How to open or start a gas station business. This type of business is always in demand due to escalating populations and truck / auto usage. However, getting started without doing the proper research is a perfect formula for disaster. This article is in two parts. Part one will show you the steps needed for an already existing business for sale. Part two will show the steps for starting from scratch.
1- Location: Find a desirable location that is in a very high traffic and convenient area. Make sure that the overall property and equipment is in a good maintained state. The more cleanlier and organized that a place is indicates that the present owner most likely took pride in the business. People who take pride in their jobs provide excellent service. Customers appreciate great service and will go out of their way to make purchases there.
2- Reason for Sale: Find out why the seller put the place up for sale. If it is due to retirement or something similar then that is okay. However, be careful that the real reason may be due to a struggling business.
3- Financing: Contact a financial institution or a finance broker who specializes in this type of business. Find out what kind of documentation that the seller must provide you with in order to apply for financing. A good credit score, down payment and managerial experience will be definite assets.
4- Down payment: You will be required to put down anywhere from 15 to 25 percent down.
5- Appraisal: You will have to get an appraisal done on the existing business. This could take up to 3 weeks and $2,500 to $3,000.
6- Verdict: If the lender is satisfied with your application, you will be approved for the loan and then it will be up to you and the seller to come up with a closing date where the business changes hands.
Building from Scratch:
1- Location: Find a good high traffic and convenient location.
2- Property Zoned: Contact your local government municipality and find out if this property or land can be zoned for a gas station.
3- Environmental Testing: You will have to hire an environmental testing company for around $2,000 and this process can take between 1 to 2 weeks. This step is costly but never the less is mandatory. There are corrosive materials in some soils that can eat into your tanks causing leakage and greater environmental risks and costs.
4- Lawyer: You will need to hire a lawyer who specializes in this industry to come up with a business plan for you. They will also over see that this whole process goes smoothly for you
5- Suppliers: Talk to as many oil company reps as possible until you find a good match. You can go with premium suppliers like the big name companies or smaller discount companies.
6- Construction: Hire a company who specializes in gas station building to design your business for you. Make sure to add incentives like a convenience store and lotto to the mix Gas stations make most of their profit from selling convenience store items. Get them to draw up a plan, estimated price and closing date for you to submit to your lender.
7- Financing: Submit an application for financing to your lender of choice along with your business plans. If you get approved for the predicted loan amount, get the place built.
8- Opening Date: Once your business built and you are ready to come up with an opening date, advertise so that you can have a big turn out.
You will have to weigh the pros and cons of buying an existing business, starting from scratch or even buying a franchise. Which ever way you go, it will be a very costly venture and may require even more licenses like lottery and liquor. There is also a great deal of time trading for income involved in this industry.