For those wanting to get into a new investment opportunity, a gas station is a good place to start. After all, gas stations are considered a necessity to car owners and public vehicle operators. But just like any investment, the right information and knowledge can spell the difference between a successful and a failed business venture. We’re here to help inform you of everything you need to know when it comes to buying a gas station.
Deciding to buy a gas station
Gas stations prove to be a popular investment because of its lucrative nature as it provides the owners with a stable yet easy business to operate. If you aren’t convinced yet, here are some facts that may lead you to consider this as a worthy investment:
- Due to the business of selling gasoline, the sales will be fixed, regulated, and controlled by the market. This allows you to take a back seat in the fuel sales strategy and instead focus on your convenience store sales or other offerings.
- Most gasoline stations have space for flexibility, letting you operate a car wash, repair shop, or convenience store for more means of sales on the side.
- In the foreseeable future, gasoline will remain to be a product with high-demand as it is needed regularly by consumers.
- Gasoline stations have a low labor cost as it does not really require skilled workers unless you operate a repair shop. There is a simple learning curve even for inexperienced workers, which makes it easy to hire and train gas station attendants and managers.
- In the Philippines, 2018 saw the increase of gross revenues among its top three gas station brands with Phoenix Petroleum doubling from P44.5 billion to P88.6 billion, while both Petron and Shell recorded a 28% growth in their gross sales. As for 2019, Shell Philippines ended their year with an increase of 11% on their net income with P5.6 billion, while Petron ended their 2019 with an income of P2.3 billion, and Phoenix reported that their operating income is up by 12%.
Things to look out for before buying a gas station
Before you make that final decision, all buyers need to exercise their diligence by putting in the right research. We have simplified that process for you with this mini-checklist of things you need to know, and questions you should be asking.
- Condition of Gasoline Pumps and Fuel Tanks – Just like any equipment, this depreciates over time. It is important to know its current condition before deciding on anything. If the station is from an already established franchise, then records of its condition would be easy to come by due to the regular monitoring done.
- Reported Profits from Owner – This will be your basis in checking if the venture is a good one or not. Check out both the monthly and yearly profits and ask yourself if the business is lucrative. What are the trends in their dips and gains? Do the financials hold up to the costs?
- Required Renovations of the Property – What is the current situation of the infrastructure? Make sure to have laid out the information if there are any deadlines for its needed renovations. Are there any damages such as leaks that still need to be fixed?
- Condition and Inventory of Convenience Store – This is where most of your sales will come from so this step is very vital. Check if there are any machines such as freezers or snack dispensers that need any fixing. Who are the vendors that you will be reaching out to in order to fill all of the shelves?
- Location and Demographics – Knowing the area and if it is a strong one is also important. Whether it’s located near a highway or residential area can tell you a lot of things about how you can position yourself as a gas station. What are the nearby landmarks? Is there a new construction site close by?
- Current News and Status of Liquor and Tobacco – This is information you have to be on the lookout for especially when the government announces liquor bans on certain occasions. Be more aware of similar ordinances you must comply with in order to sell your products smoothly.
Remember that while the prospect of earning a lot of income from this venture may be exciting, exercising the right diligence is always important especially as owning and operating a gasoline station is not a cheap venture. Once you have made the right research and have decided, you’re going to need to know where to start. You may start with service station equipment that is needed the most in your gasoline station such as gasoline pumps and fuel dispensers. Having the right solutions provider for your service stations is a big help in your first step to being a station owner. Learn more about what we do for gas stations and how we can help be your station partner here.