'I started a biz – and now it's failing'
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."
Give us your advice: Check out recent “Ask & Answer” questions.
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Finding the best customers for your business
From Lance, L.A. and Miami Eddie, here's another market for you: Office Buildings. In high school and college, I ran my own auto detailing business. My clientele were people who were business owners and professionals. They want to run their business and spend time with their friends and family. They don't have the time to maintain their cars, but they want them to look and run well.
From Nikita Irmal, San Carlos, CA I found this small business blog article very helpful for small business owners and entrepreneurs struggling to stay afloat and survive in this recession:
http://nikita-thesmallbusinessblog.blogspot.com/2009/08/how-to-recession-proof-your-small.html
Hope it provides you with a few good tips on how to turn around your business.
From Nikita Irmal Small business are crucial to our economy. Small business are an important source of job growth. We account for a large majority of jobs in start-ups, a key source of innovation and economic growth.
Here is a great article on how to recession proof your business from failing: http://nikita-thesmallbusinessblog.blogspot.com/2009/08/how-to-recession-proof-your-small.html
From Russ Faulkner, Columbus, OH Eddie,
I agree with others you do have some cards stacked against you, but nothing a little creativity and hard work can't overcome. Here is where I would start.
1. I find the 50 largest employers in your area. I would reach out to their HR departments. I would then try and set up a meeting with them to explain what you do and the time/effort if can save their staff. I would then ask to do a trial run and get some feedback. I have worked for a company in the past that has done this and it was just another benefit for our teams.
2. I might look at adjacent product categories. IE get together with a local mobil car washing service and pitch the idea of cross marketing. This might cut into your profit margin a bit, but it could be made up for if the volume is produced.
3. I would continue to chase the fleet companies. I might actually contact the police department and city offices to see if they have a contract with someone to do this service. Then ask when that contract is up for rebid.
Just a couple of ideas to get you going.
From Drew Gerber, Hilton Head, SC Eddie, for sure you should be taking advantage of every media coverage opportunity you can (like this one). PR is one of the most cost effective ways to get the word out about your business and carefully positioning yourself as a solution to your potential customer's problems is the way to do it. I would imagine that your customers are probably concerned about having their cars last longer & be more reliable (especially in the current economic climate). What tips can you offer them to achieve that? I suggest calling your local newspaper, radio, and TV channels to see if they are interested in your tips for their audience. Also, take advantage of free PR services like http://www.PitchRate.com, which connects journalists with the experts they are looking for to complete their stories.
From ilya bodner A lot of things will pull you down right now. One thing you can control is your business credit. Yes, the business has its own score.
Search for "strong business credit" in google or yahoo and you'll see what I'm talking about.
Sincerely,
Ilya Bodner
Small Business Owner
Initial Underwriting Group
From Chattanooga, TN 37404 After watching your broadcast last night about where are the jobs, I recognized I was blessed to be working. I have my own business and it is thriving. My new book "How to Start a Court Reporting Business" has just been released. http://www.courtreportingfordumbeeees.com. It's a lucrative career from which to start you own business. The book is a mentorship book that I wrote after nearly thirty years of practicing. There are still jobs out there. Deven
From Moe, Courtenay, BC If what you offer is personal service, then maybe referral selling is the way to go. Ask your customers where to go next. Save your marketing & advertising budget, and use email & testimonials to leverage your good name with your customer base. It's worth looking into services like KudosWorks or Tell-A-Friend-King, to find mechanisms that will help.
From Nelson J Perez, Doral, Florida How about trying to "park" your business at a high-traffic Car Wash in your area ?
From Hal Coate San Antonio Texas He has a poor business model. There is no way he can make money charging $24.95 for an oil change at the customer's location. By the time he buys the oil and filter and pays his expenses for his truck, insurance, etc. He cannot do enough volume to survive. Customer also look for assurances that if something happens to their car due to this service, that there is some assets behind this guy in his truck to fix their car.
From Muttley Macclad, Yorkshire, UK Jason's right on. As long as you use the oil and filter I want, not the one Oil Can Henry's slinging out. Or make my ability to choose an option – offer all levels to all people, at least eventually….
From SW, Raleigh NC I recommend working with large locations such as a hospital where folks who work there often do not have time to schedule anything for their cars because of alternating shifts. Offer a second time around discount to customers. Ask permission to put a placard in the cafeteria or in the reception area.
From Chuck, Minneapolis, MN I only have one question to ask you right now. Neither you nor the article have answered it. (However, some people in the comments have touched on it a little bit.)
Q: Who is your customer? I'll give you a hint, its not 'everyone'. Not everyone will want your service. You can walks door to door, but unless you find that customer (the one who said, "I'll give you $30 + tip") you're wasting efforts.
Do a little research and answer that question first.
From Jason, Bellevue WA Door-to-Door
If you knocked on my door to change my oil I would give you the 30.00 + tip.
Dumb it down. Go to the end of your street and start knocking doors. If you hit 50/70 houses a day you will find the customers you are looking for.
I started my biz on the bus in the winter (in Colorado) and I am now happily working from home for myself.
From john blondie newark nj So true. 2 years ago i was a ferrari driving two-house owning, seven figure big shot in the construction business, killing myself for all the stupid junk i owned, soldmost of it, cut way back (with a little help from the economy), much happier now.
From Cody LeMars Iowa hey man what i did for some time was i got on a CB and talked about my Business and it got around really fast
From Tim T, DC I have a hard time thinking its viable either especially from the standpoint of building a decent living off of it. Say you wanted to earn 60K a year doing it, you would have to do 10 oil changes a day (there quick I know I’ve done it myself) every business day of the week……And that’s before your expenses gas and wear and tear on your vehicle and supplies to provide the service. True fleet business could allow for this but I have a feeling you would be chasing one guy here and on guy there for the most part (i.e., eating up the day just traveling around).
From Jon King It is not a viable idea. Trying to find enough people to make a decent living within a viable driving distance will be impossible.
From David Frantz You just found out that in AmeriKA it's not worth it anymore the reason:
30 % PLUS in Federal tax
15 % in FICA tax
6 % PLUS in state income tax
8 % PLUS in FUTA,SUTA, regulatory
fee's use taxes, permitting fee's
sales taxes on asset purchase
CPA fee's TAX & TAX & TAX
Then YOU get to pay the general business expenses on whats left…
Folks that almost 60 % STOLEN from YOUR labors!
SUCKERS!
So it's not worth it anymore and that is why AmeriKA is going down the TUBES…….. PERIOD
NO INCENTIVE anymore you are working YOUR rear end off to SUPPORT good for nothing playing YOU for a fool! SLACKERS and 'so called' Government 'workers' sucking the PRODUCERS dry!
Get out of DEBT and cut WAY BACK and take it EASY from now on!
I cut back to no less than 80 % in my business and I am ENJOYING my life now!
From Ken, Seattle, WA I agree with the previous commenter: differentiate yourself. Some suggestions:
1. Aim for the top end, offer synthetic oil and top of the line filters.
2. Target senior centers with your advertising.
3. Sell additional related items, such as filtermags, and pre-oilers.
From Ryan, Lexington, Ohio Peoples cars are in many cases an individuals most expensive asset. Hence although your idea is great…. it is hard to hold an individual accountable for instances where error occurs. If we go to a 5 minute oil change there are tangible assets… if you change the oil in our driveway or at work what happens when you forget to fill the oil? Most people that offer these kind of services have very small net worths..hence as a consumer it would be hard for me to recoupe your costly errors. Keep working though you will find you niche!
From Curt W I own a plumbing business in Las Vegas. American Mobile lube is a company that provides the same services. We have been a customer for over 15 years. They service all of my trucks at once, so I don't have to pay my employees to sit and wait for their trucks to be serviced. The business model is good, focus on commercial clients.
From Martin B, Charlotte, NC I'm an enthusiast car collector;
Check in with the Classic car clubs. While most car hobbyists may change their own oil, disposing of it (& filter) nowadays can be a pain. Advertize how you dispose of them environmentally correct .
Establish a "Kid's Gloves" approach to car enthusiasts. Maybe you can find the people with multiple cars in their garage.
When I buy a car, I want to know the date the oil was changed, the brand used (oil & filter) and the viscosity, plus the vehicles mileage. Create a professional info sheet for this. Maybe work with smaller car dealerships to do an oil change right after they sell a vehicle before customer delivery.
Your service has got to be the BEST in care for car and you need to establish trust with customer.
PS: same issues with oil disposal goes for Antifreeze – maybe offer the less toxic antifreeze replacement to animal lovers, advertizing at the vets office "save a pets life…..replace your poisonous antifreeze".
Wheres ur Family-advertisement and all the Friends, the Networking. advertisements and dont forget that u r no-longer in competion walmart has oil changes for 30.00 bucks and up? Dont give up!!!!! keep the faith