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An oil change business keeps neighbors' cars maintained and on the road by offering regular services such as oil changes, windshield wiper replacement, and air conditioning recharging. Speedy service with a smile and competitive pricing encourages your customers to come back the next time.
Who is this business right for?
If you enjoy working with cars, customers, and providing a valuable service to the community, this might be the right business opportunity for you. There is a sizable investment required to get off the ground, but with the right location, marketing, and constant hard work, it can be very rewarding.
What happens during a typical day at an Oil Change Business?
You and your employees will have a fairly regular schedule that includes:
- Maintaining the garage bays, lifts, and pumps
- Neatening up the customer waiting lounge
- Scheduling appointments such that customers never have to wait long
- Ordering supplies including oil, filters, gaskets and other automotive parts
- Basic money handling
- Process payroll
- Basic marketing tasks
- Maintaining your knowledge level for servicing all major brands of cars and new models
What is the target market?
Everybody who drives a car is a potential customer. The most lucrative areas are situated at the edge of urban markets, as suburban families own more vehicles and will spend money on simple services. Rural markets have fewer customers available, and some of those will want to change their own oil. Inner cities have higher costs associated with the property while customers have less cash for extras.
How does an Oil Change Business make money?
Your customers pay you a minimal fee for completing a quick oil change on their personal vehicle. Connect with local car rental agencies or delivery services to generate a larger base of repeat customers. When you expand the number of services offered, clients will return to you more often increasing profits.
What is the growth potential for an Oil Change Business?
Everybody needs to have their oil changed one to four times a year. If you establish a reputation for providing quick, reliable service at a competitive price, the word will spread. In a major metropolitan area, the opportunity to expand to multiple locations is very real. If you wish to take further advantage of your current location, expanding the services you provide will help to raise profits with minimal investment. In upscale neighborhoods, you may be able to offer a mobile oil change service for your wealthier clients.
What are some skills and experiences that will help you build a successful Oil Change Business?
If you are going to be doing the oil changes yourself, then you should have completed basic automotive maintenance courses at your local technical university along with a couple years of experience applying your knowledge in the real world. Otherwise, as the owner you will need to:
- Understand OSHA standards to provide a safe working and customer service environment
- Have completed basic coursework in business management and administration
- Have good customer service skills
- Have the ability to train your employees in proper completion of all services offered
- Understanding of local regulations regarding disposal of hazardous wastes i.e. used oil and other fluids
- Basic marketing skills
What are the costs involved in opening an Oil Change Business?
In order to get off the ground, your largest investment will be for the equipment in your garage bays. Expect to invest at least $250,000 for a two-car facility, initial training, and media launch for your location. Multiple franchise opportunities can help you corner the local market and provide assistance for your initial growing pains.
What are the steps to start an Oil Change Business?
Once you're ready to start your Oil Change Business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your Oil Change Business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your Oil Change Business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting an Oil Change Business?
Location, location, location. You may be able to find low rent for a fully-equipped garage in an industrial park at the edge of town, but that requires your customers spend some time to find you. When you are positioned in a busy commercial area full of strip malls and office buildings, you encourage your customers to complete this errand during lunch, or while out and about.
How to promote & market an Oil Change Business
Your most visible marketing tool is your store front. Make sure that your signage clearly states the service that you offer and that your property is well-maintained to welcome in new customers. Direct marketing campaigns that include a discount or coupon for your garage will help generate your initial flow of traffic. Since almost every automotive garage offers oil changes, price and speed will be key elements in driving customers to your door. Make sure that you are offering a good price, but one that also supports your business model.
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How to keep customers coming back
Your first year of service will focus on large promotional campaigns in order to build local recognition and a customer base. Make use of radio, television, newspapers, social media, and direct marketing to flood the area with your name and brand. Offering discount coupons or a new-customer bonus encourages folks to check you out. Once they are in the door, it is up to your technicians to complete their work quickly. Customer service that also encourages your clients to complete other needed maintenance at your location helps to build a sense of caring and community, creating a repeat customer.
How and when to build a team
You may wish to have a business partner in this endeavor. One person may be focused on the mechanical part of the garage, while the other excels at marketing and maintaining good business practices. Both of you should be on board from the beginning. Hire your oil change technicians two weeks before opening to review service standards and provide training.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an oil change business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a oil change business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your oil change business will be in compliance and able to obtain a CO.
To avoid liability and potential lawsuits, oil change businesses should have their clients sign waivers.
How much can you charge customers?
You will want to shop your competitors to ensure your price is appropriate to your neighborhood. A simple oil change averages between $25 and $55. Most services at a quick oil change shop will cost under $100, but accessories and parts like windshield wipers provide excellent profit margins.
What are the ongoing expenses for an Oil Change Business?
The equipment in the garage such as lifts and pumps must be maintained by a qualified service company. You will need to maintain a stock of a variety of oils such that you are able to service even an uncommon vehicle from time to time. Filters, gaskets, and other expendable parts must be kept in inventory as well. It will be important to have a highly trained automotive technician on the payroll that is able to properly supervise less experienced workers, who may be just starting out on their automotive careers.
How much profit can an Oil Change Business make?
With many oil franchises bringing in nearly $250,000 a year, as the owner, it is possible to see a net profit of $75,000 to $80,000 a year. If your market can support the demand for additional bays, your operational income can rise dramatically above the average if your schedule is filled with appointments from open to close.
How can you make your business more profitable?
While an oil change in itself makes very little profit, the addition of extra services and parts for each customer raises the average profit margin up to 35% for services rendered per customer. Your technicians must walk the fine line between selling extra services just to make a buck vs. providing honest advice to your customers. In the long run, honesty will build a more loyal clientele that will be ready to pay for the extras.