The Timmons Model: In Practice

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The Timmons ModelIn Practice

Stephen Spinelli, Jr., Ph.D., Director Arthur M.
Blank Center for Entrepreneurship
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What is entrepreneurship?

• A way of thinking and acting
• that is opportunity obsessed,
• holistic in approach and
• leadership balanced.

For the Purpose of Value Creation.
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In the beginning there was...
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The founders of Jiffy Lube International believe
in
Integrity, Intensity and Intimacy Integrity is
doing the right thing when no one is looking and
no one will ever know. Intensity is focusing
energy to achieve stated objectives. Intimacy
is loving this company and loving your partners.
Jim Hindman, Chuck Hobbs, Ed Kelley, Steve
Spinelli
April 1, 1979
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What is a Jiffy Lube?
Lube, oil and filtercheck and fill the
transmission, differential, brakes, battery and
power steering vacuum the interior, properly
inflate the tires and wash the windows.. All in
ten minutes at one price in a bi-level,
drive-thru facility.
Service
delivery system
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Market Demand and Market Size

• Cars and Light Trucks 120 million
• Average oil changes per year 2.8
• Price/oil change 20
• Total market size 6.72 billion

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Market Structure

• Gas stations
• Auto dealerships
• Independent garages
• Tire sales and repair
• Muffler shops
• DIY

A classically fragmented market
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Margin Analysis

• Unit economic
• Oil, filter, lube and lubricants
• Labor
• Occupancy cost
• Advertising
• Franchisor economics
• Franchise sales
• Unit support
• Unit operations
• Financing
• Real estate
• Machinery and equipment
• Inventory
• Working capital

Alpha 68 gross margin Beta ???? Growth
impact of economies of scale.
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What strategic imperatives are required to win?

• Branding marketing validation locations
  size GROWTH
• Volume (in outlets and per outlet) market
  density site specifics process efficiency
• Pricing (transaction) base add-ons higher
  average ticket price

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What is proprietary about Jiffy Lube?
Lube, oil and filtercheck and fill the
transmission, differential, brakes, battery and
power steering vacuum the interior, properly
inflate the tires and wash the windows.. All in
ten minutes at one price in a bi-level,
drive-thru facility.
Service
delivery system
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Branding
The of outlets X average marketing expenditure
per outlet
Goal 1 company in the USA Strategy 1000
stores in 10 years Tactic Franchisesingleare
a

• What are the critical issues?
• Capital, especially for real estate
• HR, find, train, monitor and synergize
  franchisees
• Execution, Zor infrastructure, Zee learning curve
• Supply, motor oil fluids, oil filters, equipment

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Volume
Equals cars Per Day
Goal exceed unit economic demands 35 CPD
break-even 60 CPD market return Strategy
high traffic retail locations Tactic
maximize thru-put volume Top 30 SMSAs
Critical Issue High volume retail property
high fixed cost
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Pricing
Value pricing based on differentiation

• Goal maximize annual revenue per vehicle
• Strategy increase purchase frequency
• Tactic radio
• national tv
• reminder cards
• windshield stickers
• Critical Risks and implications
• Over-zealous selling
• Breach the 10 minute rule
• Unmanageable training costs