwich shop, rent houses too. Good friend owned 5 car-washes many years ago.
The key is owning a few in order to give someone something to do all day. Keep them clean, fill the coin machines, collect the bills, maintenance on the equipment. It takes a pretty well rounded mechanically inclined person. Even if you only have one, you have to go there everyday. No exceptions.
The worst things are vandalism and theft of equipment and money. You wouldn't believe what they will do to get at the coins. BIL now has cameras linked to smart phone.
The biggest money maker is to use tokens instead of quarters, 30% never return to the car-wash.

 

[aspeck]

Re: Why does this business fail repeatedly?

I am also of the opinion that viewing the books are not that big of a deal unless you are planing on bringing the management over from the business. When we sold a very profitable dealership the new owners never looked at the books and within 5 years they were tired of losing money and were selling to another owner, who sold to a third, who sold to a 4th, who closed the doors forever. We were profitable and trending upward and my grandfather opened the business 42 years earlier.

It wasn't the location, or even the economy (2 other dealerships in the area have been able to remain stable and profitable), it was the management of the new owners. The first owners asked me to stay on for a while and I agreed, but the first day of business they had an employee meeting and said, in front of me, "I don't care what was done before. It is our name on the building now, not the past owners. I don't want to hear, 'this is what we used to do" because I am in charge now and we are going to do it MY way." That was pretty much my last day, I saw the writing on the wall.

With that said, if you have a good product that people want, they will go out of their way for it. Location can help or hurt, but it doesn't have to be a game breaker. There are pluses and minuses to the Quck Change location, and they have been hashed out and rehashed here.

My question is not about the past, but about the future. What are YOU going to do to put cars in the bays? What is YOUR pricing structure going to be? How many cars do you have to service each day to break even? Is that possible? (Remember, you are buying this place to do more than break even and give people jobs, you want a return on your investment!) What are you going to do to establish brand loyalty? What will set your business apart from the Walmart Oil Change garage, from the shade tree mechanics, from the dealerships? Will you make this a place that YOU would rather go? What about your friends? Others?

You saw enough of the books to know the death of the business has been lack of cars in the bays over time. However, you also saw that is not the way it started out. So, what can you do to capitalize on the "try the new guy out" mentality to keep them coming back and telling their friends? 5 oil changes, get the 6th one free??? 3 Oil changes, get the 4th at 1/2 price? Get a 10% discount for every friend you refer?

Okay, I have other things to do today ... that is enough for now.

 

[aspeck]

Re: Why does this business fail repeatedly?

As for the waste oil, get yourself a waste oil burner and use it for winter heating ... cheap heat and bypasses much of the paperwork.

 

[Fishing Dude too]

Re: Why does this business fail repeatedly?

Maybe I missed something here but I think I read all the posts accurately.
#1. Does the Wal Mart do oil changes ?????
#2. Never buy into a failed business without reviewing the books available.
#3. Know your "break even" cost per oil change based on what you find out from #2 and the best forecast you can make of expected business.

If the answer to #1 is "yes" then I would run in the opposite direction as fast as possible. I have used Wal Mart for oil changes a few times. The one I have used is actually extremely good and do not try to sell you any frills and extras. leave the car with them, go and do whatever shopping you need to do and when you are done shopping the car is finished and waiting for you.
Just my thoughts though.
Good Luck with whatever decision you make.

I hate walmart oil changes because of time, cost, and the fact they know if the longer they take the more money you spend. How many others feel the same way?

 

[JB]

Re: Why does this business fail repeatedly?

You established that they all started at high, profitable volume. They failed because those customers did not come back.

My guess is that they drove those customers away with lousy or annoying practices.

Investigate why customers either come back or don't.

You are making your analysis far too complicated. Customer satisfaction was not there and each succeeding operator repeated the customer unfriendly practices of the previous failure.

Refer to my post of why I didn't come back. It had nothing to do with location or nearby competition. It had everything to do with customer satisfaction.

 

[kenmyfam]

Re: Why does this business fail repeatedly?

All the previous operators leased the location. They don't have anything to do with someone new coming in so there really is no reason for them to open their books to a new renter.

Wal-Mart has no auto service center at all, they are not competition.

This is the one and only quick change shop within that same 40 mile distance.

All three previous operators were closed on Sundays.

Did not realise that it is a leased location. Therefore the books are not that significant.
If Wal-Mart has no auto service centre then that is a huge plus.
The 40 miles distance from another one is also a great plus point.
Sunday could well be an issue with the church folk, however if you match the opening hours of Wal-Mart you should be OK. They are obviously profitable on a Sunday or they would not be open either.

Whole thing sounds like it could well be a good investment with the correct person at the helm.
Good Luck with your decision.

 

[Fishing Dude too]

Re: Why does this business fail repeatedly?

Sounds like a case of we'll change your oil, we do it at our pace, and no reason to look profesional. I wear a full uniform at work daily hot , cold doesn't matter I figure makes me look like someone who is ready to do their job. Why would anyone sit in a car without a seat protector, let alone on a car? These are things that chase customers away. Taking 30 minutes may not be a real big deal as that is what the ford dealer does but they also do a safty inspection. Would modernize the billing, with puters. Tell the help that they work for the customer not for you as if the customer is not happy they will be without a job.

 

[LippCJ7]

Re: Why does this business fail repeatedly?

I think I would jump on it if things are the way you say Bubba, I know I could change the direction pretty quickly and it sounds like the employees are in need of new ownership or new employment, I agree that Walmart being a no auto service business is a huge deal for you, I also like the idea of a shuttle to and from Walmart, maybe an extended golf cart to start? You SHOULD be open on Sunday, matching Walmarts hours is an excellent idea. The Building being a lease is an issue as the owner may have issues with major improvements to his building but once he sees business improve most building owners are very open to upgrading a building for more rent or possible selling the facility out right? I like the distance to competitors is wonderful and the possibility for Fleet business! I like my plan set up for the long term, win over the customer base and build a long standing business.

I have a pretty hard line on Employees, my way or the highway simple plan, I listen to ideas and am not afraid to say I was wrong but once I implement good ideas they are law! Pay is another issue, I have always been a pay for performance kind of person but you have to regulate Quality Control tightly. By the hour just seems to breed laziness but the right employees will tell you which they prefer.

The modernization of the business is mandatory, as is learning your customer base, that personal service that has gone by the way side will pay dividends, especially in your area and demographic. its not all about speed but it is about productivity.