Whenever you start a new business, it makes sense to ask those who have been intimately involved in the industry as many questions as possible. This is a case study of one entrepreneur who did just that, he was starting a Mobile Oil Change Business. Here below are a few of the questions he asked and perhaps these questions might help you as well:
What is an average revenue for a Mobile Oil Change business?
This is hard to guestimate, most Mobile Oil Change Businesses actually lose money. Most of this is due to a misunderstanding of the industry subsector and improper market mix. You really need to be 80% in fleet business, parked in a row, with similar wiper blades, oil, filters, etc. cuts down on inventory, time per unit and travel, remember $5.15 per gallon plus traffic and labor being paid while in traffic. Efficiency is the key, read Six Sigma, and Fredrick Winslow Taylor for me.
How long does it take for this type of business to profit?
Sometimes never, which is the norm. Sales are a big issue, and cash flow is the question you should be asking, because yes, you can make a profit on each job, but become bank of Rav and go out of business anyway. Capitalization of course, being the biggest heartbreak for the small business man.
What’s the cost to start this business?
Depends on your equipment configuration, new or used equipment and how you go after the initial marketing. Let’s guestimate $10,000 for a trailer unit that you put together yourself. $40,000 for equipment and a used van; $65,000 for a van + equipment new? $10,000 marketing and $25,000 float. Guestimates.
What type of customer base is this idea going after?
Ideally only fleets, but even Valvoline in KY stopped their pilot program with 300 accounts after 6-months. Partly due to cannibalizing fixed sites using their brands but also due to shortages of auto mechanics, I think it is up to 170,000 now. So you might want to read up on that.
What about insurance? What type of insurance do we need?
1-3 million aggregate. I do not know what you assets are so I cannot advise this, but most businesses will want 1 million liability, and you are in the Care, Custody and Control so you need garage keepers liability insurance too. Airports will need 5 million so will some government agencies.
Is it illegal to do an oil change on the street?
Yes, most cities have ordinances; No Car Maintenance or repair on the streets and really you shouldn’t do it on the street anyway.
Where do you do oil changes? In residential areas?
You will not catch us doing that. Consumers are ruthless, spoiled and demand “pizza delivery” type service, you cannot afford to fight traffic to do that, even with all the GPS-Google-God-Mapping-Software.
Does this business require a lot of resources? Or do can I do this alone?
Depends, I suppose you could run a one-man operation, it would be safer, but work flow would be slow and inefficient. You could probably make money, but doubt you would be pulling in the average income level of a middle class suburb.
If you are going to start your own business you may as well go ahead and make a list of questions now and you will be glad you did. Think on this.