Buying or leasing a gas station can be a great opportunity, but it pays to go into a deal with your eyes open. Here are some things to think about when making your decisions.
1. Branded or Unbranded? Do you want a branded station with one of the major oil companies such as Shell, Exxon or Mobil, BP or Chevron, or do you want an unbranded station?
A branded store gives you support, training and advertising through promotion of its brand in addition to the brand recognition that these majors have within the industry. Most brands have rolled out reward programs that can greatly benefit station owners and has been proven to drive more gallons. Learn about the different brand reward programs here.
With the brand comes standard practices that must be upheld to maintain the image and quality that the name brings. If you are willing to deal with the rules of the brand, you can benefit greatly from the name recognition.
Another major benefit of a branded store are the branded consumer and fleet cards that save significant money in credit card fees. With your average branded card having 0% transaction fees versus your typical third party credit cards that have anywhere from 1.95% – 2.35% transaction fees, you can see that the savings add up for each customer.
Going unbranded on the other hand can be a bit of a gamble. Consumers place a value on a name brand, so that means an unbranded will have to make a name for themselves from scratch. This isn’t easy in a market saturated with quality brands on every corner, however it can be done in the right place with the right person behind the helm of the business.
2. Get help if you need it. A distributor like Southeast Petro can provide a list of stores available for purchase or lease, help you find financing and offer brands that will contribute to your success.
3. Examine what you will inherit from the previous owner. For instance, check the previous owner’s supply contract. If the contract is transferrable, you will assume the contract. Make sure you read through it and ensure that nothing in the fine print will hurt you or your business.
Also check to see if the station is profitable, with the help of a professional accountant if necessary. Count customers yourself. In addition, be sure the facilities are inspected for leaks, soundness of construction and any other issues.
4. Consider all aspects of your location. The location as well as the traffic pattern are important to your success. A busy intersection may not be ideal if there isn’t easy access to your store from both directions, but corner lots and highway exits can drive business in bigger cities. In a non-urban area, look for a densely populated residential area.
Also know local laws that will have an impact on your location, from business to environmental regulations. In addition, check to see if road construction or other potential threats to the business are scheduled.
5. Ensure access for potential customers. Is the station you’re considering in an area frequented by trucks or business fleets? Make sure the big trucks and fleet vehicles can get to your pumps and that they can get in and out of your station easily.
6. Understand competition and demographics. If there’s too much competition in the area, it may hurt your business. But if there is little or no competition, the lack could be a sign that there isn’t enough activity to support businesses in the area. Do research on the demographics of the location by looking up government census data on how many people are in the area and their ages, earnings and other information. It is also wise to check with local building and permitting departments to see if any of your major competitors have plans to build near the property you are trying to buy. Find your building department by county here. Make your determination about how you will be able to compete before you buy, so that you are not caught off guard.
7. Keep in mind the safety of the area and the station. Check police records or talk to local police officers about how safe the area is. Gas stations are especially vulnerable to robberies. Even if the area seems safe, make sure you have sufficient lights, windows and security cameras to deter criminals.
8. Look for a station with a nice convenience store. A large, well-maintained convenience store can draw customers and earn you more money.
9. Be clear on what comes with your deal. Are you buying the land and the store? Are there separate owners for each? What about other businesses on the property, such as a car wash? Or are you just leasing the store?
10. Draw on all your resources to make the best deal. A lawyer can help you review the details. And a distributor such as Southeast Petro can provide you with additional advice and resources, as well as follow-up support to help you make your new station a success.
