How to Start a Gas Station for Free
Starting a Gas Station
Get a general idea on how a gas station operates. This article is for those who plan on putting up their own gas station. It also provides information on the different types of gas stations and gas brands.
A gas station is a solid investment because public demand for fuel is constant.
Getting Started in the Business
Getting Into the Convenience Store Business
There are more than 144,000 convenience stores in the United States, with 62 percent of stores operated by individual owners. If you’re thinking about becoming a part of this dynamic industry, here are six steps to consider when opening a store:
- Business Plan
- Design/Store Construction
- Selling Motor Fuels
- Employee Training
- Workplace Safety/Compliance
But perhaps the real first step is to become a NACS member — NACS helps retailers grow and maximize profitability through its resources, data and advocacy on the industry’s behalf, and can assist with all the steps in your journey to become a successful retailer.
Before getting started, here are few questions to consider:
- Should I acquire an existing store or build a new one?
- Should I purchase or lease the building?
- Should I purchase or lease the equipment?
- Should I buy a franchise?
- What is the traffic count where my store will be located?
Also, use the services of professionals in your search for a location, including industry veterans, real estate brokers, attorneys, site selection companies and certified public accountants. Additional resources include:
- NACS State of the Industry Report: The most comprehensive collection of data on financials, store operations, merchandising, motor fuels sales and quartile analysis.
- How Small Operators Can Grow Their Business: Handouts from the 2006 NACS Show presentation.
- International Franchise Association: IFA represents all aspects of the franchise community and works to protect, enhance and promote franchising.
- State Associations: Find contact information for state and local convenience store associations in your area.
- U.S. Dept of Commerce Minority Business Development Agency: Provides business development services to minority entrepreneurs.
- U.S. Census Bureau: Collects data about the American population. You can find out population characteristics for the location in which you are planning to open your convenience store.
- U.S. Chamber of Commerce: offers valuable resources that can help you start and run your business.
Resources to buy or sell a convenience store or gas station
(These are some companies that provide information on buying or selling stores. Listing them does not imply a NACS endorsement.)
- GasStations.com: Buying and selling of gas stations, convenience stores and equipment resources.
- BizBuySell; NRC Realty Advisors LLC: Clearinghouses for those interested in buying or selling businesses and store sites.
- Convenience Store Business Plan Start-Up Guide: Helps new buyers determine where to begin in the convenience store business.
The NACS State of the Industry Report has information that can assist in the development of a business plan. The report contains information on sales, expenses, trends and other statistics about the industry. Using this resource will not only help in your own analysis, but will add credibility to your plan. Additional resources include:
- NACS State of the Industry Compensation Report for 2009: The latest snapshot of compensation levels, turnover and healthcare costs for the convenience and petroleum retailing industry.
- Membership Directory (For NACS Members Only): Lists retail members by state/country and company name and lists supplier members by products/services offered and company name.
- Loyalty Innovations-The Best Program for You and Your Company: Ideas from the 2008 NACS Show presentation.
- Attention Independent Operators - Work Smarter Not Harder: Speaker notes from the 2007 NACS Show session.
- Jobbers Serving Retailers - Components of a Great Business Relationship: Tips from the 2007 NACS Show workshop on building relationships with jobbers.
- Best Ideas For Increasing Profits and Saving Money: Presentation notes from the 2006 NACS Show.
- Risk Management: How to protect your business and minimize risk.
- Small Business Federal Tax Responsibilities: Guidance on tax obligations.
- U.S. Small Business Administration: According to the SBA, the major components of a business plan are the description of the business, the marketing plan, the financial plan and the management plan. SBA resources include, but are not limited to:
- Assessment Tool: Are you ready to start a business? This tool is designed to help you better understand your readiness for starting a small business.
- Financial Assistance: Provides a number of financial assistance programs for small businesses. Included is information on organizations and sites that can assist you in locating special purpose grants.
- CDC/504 Loans: SBA loan program is a long term financing tool for economic development wth in a comunity.
- American Recovery and Reinvestment Act of 2009 (Recovery Act)
- Small Business Planner: Manage your business from start to finish. Careful planning is fundamental to success. Includes information and resources that will help you at any stage of the business lifecycle.
- Business Licenses and Permits: Every business needs one or more federal, state or local licenses or permits to operate. Permit Me, a tool from Business.gov alows you to get a listing of federal, state and local permits, licenses, and registrations you'll need to run a business.
- Creating a Business Plan: From the Harvard Business School Pocket Mentor series, find information for a successful plan need and how best to present it.
“Curb appeal” is important for a successful store, meaning it should look inviting, clean and friendly to customers.
Here are a few questions to consider:
- What are the elements of making your exterior appealing?
- Has my store design maximized sales opportunities at the highest impulse locations?
- Does the store layout afford my employees an unobstructed view of the fuel pumps?
- NACS Ideas 2 Go DVDs: Don’t reinvent the wheel. Learn from what other leading convenience retailers are doing to develop profitable and unique stores. Find new business models and innovative strategies that redefine convenience and help you remain competitive.
- NACS Green Toolkit: A guide designed to provide solutions that will help retailers implement a green and sustainable operation — whether it’s a remodel or a new store build.
You’ll need to decide whether to offer branded or unbranded motor fuels. Branded fuel is the fuel offered by the major oil companies ExxonMobil, BP, ConocoPhillips, ChevronTexaco and Shell – or by other major refiners such as Valero. Typically, branded arrangements allow retailers to benefit from marketing support and unique additive packages. Retailers that sell unbranded fuel typically sell it as their store brand. Unbranded stores typically have more options in how and where they can obtain fuel, and that carries both challenges and opportunities for retailers.
- Petroleum Economics: Handouts from the 2006 NACS Show presentation.
- U.S. Environmental Protection Agency: Provides information on EPA regulations and compliance issues that relate to the storage and sale of petroleum products.
- Petroleum Marketers Association of America: Represents marketers of all types of petroleum products including motor fuels.
- Society of Independent Gasoline Marketers of America: Represents independent chain retailers and marketers of motor fuel, both branded and unbranded.
- Petroleum Equipment Institute: Source of information for the petroleum handling equipment industry.
NACS offers customized onsite training for retailers on topics such as:
- Inventory Loss Prevention
- Robbery and Violence Deterrence
- Customer Service and Handling Difficult Customers
- Effective Communication Skills
- Time Management
- The Human Resources Process from Recruiting to Termination
To discuss onsite training, contact Michael Davis at (703) 518-4246
Additional NACS training tools and resources include:
- Delivering the Difference: The NACS Human Resource Series: Learn all you need to know about recruiting, hiring, training and retaining employees.
- Employee Selection Tool: A cost-effective tool to help convenience store operators improve customer loyalty and reduce employee turnover by hiring right the first time.
- Be Our GUEST: The NACS Guide to Good Customer Service: Interactive tool to teach your employees how to use the GUEST approach to be a good host and provide great customer service.
- NACS Techniques of Alcohol Management: Designed to teach store managers and employees how to legally sell alcohol products.
- Mystery Shopping Providers Association: Find a list of companies that will mystery shop your store.
- Robbery Deterrence CD Training Program: trains employees with proven, solid, every day practices to avoid industry related crimes.
Compliance is the sum total of all state, local and federal rules, regulations and laws to which business owners are expected to adhere. Resources include:
- U.S. Department of Labor: A good source of information about federal labor laws and regulations.
- Occupational Safety and Health Administration: Information on federal workplace safety and health regulations.
- U.S. Food and Drug Administration: Information about regulations concerning the merchandising and sale of FDA-controlled products.
- U.S. Environmental Protection Agency: Provides information on EPA regulations and compliance issues relating to the storage and sale of petroleum products.
- Coalition for Responsible Tobacco Retailing - We Card: Laws and regulations on the sale of tobacco.
Products of Gas Station
Gasoline and diesel are two most common types of fuel sold in any gas station. However, since the advent of environmental awareness, other gas stations deemed it fit to carry alternative fuels such as bio-diesel, hybrid fuel, hydrogen fuel, and ethanol. Other products typically sold are liquefied petroleum gas and compressed natural gas.
Premium vs. Discount
In the US, gas stations are classified into two groups: those that carry premium brands and those that carry discount brands.
Some of the more recognized premium brands are Exxon, Chevron, Texaco, Valero, BP, Citago, Shell, BP, and Sinclair. Notice that all these brands are international gasoline brands. Some local brands however are also categorized as premium. For example, Petrobras, ESSO, PENEX, and Petro-Canada.
What sets a premium gas station apart is its visibility. They have a branch in almost every corner and they make use of tall signs showcasing their familiar brand logo. They also have brighter lighting. The service they offer is top notch and they aim to provide convenience for their customers. Often, they are cleaner and more modern.
Discount brands, on the other hand, are quite smaller independent stations. Often they are considered as regional chains. Some examples of discount gas stations are Rotten Robbie, Valero, ARCO, and USA Gasoline.
Their gas prices are usually lower compared to the premium brands. This is why many buy wholesale gas from them. In terms of location and visibility, discount gas stations are few and far between. They are typically located a good distance from freeway exits and highways. Their services are not up to par with premium brands as well as their technology.
A - Begin by finding an ideal location for your gas station. The best way to go is setting it up in a high traffic area. You may seek the assistance of local realtors. The usually know more about sale listings. Once you have viewed the property and it has passed your criteria, commit to it.
B - After you have secured a location, you can now focus your attention to finding a good source for your product. Talk to as many oil company representatives as you can. This will enable you to compare rates. Upon finding the best deal, have a solicitor review the contract for you. Caution must be observed on the legal aspects of the deal.
Get in touch with the local state agencies and file all the mandatory paperwork such as license and permits. Also, get in touch with the local fire department and find out what their requirements are and make sure your gas station meets these requirements.
C - Create a working business plan. Make sure you include a provision on monitoring cash flow. Also, include marketing techniques to promote your gas station.