'I started a biz - and now it's failing'April 3, 2009: 10:28 AM ET
Our experts try to jump-start a struggling auto services venture.
Eddie Freeman II, Lube N Go Michigan!, Mich.
I started a mobile oil change business. We change your vehicle's oil at your location, work or home, for $24.95. I am having trouble launching the business - the phone is just not ringing, and I am having no luck with fleet businesses. I've tried word-of-mouth marketing and handing out fliers. I started the business with my own money when gas was $4 a gallon to save customers money and time. Everyone thinks the idea is great, but no one is using it. I quit my job as a dealership service manager to start this business. What advice do you have to get it going?
By Emily Maltby, CNNMoney.com writer
There are a lot of things working against your business right now, both in and out of your control. First is the economy. People are putting off expenses that aren't imperative, and they may wait an extra couple thousand miles before spending money on an oil change.
"Nationwide, the majority of shops are experiencing a downturn," says David Rogers, president of Auto Profit Masters, an advisory firm for auto service shops, and COO of repair shop Keller Brothers Auto in Littleton, Colo. "I've seen many have to take measures like opening extra days and staying open at night, but it's not working."
Another other issue is your competition. You're up against not only mom-and-pop establishments and service gas stations, but the JiffyLube and Midas chains as well.
"It's a cutthroat market, where people are offering the cheapest of cheap, $10 to $14," Rogers says. "Even on Craigslist, there are no-name people who will do your oil change to earn a few extra bucks."
But the main problem you should focus on right now is your business model.
"This concept has been tried before, but from what I've seen, most of them are suffering," says Rogers. "And it's because consumers are simply not comfortable with it. People are conditioned - they like the feeling of going to a brick-and-mortar shop. With your model, they think of a greasy guy jacking up their car in a parking lot and then they'll have to get it towed to a shop anyway. Or, if they're at work, you'll come in and interrupt what's going on. On the surface, it seems pretty sketchy, so it'll be a long road to overcome that image."
To start turning that around, marketing is vital.
"When you have a product that's unlike any other, people have no trust," says Jim Lanzalotto, president of marketing firm Scanlon.Louis in Newton Square, Penn. "The trick is to show them why they can't live without this service, and the best way to do that is to offer free trials. That will get the relationships established, and you'll also start to get feedback."
But you don't want to just give away free services randomly. The key is to focus on the gatekeepers of word-of-mouth advertising. For instance, offer free trial services to your local radio announcers or writers from your hometown newspaper. If they like the service and talk about it, your name will spread faster.
To help your marketing, make sure your name says it all, so that people understand what you are all about the instant they hear your company's name. "Your name is a value proposition," says Lanzalotto. "'Lube 'n Go' - does that mean 'I drive to you?' It's not clear."
Also reevaluate who your target customers are and how you can access those customers. Instead of trying to focus on individual employees at companies, Lanzalotto suggests arranging a deal with the HR managers of those companies. See if you can get a coupon program going for the whole office.
Also, one great place to find car owners is gas stations. Try to partner with fuel stations that don't have their own service center. You can organize a referral or revenue-share deal with them to boost their incentive to tout your business.
Polishing your image can also pay off. "You have to come off square - you have to scream professionalism, from the uniforms to the truck you drive," Rogers says.
Your truck should be lettered and decorated with your logo so that people who drive by can see what you are doing. "It's a staging area," Lanzalotto says. "Put out banners and signs when you do your work, something like, 'Another oil change by Eddie Freeman.'"
And, tough as it is to put entrepreneurial dreams on hold, you'll also need to think about an exit strategy. When consumers aren't spending, even strong businesses can face insurmountable obstacles.
"This is not the greatest time to launch this type of business, particularly if you don't have a lot of experience," Rogers says. "This is the time to study and find help. I'd say you need two years of operating expenses and marketing and advertising expenses to make it through."
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