Hidden Costs to Consider When Starting a Mobile Oil Change Business in 2013

Not long ago, I was talking to an MBA student about the mobile oil change sector, their little groupthink committee chose this for their class project - write a business plan. Now then, writing a business plan for a service sector is much different than actually doing it, but let's talk shall we?

You see when preparing the proforma part of the plan, I was asked specifically; "What are some of the hidden costs that a startup company may not be forecasting for that could come back to present itself as a problem?" For a little background, they chose Washington DC as a target market, probably due to the high per capita money flows - sure taxpayer's money right?

So, what are some of the hidden costs they should consider? Well, how about ObamaCare for one? But that's just a biggie to start as there are so many more. Employee pilferage is another, that is to say employees doing free-bees and pocketing cash, DC labor is tough, look at the way the government employees staged a protest after 2-days of the government shut down, employees in DC actually believe you owe them something, and employee lawsuits are high there, everyone wants to get paid not to work - in my humble opinion.

What about traffic? That surely takes a toll - stuck in traffic paying fuel and labor costs w/o revenues. Mistakes are also costly if employees don't pay attention, even training is a problem, because the employees don't listen. Might want to go robotic, but that too costs money in development.

Modification of work service vehicles for various customer requirements - parking structures no trailers, high vans - in the DC Area, certain areas no trailers are allowed. Weight limits in structures add to this problem. Oil waste drop off fees and locations can be cost challenges as you have to take the used oil somewhere, that costs time and money in travel.

Security checks, you just can't roll onto any property in a van or truck, and who are your employees. One big problem in DC is all the foreign workers for some it is hard to get clearances. Web-based systems to schedule, re-schedule, re-route, pay-online systems, there is a real cost there, a business cannot afford a bad ObamaCare rollout online.

Washing uniforms and Shop towels is a common over looked cost in this sector, also the cost to maintain equipment, Murphy's law, stuff breaks, new start-ups seem to buy the wrong equipment. Additional insured certificates out of the blue for $5M aggregate due to some risk management guy with paranoia who won't approve the HR's request.

Indeed, I suppose if I thought about it some more I'd come up with a 100 more small costs that folks do not consider in their proforma - no business plan ever works out perfectly - double or triple the upfront costs before crowd funding offer, and double the time to get running, and don't underestimate the competition - you are not as smart as you think you are - you must assume the competition is better connected, more well financed, sneakier, more Machiavellian, students of Karl von Clausewitz, Colonel Boyd's OODA Loop, and smarter. But regardless you can beat them, it's just not as easy as it seems. Please consider all this and think on it.

Lance Winslow has launched a new series of eBooks on the Mobile Auto Services Business. Lance Winslow is a retired Founder of a The Oil Change Guys, a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net.

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