Fueling Your Dreams: How to Start an Independent Gas Station
Have you ever wondered who owns that BP on your corner? You may be surprised to learn it’s not a huge national corporation but an independent business owner. In fact, about 60% of all convenience stores are owned by a person or family that operates just one store.
If you have a dream of running your own business and can get the funding, a c-store can be a great option. But opening a gas station can come with some unique challenges and requirements compared to other business ventures. From making a business plan to solidifying the day-to-day operations, here’s how to open a gas station.
Create a Business Plan
Before starting any business, you need to have a comprehensive plan. A business plan is essential to securing business loans or gaining the interest of potential investors. Luckily, there are plenty of resources that can help future small business owners like you write a business plan.
While crafting your business plan, consider your competitors and what will set you apart from other gas stations in town. Think about where they are lacking and how you can overcome those weaknesses to offer a superior customer experience.
You also need to determine what you’ll sell besides gas. Will you have a car wash? Will your convenience store sell made-to-order food or just prepackaged snacks and drinks? Will you carry items with more regulations, like cigarettes, lottery tickets, and alcohol? All of this should be outlined in your plan. Keep in mind that the vast majority of your profits will not come from fuel sales but from product sales.
Choose a Location
Location, location, location. The importance of location should be stressed when buying any type of real estate — whether it’s a home or a spot for your gas station. Before picking a location, though, you need to decide if you’ll take over an existing business or start from scratch.
Taking Over an Existing Location
Many entrepreneurs who are new to the industry cut their teeth by purchasing and running existing gas stations, which can save you on construction costs, resources, and time. It can also take some of the stress out of choosing a location since your options will be limited to businesses looking to sell.
With lower start up costs and less time spent constructing an entirely new business, it’s not surprising that this tends to be the most popular route to take. However, it doesn’t mean you can’t build a gas station for scratch with the right resources.
Building a New Gas Station
If you decide to start from the dirt up, you need to be strategic about where you place your gas station. Consider traffic patterns, competitors, and nearby neighborhoods. You likely don’t want to build your gas station super far off the highway or directly across the street from a successful competitor.
As for neighborhoods, just because a neighborhood is popular doesn’t mean you should automatically put your gas station near it. Think about budding neighborhoods that may bring you more traffic in the future. Being there early can give you a leg up.
Once you’ve found the perfect property or land, you’ll want to snag it as soon as possible. However, you might need to wait until after you have funding to make the purchase.
Register Your Business
Opening a gas station can be exciting, but one of the first things you need to do is register your business to make it a legal entity. To start, you’ll have to decide on a business structure (sole proprietorship, LLC, partnership, or corporation).
Sole proprietorship might sound tempting, but it’s generally not recommended for a gas station. You will be solely responsible for any of the risks that come with a gas station, such as robbery, leaks, accidents, etc. Most single-store operators choose to go with an LLC (Limited Liability Company).
An LLC protects you from being held liable and often comes with lower fees. However, an LLC might make getting a loan or investors more challenging. If your ultimate goal is to expand to multiple locations, consider forming a corporation. Consult with an attorney before making your final decision.
Don’t forget about taxes! You need to apply for an EIN (Employer Identification Number) with the IRS so you can file your business taxes.
Acquire Funding
You have a beautiful business plan, found the ideal location, and registered your business. Now, it’s time to get the funding. You’ll need to determine the start-up costs of your gas station, including real estate price, anticipated payroll, initial inventory costs, license and permit fees, construction costs, and more.
Once you have a ballpark figure of the amount you need, you can apply for a small business loan. This is where your thoughtful business plan will shine, showing potential lenders how serious you are about your gas station and explaining why it’s a smart investment.
Find a Fuel Supplier
What is a gas station without gas? If you’re new to the world of gas stations, you likely don’t know where to buy fuel wholesale and will need to research local fuel suppliers, also called fuel jobbers. Gas suppliers usually make their profit from a portion of your fuel sales, so shop around and compare deals to ensure you maximize your profit margin.
Branded vs. Unbranded Fuel
You also have to decide if you’ll sell branded or unbranded fuel. A fuel supplier might have branded supply agreements with a major oil company, like Shell or Mobil. Each brand’s fuel contains small amounts of additives that are supposed to help with performance. The branded fuel might cost slightly more, but you gain customer trust by having a recognizable brand attached to your gas station.
Unbranded fuel does not have a brand name attached to it, so you will have to use your own business name and image. Unbranded fuel is usually a few cents cheaper per gallon, and a good jobber will have multiple suppliers available so you can chase the best price. However, you miss out on brand recognition. If it comes down to your self-branded gas or a Chevron across the street, a customer might be more likely to choose the brand they know.
Reliability
Beyond profit margins and fuel type, you need to ensure you can rely on your supplier to keep you well-stocked. Venture Fuels is a fuel supplier in the Midwest known for offering more than just low fuel prices. With our Smart Fuel Program, we monitor sales, the market, and truck availability to offer the best price possible and ensure you always have product.
Find Vendors for Food, Drinks, and Other Goods
Most of your profit will come from what you sell inside your convenience store, so you need vendors you can trust to deliver your inventory on time. How many distributors you need depends on what you want to carry. Most distributors partner with multiple brands, so you can likely find a single supplier for all your snacks and beverages.
However, if you carry tobacco products, alcohol, sundries, beauty products, etc., you will likely need to add more vendors to your list. Just like with your fuel supplier, you’ll want to do plenty of research and compare deals to find the right distributors for your bottom line.
Protect Yourself with Business Insurance
Owning a business comes with a ton of financial risk, and gas stations are no exception. Employee accidents, customer injuries, equipment breakdowns, leaks, robberies, fires, property damage — you never know what might happen! Having business insurance will help protect you and your assets.
Secure Permits and Licenses
Before opening, you need to ensure you have all the proper permits and licenses. What you need can vary from state to state, but you should expect to have:
Certificate of Occupancy
Health Inspection
Tank and Pump Inspections
Building and Fire Inspections
Alcohol, Tobacco, and Lottery Licenses
Water Discharge Permit
Motor Fuel Outlet License
Market Your Gas Station
Other businesses tend to rely on various marketing tactics like print ads, online ads, blogs, events, etc., but gas stations usually only need road signage. Most people are just looking for the nearest gas station they can pull into, so you want to make sure yours stands out. Invest in highly visible signage that makes it easy for passing drivers to see and find your business.
After your business is up and running, you want to monitor your online presence on websites like Yelp and Google. Even just a few bad reviews can turn tons of customers away. Make sure to address any negative feedback left by previous customers and work on fixing specific problems mentioned, like dirty bathrooms or unkind employees.
Set Yourself Up for Opening Day and Beyond
You created a plan for opening your gas station, but you also need one to keep it running. Some important tasks to take care of include:
Establishing hours of operation
Tracking and organizing inventory
Adding security measures like cameras and alarms
You should take care of these tasks before opening day, but know they aren’t set in stone. If you aren’t receiving enough traffic late at night to justify staying open, consider adjusting your hours. Or, if you need to amp up security, add new cameras. It will be a learning process as you go along.
Turn to Venture Fuels for Help
Ready to make your gas station ownership dreams a reality? You'll need a fuel supplier you can trust. Venture Fuels not only supplies fuel at low costs, but we're also here to help you succeed with our support services. Contact us today for a consultation.