Over the past several years at Oilstop, we have had the opportunity to grow our footprint of service centers by acquiring other drive-thru oil change companies. We love acquiring new service centers and bringing a new team and company on board to join our mission at Oilstop.
These days, it seems like there are two groups of oil change operators: those who are thinking about selling at some point in the future, and those who are looking to acquire shops to expand their footprint. At Oilstop, we’ve found that the operators who have prepared and plan ahead for their eventual “exit” have an easier time selling, have a smoother transition, and may even be able to sell at a higher price! So, what does it mean to plan ahead?
You should begin preparing your quick lube several years before you are expecting to sell. It’s not uncommon for a prospective acquirer to visit your location and “mystery shop” your operation. They will be looking at curb appeal, hospitality, store cleanliness, and overall experience. You want to put on a good impression! Start by focusing on optimizing your team. Potential buyers get excited about a strong and stable team and culture.
Hiring is hard. If your buyer has the opportunity to interview and hire your team to continue operating the business, this is a huge value! Investing in your team up until you sell will help with the transition as well. Your team will know how things are run, where everything is kept, and can make the transition to the new operator (and your transition to the next opportunity or retirement) much easier!
Communicating with your team through this process is important as well. When the time is right, let them know you are thinking about selling, but you are hoping and working hard to find a buyer who will keep the team on board. Hiding this news from your team rarely ends well. As usual, honesty is the best policy. A good team will value your trust in them and will work hard to ensure the business continues performing up until the sale.
As you are preparing to sell your business, focus on a few important metrics that will matter most to your buyer. First off—and most important to buyers—don't stop growing your car count! At Oilstop, we believe a strong car count is the single best indicator of a quick lube’s health.
Sure, a poorly run operation can have high car count days. But to maintain those strong days over the long term usually involves a strong team, training, and leadership. Guests who have a good experience in your shop will come back and tell their friends, growing your car count. A strong car count is a vital indicator of health in your business. As our team often says, “Car count is king!”.
The other important metric to focus on improving as you prepare to sell is your “net operating income,” or profit. There is an old adage that, “Businesses are bought, not sold." Your eventual buyer is making an investment in your business. Usually, this involves buying your profits at some multiple.
If they buy your business at a price of “four times your profits,” they are making an investment that will take four years for them to pay back. As you approach the time to sell, working to improve your profits is important. Be cost conscious, but don’t cut costs to the point of harming your car count. This can involve holding off on big costs such as a new building sign or a new website, since your buyer will likely use their own sign and website. But again, the best way to drive profits is to grow your car count. So, don’t hesitate to spend money on things that will do that. Remember, “Car count is king!”
Lastly, one of the best things you can do to be ready to sell is to take some of those pesky calls from potential buyers. Building relationships with potential buyers before you are rushing or desperate to sell will help ensure you have options when the time is right.
Just because you picked up the phone or responded to an email, it doesn’t mean you have to sell now. Use these calls as a chance to learn about their process, what price they might value your business at, and even best practices on how to prepare your business to sell. At Oilstop, we never want to pressure someone to buy an air filter in our service centers, and we never will pressure someone to talk about selling their shop. Instead, we are just looking to build a relationship for when the time is right!
