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10 steps to the perfect fast lube

October 11, 2010
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In our increasingly competitive business environment, small business owners are looking for a way to get a leg up on the competition.

Adding a fast lube facility to your carwash is a great way to do that, but you need to consider these 10 tips before you decide to expand your facility.

1. Develop a business plan

Consider the business plan your blueprint for success  it defines your business, identifies your goals and serves as your roadmap to success.

There are two key elements to a business plan:

  • A financial pro-forma; and
  • A managerial plan.

Your financial pro-forma should include facility costs such as real estate, lease and rent, COGs, labor costs and operational expenses.

The financial plan allows you to determine cost drivers and it also indicates the revenue you will need to generate in order to turn a profit.

Your managerial plan helps structure your leadership team. It should include your strategies for recruiting, hiring and retaining your core management team.

2. Analyze your cost of entry

Getting into the fast lube business can carry some significant up-front costs; you need to ask yourself how much capital is needed to get into the fast lube business.

Begin by determining if there is a need to expand your current lot and evaluate the financial requirements of building a facility. Based on the services you'll provide, you need to determine the cost of goods for your inventory and overhead costs.

Your labor costs will include:

  • The core management team;
  • Facility personnel; and,
  • Ongoing employee training initiatives.

Finally, you'll need to consider your overhead expenses, or the costs of doing business. Your financial pro-forma will help you assess your ongoing cost drivers, but it's also important to evaluate your cost of entry.

3. Get a site evaluation

Considering the importance of location, it's an absolute necessity to perform an initial site evaluation.

Begin by consulting with your fast lube program provider, as most fast lube programs can offer site evaluations as a fundamental element of service.

Research is the key to successfully evaluating the potential of your fast lube location. During this process, you will need to obtain key data such as population density and growth, automobile registration information, household income data and traffic count statistics for the area surrounding the facility.

It's crucial to obtain this location research, which will tell you about the potential of your facility and can help you identify possible problems before you make the investment.

4. Analyze facility options

Determine which building options are available for the facility:

  • Standard brick and mortar; or
  • Modular.

Building a brick and mortar structure can require a considerably larger financial investment and time commitment.

A modular facility offers a variety of advantages to operators who are looking to add a fast lube to an existing business. However, drawbacks to a modular facility include limited workspace and storage.

Regardless of the system you decide to incorporate into your fast lube, you need to ensure you can service vehicles quickly and efficiently to maximize the number of vehicles you service.

5. Operations are fundamental

The operational requirements of a fast lube differ greatly from those of a carwash.

The primary concern of a carwash operator is ongoing facility maintenance; a fast lube facility is a more labor-intensive business that requires full-time staffing during hours of operation.

Because of the staffing requirements, you need to identify a core management team. This team will manage the facility and carry out day-to-day operational responsibilities like hiring, scheduling and staff training.

6. Choose a service menu

Put yourself in your customer's shoes. Understand they are looking for quick, convenient, competitively priced OEM-recommended services.

Avoid getting caught up in recommending unnecessary services, as these offerings can negatively impact the trust you have built with your customers.

Before adding an additional service, it's important to determine if your staff will need specialized training to perform the service. Training can impact your labor costs, hiring criteria and employee scheduling.

Adding additional services means you'll also need to consider the capacity of your bay. You need to be able to perform the additional service without interrupting the flow of your fast lube  a business that thrives on quick and efficient oil changes.

What kind of return on investment can you expect from adding the service? You need to complete a break-even analysis to determine if you will receive sufficient return on investment to justify the service offering.

Use a fine line approach with add-on services because, should your customer experience sticker shock, it can have a negative impact on the trusting relationship you've worked hard to develop.

7. Put an inventory management system in place

The key to keeping inventory costs down is to only order a product when you need it.

By not overstocking your inventory you are keeping your costs down, and you are only paying for the product once it's been sold.

Managing your inventory is not something you calculate every day, but it can have a significant impact on the bottom line.

Look for inventory trends in key product areas where you must carry a broad inventory to meet your customers' needs, such as oil, oil filters, antifreeze or transmission fluid.

Based on your historical data set minimum and maximum benchmarks. Once you reach a minimum, determine that in X amount of days you will need to restock the product.

8. Build a customer base and focus on retention

The most effective way to build a customer base and loyalty among those customers is to employ a staff that provides world-class customer service, from the greeters to the technicians.

Lead by example and implement a customer service training program to ensure your team understands the importance of customer service to the success of your business.

The training program should teach your employees to be listeners, communicators and educators.

By providing professional, honest and fair service, you are building trust with your customers and developing a loyal customer base.

9. Promote your business with a point of difference

There is no silver bullet for successfully promoting your business. However, what will set your fast lube apart from the competition is establishing a point of difference.

You can differentiate your facility from the competition by identifying a valuable offer that addresses your customers' maintenance needs.

You should continually adapt your promotions by taking into account industry trends, changing lifestyles and your customers' needs.

Understand the seasonal needs of your consumer, for example wiper blade replacements during the rainy season or a radiator flush when the temperatures rise.

Entice your customers by providing them with timely and valuable promotions throughout the year.

Identify valuable bundled offers that combine services from your fast lube and carwash and offer graduated savings as the total service cost rises.

Continually alter your promotions to keep the offers fresh and your customers engaged.

10. Consider additional income streams

Consider other types of businesses that compliment your two existing businesses and if that business is capable of providing you with an additional source of revenue. Offering other automotive merchandise can create a one-stop shop for your customers.

This convenient atmosphere allows customers to purchase a variety of products for their vehicle, all while increasing your ticket average. Battery and accessory businesses are commonly added to a fast lube facility, but it's important to evaluate the business' potential before making the investment.

David Kunkel is a Retail/Installed/Private Label, Sales and Marketing Manager for CITGO Petroleum Corporation.

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