How to Start a Gas Station?


There are several ways to own a gas station. While some options are more feasible in a specific set of circumstances, most others depend upon your choices and state of affairs. Owning a gas station may incur high initial cost outlays, but it is an incredibly lucrative business in the long run.

How to Start a Gas Station?

Typically, you can own a gas station in three significant ways. If you want to choose a faster route, you may either purchase a business put up for sale or buy an existing gas station. The third option, a relatively long one, involves building your gas station from scratch.

Every option has its own merits and demerits. Irrespective of which way you pick, you will need to invest some capital. If you wish to be the owner of a gas station, you will need to learn the equipment and machinery used in the gasoline industry.

How much do gas station owners make?
Successful gas station owners can make anywhere from $50,000 to $100,000 annually. Usually, gas stations that do more (selling various products) than gas tend to make more money. However, salary depends on the number of gas stations, size, traffic frequency, location, etc.

How much does a gas station cost?

How much does it cost to open a gas station in 2021 in the US?

The minimum investment is:
$2,500 for legal fees
$2,800 for insurance premiums
$3,200 for US state permits
$5,500 for promotional signage
$9,000 for initial inventory for a gas station
$25,000 for setting up a convenience store in a gas station
$110,00 for setting up the gas station
$150,000 for purchasing a gas station building

When we ask how much it costs to own a gas station, it is tough to say the round number, but the range is from $150 000 to $200 000 average in the US.

Glance through the details of each of three main ways to own a gas station:

Purchase a Gas Station Franchise

This is one of the easiest and fastest routes to be a gas station owner. To do this, you will be required to pay a certain amount of fee to an existing corporation. This will enable you to begin a business in their name and enterprise model.

There are numerous advantages of a franchise form of business offers; one key benefit is working under a well-renowned brand identity. Such established entities follow powerful business models that have a validated history of success. Besides, the parent corporation owners are concerned about your business’s performance, and thus, you will have a senior authority to assist and guide you. This applies even more if you have agreed to give them a share of your net profits.

Yet, these benefits are also accompanied by some drawbacks. As per your franchise agreement, your expenses may be really high, especially if you need to give a portion of profits to the holding company. In terms of the expansion of business and its services, the regulatory requirements may be too constrictive. So, it may become tough to earn substantial profits from the business.

Gas station franchise costs around $250 000 where an initial investment fee is at least $225.000 as well as ongoing franchise fees of $25,000.

Further, the parent company gets to select your station’s location and decide the number of stores that can be opened within a particular distance. Their preferences may not always seem beneficial to you. Moreover, if any other franchise of the company gets into trouble, it can fetch a huge amount of media attention. This will, in turn, hamper your business sales as you also share the same brand name.

Purchase an Existing Gas Station

An alternate way to become a gas station owner is to buy an ongoing business. For this, you need to place a bid or make an offer on an existing gas station business. This money is then given to the present owner, after which you become its new owner.  Purchasing an existing business offers multiple benefits since it has already proved successful.  But before you make this investment, do conduct a thorough research about its profits, costs, taxes, and related information.

There are a few pitfalls of owning an existing gas station. Firstly, you have to gain the trust of customers who dislike a change in ownership. Secondly, you may face complications if the previous owner lacks proper records of transactions with creditors, suppliers, and other stakeholders. To avoid these issues, it is advised that you do a critical analysis of the reasons behind the enterprise’s sale before purchase. This will prepare you for the efficient handling of its financial accounts.

Build from Scratch

One of the most difficult yet also the most flexible option is to start your gas station from scratch. This option entails a sufficient amount of time, effort, and money in the early phases. But the major advantage is that it allows for maximum independence and control. You are the sole decision-maker of your business and its operations. You won’t have to answer anyone for the choices you make or the business strategies you follow.

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Firstly, you are required to procure licenses for business ownership and gasoline sale to start your own business. Then, you will have to search for suppliers of related goods and services.

The only demerit of building from scratch is that you have a lot of work to do. New business demands extensive advertising and promotions before it starts giving profits. In other words, you have to take care of the marketing part besides the operating side of your business. Due to the presence of established and well-known companies, you are likely to face a highly competitive market in the beginning.

Initial Investment and Capital

No matter which option you choose, you will require some initial investment and capital. Generally, you will have to get a business loan to make the starting purchase. There are also some licensing formalities and legalities to fulfill. Soon after the purchase, you are likely to invest in the workforce, accountants, and other employees to handle different aspects of your business. Besides, you will forge agreements with the relevant suppliers of gasoline goods. Then, there are marketing obligations and requirements to establish your presence in the industry.

Apart from the core services, gas stations sell fried fast foods, coffee, and similar goods. Some gas station brands offer beverages under their own company name.

Daniel Smith

Daniel Smith

Daniel Smith is an experienced economist and financial analyst from Utah. He has been in finance for nearly two decades, having worked as a senior analyst for Wells Fargo Bank for 19 years. After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management. At Nimblefreelancer.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification. Read more on Daniel Smith's biography page. Contact Daniel: daniel@nimblefreelancer.com

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