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There are battery operated cars. However, many still prefer the crisp and smooth sound of an fue-based engine. Consumers will always need fuel, and gas stations are one of those businesses that will always thrive together with oil and gas contractors.
A gas station can make money in different ways aside from selling fuel to everyday consumers. For one, there are some that work with moving companies and supply the fuel for the box trucks or cargo vans. You can also find gas stations that operate convenience stores for better sales.
This is a perfect example of a business that’s easy to operate and is very resilient. Read this guide you’re thinking about how to start your own gas station but are completely in the dark.
So how to start a gas station business? There are many things to think about. That said, we’ll explain the steps that should be part of your checklist.
Do you want to start a gas station from the ground up or do you want to purchase an existing one?
Starting a gas station from the ground up means that you do all of the legwork. Nonetheless, this is a good option if you want to learn the ins and outs. Moreover, you don’t expose yourself to the setbacks of buying an existing business.
Buying an existing gas station is the second option if you want to start making money ASAP. You can buy gas stations for sale online. These already have the equipment, permits, and licenses.
However, you must be very careful to see any setbacks. For example, the previous owner might have liabilities and this will be passed to you upon purchasing his gas station. The gas station might also be sold due to problems that even you can’t solve. That being said, carefully evaluate financial records and other important documents before doing the purchase.
The next thing you’ll need to do (provided that you start from scratch) is to look for a location. Ideally, your gas station should be in a place where vehicles frequent. Areas nearby malls, parks, tourist spots, schools, and retail centers are a gem. However, be prepared because the cost of renting or leasing such a location is never cheap.
When you have the location, it’s time to build the gas station and install it with equipment. You will need to approach a construction contractor who specialize in the construction of buildings involved with fuel activities. As for equipment, you can either buy 2-4 units of second hand or brand new fuel dispensers from local or international dealers.
Your gas station makes money by selling fuel. The thing is, you can’t just purchase fuel anywhere. That said, finding a trustworthy supplier is the second step in how to start up a gas station. Many fuel suppliers right now have a website where you can take a look at requirements and pricing. Some even allow you to contract a representative immediately.
Gas stations are heavily regularized. Permits, licenses, and other requirements must be furnished and submitted to concerned authorities before operating.
As with any other business, your gas station will need to have an EIN, a business plan, a bank account, and a unique name. Documents proving that you have this must be sent to the city or municipality where your gas station is located.
Permits and licenses are very important. You can get this after the gas station has been inspected by authorities. Common permits or licenses you need for operating a gas station business are:
Fire safety permit
Building safety permit
Water discharge permit
Liquor license if your gas station operates a convenience store where alcoholic products are sold
Air quality permit
Make sure you have a plan in place to market your new gas station. You need a marketing plan that starts before you're set to open your new fuel station so that you can let people know what you have in mind and when they can come in to see what you have to offer.
Once you purchase your new gas station, you need insurance to go with it. You may need:
Liability insurance
Commercial property insurance
Workers' comp insurance
Make sure you have those policies in place to protect your business as soon as possible. The longer you wait to get that coverage, the greater the likelihood that your business will suffer a disaster that you cannot afford.
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If you go for an existing gas station business, then prepare a starting capital of $300,000-$400,000. This will cover the cost of paperwork in transferring the business to your name and buying new equipment.
Suppose you start from scratch, then the first thing to consider is the cost for leasing or buying the piece of land where your gas station will stand. A 1 acre piece of land will require a lease of $300-$400 and if you decide to own the location, then expect to invest $3,000-$6,000
Building the gas station will cost at least $50,000-$100,000. Of course, you’ll need to install a fuel dispenser. So you also have to ponder about this cost when wondering how much is it to start a gas station. One fuel dispenser costs $18,500. If you need four, then you’ll spend $74,000
Construction and equipment costs aren’t the only factors you need to consider when asking how much investment needed to start a gas station. After all, you also have to think of the cost for fuel delivery. Suppliers charge $60 per 20 gallons on average. Your gas station can hold 40,000 gallons. Going with this data, your fuel station business will spend $120,000.
How much investment is needed to start a gas station, again? If you find yourself struggling to open a gas station without the necessary funds for that initial investment, you may have some options.
Do you have friends, family members, or business partners who might be interested in helping you open a new gas station? If so, they may provide vital financial backing that can help you get your new gas station off the ground. Keep in mind that if you ask for investments from friends, family, or business partners, you may need to have a clear investor contract in place that lines out what percentage of the profits from the gas station your investors can expect.
A small business loan is often one of the most effective ways to get the funding you need to cover the cost of starting up a new gas station. Keep in mind that you may need to have solid credit or a good down payment in order to secure a small business loan, and you will need to have a clear business plan in place that lays out the likely return on investment.
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You can try franchising if you want to stand on the shoulders of giants. A gas station franchise can easily make more sales because it carries the reputation and image of the franchisor. However, a downside is that there might be restrictions with regards to how you want to operate things as the owner. Here are some of the most common gas station franchises and how to start with them:
| Franchise | How to Start? |
|---|---|
| Petron | -Must own an existing gas station or a lot that passes Petron’s standards -Fill the application form and submit -Undergo training (if picked during the selection process) |
| Shell | -Business management experience of 3 years or more -Experience in the management of 10+ hourly wage employees -Must be a US citizen or a green card holder -Fill the online application form found at Shell’s website |
| BP Gas Station Franchise | -Application form attached with a business plan -Submit financial records -Undergo interview -Undergo license to operate training, which the costs will not be shouldered by the company |
A business will not become successful on its own. You have to guide and nurture it. So how to run petrol station business? Here are some things you need to do.
Always keep tabs on the delivery of fuel. This is very important when running a gas station because you don’t want customers to spend their time driving only to find out that your tank is out of fuel.
Also, keep an eye on employees, especially those that work in the convenience store. They might steal stocks or even cash. It’s best to put a CCTV camera around so that it’s easier to keep an eye on everything.
Keep alarms near your employee’s reach. This is very important if your gas station is open 24/7.
Don’t forget business insurance. Insurance can help if your gas station causes pollution, has an employee experience a work-related injury, or needs to close temporarily.
Finally, always grace the business with your presence. Ideally, you must always be around. In case you own a lot of business, consider visiting your gas station at least one or twice a week at irregular intervals.
Finally, keep an eye on how your gas station is functioning. What do your profit margins look like? What might you need to change in the future? Evaluate and make changes to your business as needed, especially as you focus on loan repayment and other key elements.
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