Start an Oil Change Business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your Oil Change Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
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 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.
Who 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.
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.
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.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Oil Change Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Oil Change Business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
STEP 5: 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.
STEP 6: 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.
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.
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.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: 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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An Oil Change Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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 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 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.
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Take the Next Step
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
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 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.