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Experience running a smog shop?

Discussion in 'Business Models, Niches, Industries' started by Denim Chicken, Jun 19, 2018.

  1. Denim Chicken

    Denim Chicken Silver Contributor Read Millionaire Fastlane Speedway Pass

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    Jun 5, 2010
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    Does anyone have any experience running a smog station or owning a franchise of them?

    My dad is soon to retire in a few years and while he will get a small pension he's also thinking of things to do once he stops working his normal 9-5.

    A friend of his owns a local smog shop and has mentioned in passing that it might be a good opportunity for him as there's a smog shop close to my dad that is looking for a change in ownership.

    I don't think it's listed for sale but it's one of those gas station+smog shop deals and the owner owns multiple gas stations and he wants out of the smog shop portion of it because he has too much to manage.

    From a cursory conversation with my dad, his friend said if he wants he will train my dad at his own shop even if it's 1 day a week on a Saturday to help him get certified and from there he can coach my dad on running his own shop.
    In return, he would get a % of sales almost like a franchise but with no dues just a straight % that scales with revenue. but honestly the conversation didnt get that far. It was just something he mentioned in passing.

    Now for the numbers, his friend mentioned that if there's 1 rack a single small smog shop makes about $3000 in profit/mo after rent and overhead is paid. Rent is around $3000/mo and the equipment (dyno, computer, etc.) is for sale around $10k at this local place he's talking about. It's not enough to be fastlane but usually these businesses scale with multiple locations.

    My dad is curious if this will be a good opportunity for him to start as a way to transition in retirement. It's not physically demanding to run a test only smog center.

    I'm also good with SEO and do web design and digital marketing so that would be something I can help with.

    From what I'm reading, smog shops have a CAP in their earnings (i.e. ceiling) due to how many cars can be serviced every day depending on the # of racks available. So assuming it takes 20-30 mins/car per dyno, it would limit the shop to say 15 cars/day MAX... so

    $70/smog x 15 = $1050/day x 20 (business days) = $21000 gross revenue at full capacity. MINUS overhead and wages.

    You would have to factor in downtime, free re-tests, and so forth so I'd like to see an actual P&L to get a better idea.

    The other consideration is one that is a double edged sword.
    Smog is required by the government particularly here in CA all vehicles are required to re-smog every 2 years, and any time you sell a vehicle.

    However, emissions regulations continually change and while there is artificial demand that also means there's a quite a lot of test only smog places around here. If this business model were to scale, 1 regulation that makes the test machines obsolete would be a large capital expenditure for each shop under management.

    Anyone have experience owning/running auto service shop or chain? or a be a tire shop, brake services, quick oil change shop, etc. Anything that's a similar business model

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