How to Buy a Gas Station
With gas stations and their convenience store counterparts scoring high in the rankings for both popular and profitable businesses in the US for franchises, it’s no surprise that there are more than 120,000 of these hybrid businesses dotting the roads and commercial areas across the country.
The gas station/convenience store hybrid generates more than $400 billion in yearly revenue. And, for those hoping to get a piece of those profits, making a major investment can mean huge financial gains. It can also mean huge financial losses if you don’t know what you’re doing.
If you’re ready to make an investment in a gas station, here are the top five tips for buying a gas station that can help you get started.
Decide on the Kind of Gas Station You Want
Do you want to invest in a franchise or in an independent gas station? This question is an important starting point because it determines the future actions you take, be it pricing, location, and overall objectives.
If you’re choosing a franchise, then you’ll be signing a franchise agreement with a partnering corporation, such as Exxon, Shell, or Sunoco. You’ll receive all of the perks and benefits that you can get from being partnered with a name brand, including their fuel suppliers. The down side is that you’ll be legally obligated to follow the specifications of the corporation with which you’re partnered.
If you instead opt for going independent, you’ll likely be purchasing and selling unbranded fuel that is acquired through a variety of suppliers. While you won’t be receiving the logo and branding that come with a franchised gas station, as an independent business, you’ll have more choices in how you conduct your business.
Set a Budget
Before you can begin to look for a gas station to purchase, you’ll need to know how much you’re willing to spend on your investment. Write up a business plan that takes into account total costs of the building, mortgages, maintenance costs, and the gas itself.
You might benefit from working with a financial advisor who can help you sort out the details of what you can reasonably afford.
Consider Your Location
You know what they say: location is everything. While location isn’t really everything, where you choose to purchase your gas station certainly plays a huge factor in the success of your business. Consider the following criteria for choosing the best location for your gas station:
Safety and Cleanliness
You want your gas station to be in a well-lit, clean area to ensure that your employees and the people using your services are safe from crime or injuries. A dangerous part of town could have high robbery rates or be littered with glass that could damage property and leave a bad impression on those coming to fill up.
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Picking a Popular Area
Even if you have the most stunning, well-advertised gas station in town, it could be irrelevant if your location is in a remote area with no traffic. A gas station located next to shopping centers or apartment complexes is more likely to yield more business to your station.
It’s worth noting that some remote areas can actually work in your favor, if you choose a high-traffic intersection for commuters and trucks, but this tends to be the exception.
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Neighboring businesses
Your friendly (or unfriendly!) neighbors are also an important, yet often overlooked, element of choosing a good location for a gas station. Take into account the kinds of businesses that are adjacent to your gas station, as they can compete with your own business.
If you choose wisely, you might even find that your neighbors actually help your business. For example, gas stations near grocery stores that don’t already have their own gas stations can serve as extra traffic for your company, as those looking to fuel up after stopping at the store seek business at your gas station.
Get Familiar with the Area
Now that you’ve made a decision on the location of your gas station, you’ll want to learn as much about the area as possible. This includes demographics, vehicle types, and crime rates. Consider asking yourself the following questions:
- Who is likely to make a pitstop at your gas station?
- What kinds of vehicles do they drive?
- How old are they, and are they commuters or locals?
- What kind of precautions do you need to take to keep your business free from crime?
You don’t want to spend all of your time marketing and investing in diesel products if the majority of people using your services drive sports cars. You also don’t want to advertise other products or services to an audience that has no interest in those ads.
Understand the area, and you’ll be able to better cater to the kinds of people who will be visiting your business.
Have Your Site Evaluated and Legally Accounted For
You’ve found the perfect location for your new gas station, but before you make that purchase, you’ll want to do a few legal actions. These actions include both a site evaluation and a combing through the fine print of your purchase agreement.
The environmental site assessment (ESA) is a required investigation of your prospective gas station’s environmental history. The inspection includes a thorough history of prior contamination problems. If the ESA shows there to be past contamination incidents, you may be able to have further, more detailed studies conducted.
Your purchase agreement should have an environmental contingency clause that allows you to have flexibility in the off chance that the evaluation you will be conducting doesn’t pass its inspection. This could include additional time to fully inspect and evaluate the property’s history, or even a cancellation clause for cancelling the contract entirely if the seller refuses to fix any contamination issues that are discovered during the inspection.
In Conclusion
Buying a gas station is a major financial decision. We hope that these five tips give you the tools you need to get started in the process of acquiring your new gas station.
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Hi! We’re Josh and Jolene Baijot, the creators of this website. We’re also Commercial Real Estate Agents in Washington State. Thank you for taking the time to read this blog post. We appreciate your time spent on this site. You can connect with us on Facebook, Instagram, or contact us through this website.
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