I have seen so many oil change businesses try and do this and it never works. Mobile and fixed companies. They try and undercut the competition. They send out coupons or advertise oil changes for $19.99. A guy tried to start a mobile oil change business up here advertising oil changes for $24.99. What they hell???? How does he think he is going to make a profit from $12 profit per unit. I don't know anywhere where someone can live on that. Even if he were to do ten vehicles per day that would be $120 profit. That's shit. After taxes, fuel, fix expenses, etc that $120 will be more like $80. And is there one, I mean one mobile operator that is consistently doing ten oil change every single day?? Come on, get real. I called this guy up and asked him what was he thinking? He wasn't operating in the same city as me it was in "the suburbs" 30-40 miles away so it was not a competition thing for me. I just wanted to see if this guy was retarded. And his answer was "he just wanted to get his name out there" and "build up a customer base."
Let me tell everyone something. Your business will establish some sort of "brand" for itself. Even if you run a "fly by night" operation, which most mobile oil change operators do, you will establish a name for yourself. You will known as a real business or a cheap discount business that won't be around for long. You pick. I can go out today and advertise $19.99 oil changes and pick up 100s of new customers. But guess what I have learned. Once those customers see that you are willing to work for free.....they are going to come to expect you to keep working for free. They are going to expect that $19.99 oil change all the time. And when you raise your price to your standard price they are going to go to the next guy offering $15.99 oil changes. You can pick up tons of what I like to call "bottom feeders" or people who always want the world for nothing. You can have them. I let those people go to Midas, or Sears, or someplace like that. I love hearing stories of people going in those places for a routine cheap cheap oil change and getting totally ripped off and slapped with a $350 repair bill because they needed blinker fluid and that stuff is really really expensive. Those people never learn and will always go for the cheapest product or service they can find. I do not want them. You cannot build a strong viable business off people like that. Sure you are not going to have customers that will always write you a blank check, though some actually will beleive it or not, but you need customers that are willing to pay a fair market price for good convenient service. That's a foundation.
I picked up this fleet two and a half years ago. I am not going to say their name but it was G$@#&#*# Mechanical. They had 20-30 trucks. Nice sized fleet. It took me a month to get them. I did 15 of them. The owner brought me into the office after we did them. She was complaining about the extra quart I charged them (like when a truck or SUV takes 6 or 7 quarts). She claimed that the quick lubes never charged her for the extra quarts over 5 quarts. "HUMMMM" She also said that Jiffy Lube gives her free oil changes after so many. She also said that drivers say yes to too many add ons. I could go on and on..........
I dropped that fleet like a bad habit. I got paid for what I did do never did any more work for them again. That's how I operate. I do not want cheap bottom feeders. I am not going to run a business like that. I do not work for people who nickle and dime me.
I have another fleet that I love. If something needs to be done I explain what it is and why and he 99.9% of the time tells me to "go and do it." I don't add on all the time but when I do he knows its important. He has never complained once of my prices. He sees me freezing my ass off in the middle of winter doing all his trucks and he respects that.
The few individual customers I do have are ones like the guy I just mentioned. I only kept 10 of the 100s I used to have. Guess which ones I kept?
I got off base. My point is that if you are running a mobile oil change business and you are doing cheap oil changes than you are an idiot and when you go out of business do not complain. You work for free do not expect to profit. Remember that your goal is to make $100/hr minimum. So you have to be smart and find your correct customers. Don't waste your time.
Friday, March 27, 2009
Sunday, March 22, 2009
Mobile Oil Change Profits
I talk to a lot of people during the day and it is woefully apparent that they have no idea about running a business. They are totally clueless and really should not be in business for themselves.
People any business that you are in has to be generating at least $100 per hour for it to be worth anything. That can be off one job or multiple jobs but if your business is not making $100/hr than you will fail. You may think that is high. Actually that's low. You need to make more than that to afford the average American standard of living, especially with inflation or if you live in California, but one hundred dollars an hour is the absolute minimum.
Think that is being unreasonable. I have to send the IRS a check in the mail for my 2008 earnings. Even with all the deductions its $10,000. So self employment and state taxes could take up to 22% of your income. Than you have accounting fees at the end of the year. Then you have insurance. And you need two types of insurance. You are going to need garage keepers insurance and it should be a million dollar aggregate policy and you need a standard auto insurance policy. Don't even get me started on the insurance you need if you plan to have employees for your mobile oil change business. It can be as high as $10-$20 per hundred dollars in payroll. Then you have fuel. Then you have administration costs like envelopes, postage, paper, fax machine, phone, etc. Then you have all the miscellaneous expenses that will pop up every month. And then you have to account for mistakes, no matter how careful you are, to happen. A year ago we had to buy a 2001 Dodge Neon from a body shop we did the oil change for because we put a PZ-19 on the car when we should have put a PZ-21 and the oil filter got hit and oil came out and messed up the engine and we spent another 4,000 replacing the engine and selling it. And I hope that if you have a mobile oil change business you have a partner. I highly recommend not going into this business without two people who are equally committed to making the business work. Two heads are better than one. All the mobile oil change companies that I have seen with one person went out of business quickly. Sure you have to split the profits but believe me its worth it. So you see that per dollar an hour will actually be more like $35 per hour after you factor in everything.
And making at least $100 an hour in some places can be hard. How can you make decent profits when you are doing $20 oil changes. It does not add up. I am really scratching my head at how some people make it in certain states and cities in the "quick lube" business period. The only way I can see people make a profit is bait customers with one price and then push as many add ons as they can once they have the customer. That's the only way. And even with some of those ad ons the profits do not add up in my mind. Maybe someone can fill me in. I cannot figure it out. I know that if you go to Wal Mart now on 3-20-2009 a 5 qt container of Super Tech 5w-30 is going to cost $10. Then you are going to have to spend another $2.00 on an oil filter. That equals $12 for the oil and filter. That does not include fuel and fluids even though most cars at the most will require maybe a dab of brake or power steering fluid. Some will require a good amount of coolant though. My point is that if you are charging 19.99 for an oil change, you are making $8.00 per oil change!??? You can may more money working at Starbucks once you factor in tips. Eight dollars profit?? That's crazy. Even if you charge $25 per oil change that's $13 dollars profit.
So my point is that if you have a mobile oil change business of any sort than you need to be pro fitting $20 net per oil change and be doing five cars per hour that you are working. If you are not than you are wasting your time. That is the only way this is going to work in the long run. Your wife is going to be really supportive for the first year maybe and I do mean maybe one and a half years but if by year two you are not making decent money than she is going to put pressure on you to get a "real job" with benefits. I promise. Like I said I have spoken with a lot of mobile oil change operators in the last 5 years and I have seen many come and go. I know of websites that were put together really nicely and when you call the number on it its out of service. If you cannot make $100 an hour and cannot figure it out than it will not be long before you will go out of business. You are just prolonging the inevitable.
On a side not I am setting up a mobile oil change consultation service for operators. I have several options available. E-mail me at akoilextreme@yahoo.com if you are interested or want some general advice.
Back to profit margins. Its something you really need to think about. Where do you plan to get your business from? What about profit potential? Can you make $100 per hour? How are you going to do it? Which types of vehicles do you want? How do you plan to get them? Whats your presentation? Do you have to proper tools to service the types of vehicles that actually pay? Can you sell? How are you going to learn how to sell? What equipment do you have? How are you going to survive while you are in the building stages of your mobile oil change empire? Do you realize that it will take minimum 1-2 years before you can make a decent profit that you can live on? Is your spouse aware of the extra burden that is going to be placed on her but that if this works she can relax after/ if it takes off?
These are all questions you need to ask yourself.
From 2004-2007 I made absolutely nothing off my mobile oil change business. I gave myself just enough draws to eat and put gas into my car. I lived with my parents. Now whenever I want I can make $6,000 per month and if its the summertime I can make $8-10 per month. I say if I want to because sometimes I don't feel like pushing it and I barely do any work and make $2,000 a month like last month. It was February, dark, cold, and stayed inside and worked on this website along with several others. This month I want to make a least $3,000 so I can pay my taxes off. I could make way more but like I said its Alaska, its cold outside, and I do not feel like changing oil or doing any fleet work 8 hours a day five days a week in 10 degrees with snow coming up to my ankles. The point is that I could. I have the ability because I paid my dues for several years, reinvested all my profits, and now I have a great business. If you are willing to do what I did than your mobile lube business can work. But still in order to work you must set your sights at making $100 per hour minimum. And you can take that to the bank.
People any business that you are in has to be generating at least $100 per hour for it to be worth anything. That can be off one job or multiple jobs but if your business is not making $100/hr than you will fail. You may think that is high. Actually that's low. You need to make more than that to afford the average American standard of living, especially with inflation or if you live in California, but one hundred dollars an hour is the absolute minimum.
Think that is being unreasonable. I have to send the IRS a check in the mail for my 2008 earnings. Even with all the deductions its $10,000. So self employment and state taxes could take up to 22% of your income. Than you have accounting fees at the end of the year. Then you have insurance. And you need two types of insurance. You are going to need garage keepers insurance and it should be a million dollar aggregate policy and you need a standard auto insurance policy. Don't even get me started on the insurance you need if you plan to have employees for your mobile oil change business. It can be as high as $10-$20 per hundred dollars in payroll. Then you have fuel. Then you have administration costs like envelopes, postage, paper, fax machine, phone, etc. Then you have all the miscellaneous expenses that will pop up every month. And then you have to account for mistakes, no matter how careful you are, to happen. A year ago we had to buy a 2001 Dodge Neon from a body shop we did the oil change for because we put a PZ-19 on the car when we should have put a PZ-21 and the oil filter got hit and oil came out and messed up the engine and we spent another 4,000 replacing the engine and selling it. And I hope that if you have a mobile oil change business you have a partner. I highly recommend not going into this business without two people who are equally committed to making the business work. Two heads are better than one. All the mobile oil change companies that I have seen with one person went out of business quickly. Sure you have to split the profits but believe me its worth it. So you see that per dollar an hour will actually be more like $35 per hour after you factor in everything.
And making at least $100 an hour in some places can be hard. How can you make decent profits when you are doing $20 oil changes. It does not add up. I am really scratching my head at how some people make it in certain states and cities in the "quick lube" business period. The only way I can see people make a profit is bait customers with one price and then push as many add ons as they can once they have the customer. That's the only way. And even with some of those ad ons the profits do not add up in my mind. Maybe someone can fill me in. I cannot figure it out. I know that if you go to Wal Mart now on 3-20-2009 a 5 qt container of Super Tech 5w-30 is going to cost $10. Then you are going to have to spend another $2.00 on an oil filter. That equals $12 for the oil and filter. That does not include fuel and fluids even though most cars at the most will require maybe a dab of brake or power steering fluid. Some will require a good amount of coolant though. My point is that if you are charging 19.99 for an oil change, you are making $8.00 per oil change!??? You can may more money working at Starbucks once you factor in tips. Eight dollars profit?? That's crazy. Even if you charge $25 per oil change that's $13 dollars profit.
So my point is that if you have a mobile oil change business of any sort than you need to be pro fitting $20 net per oil change and be doing five cars per hour that you are working. If you are not than you are wasting your time. That is the only way this is going to work in the long run. Your wife is going to be really supportive for the first year maybe and I do mean maybe one and a half years but if by year two you are not making decent money than she is going to put pressure on you to get a "real job" with benefits. I promise. Like I said I have spoken with a lot of mobile oil change operators in the last 5 years and I have seen many come and go. I know of websites that were put together really nicely and when you call the number on it its out of service. If you cannot make $100 an hour and cannot figure it out than it will not be long before you will go out of business. You are just prolonging the inevitable.
On a side not I am setting up a mobile oil change consultation service for operators. I have several options available. E-mail me at akoilextreme@yahoo.com if you are interested or want some general advice.
Back to profit margins. Its something you really need to think about. Where do you plan to get your business from? What about profit potential? Can you make $100 per hour? How are you going to do it? Which types of vehicles do you want? How do you plan to get them? Whats your presentation? Do you have to proper tools to service the types of vehicles that actually pay? Can you sell? How are you going to learn how to sell? What equipment do you have? How are you going to survive while you are in the building stages of your mobile oil change empire? Do you realize that it will take minimum 1-2 years before you can make a decent profit that you can live on? Is your spouse aware of the extra burden that is going to be placed on her but that if this works she can relax after/ if it takes off?
These are all questions you need to ask yourself.
From 2004-2007 I made absolutely nothing off my mobile oil change business. I gave myself just enough draws to eat and put gas into my car. I lived with my parents. Now whenever I want I can make $6,000 per month and if its the summertime I can make $8-10 per month. I say if I want to because sometimes I don't feel like pushing it and I barely do any work and make $2,000 a month like last month. It was February, dark, cold, and stayed inside and worked on this website along with several others. This month I want to make a least $3,000 so I can pay my taxes off. I could make way more but like I said its Alaska, its cold outside, and I do not feel like changing oil or doing any fleet work 8 hours a day five days a week in 10 degrees with snow coming up to my ankles. The point is that I could. I have the ability because I paid my dues for several years, reinvested all my profits, and now I have a great business. If you are willing to do what I did than your mobile lube business can work. But still in order to work you must set your sights at making $100 per hour minimum. And you can take that to the bank.
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