Top 9 Tips to Start Your Own Gas Station Successfully

Starting a gas station is typically the type of business that could help you generate a good amount of money if you can handle it well. Although you may face a few unique challenges that make starting your gas station business seem complex. However, this should not discourage you from opening your own business and feeding your entrepreneurial spirit.

If you are keen to open your own gas station, try following the tips below. By maintaining some of these necessary steps, you can easily begin your gas station business and handle the whole process successfully.

1.               Adding Important Information to your Business Planning

First, draw up your business plan for the gas station. Then, go to an accountant and ask for a realistic professional opinion, making sure you include all of the details. Discuss your estimated expenses, as well as the expected income. Your business plan may involve several important pieces of information rather than just a simple outline.

If you can plan a fully fleshed-out business with a description of the products, services, and amenities, such as a car wash, air stations, vacuum stations, etc., it will be more attractive to investors and gas station lenders. Also, make sure to add an analysis of your competition and discuss the analytics of the local market.

Explain why your business might do well in the competition by providing a detailed plan of your business, organization, and management system. Remember to include a marketing and advertising strategy and also provide the goals and mission statement as well.

2.               Researching Permits and Insurance

Don’t forget to research and find out what kind of permits and insurance you might need to operate your gas station, which may vary by state, country, and county. Check to see what kind of products you may have in your gas station, and even get legal permission if you are required.

You may be required to carry liability insurance in the case of a client being injured. You will find that there are several insurance policies available to businesses that cover certain occurrences. You must make sure that you are not liable for any harm that may occur. To establish legal contracts, you might need to speak with an attorney.

3.               Making Decisions about Having any Franchise Agreement

Consider whether or not you want to become a part of a franchise agreement. For instance, if you are willing to open up a BP or Sunoco station, you would be becoming a part of a franchise, which will allow you to use the products and trademark, as well as any business models of the bigger company. 

In the case that you do decide to purchase a franchise, don’t forget to consult with a business attorney before signing any agreement.

4.               Budgeting

You will need to add funds for the cost of start-up and operation. The budget plan also needs to include real estate costs, which might have the purchase of an existing gas station or your purchase of any land along with its building costs. Consult with a professional if you’re confused about what would be a better option with your budget.

Permits and insurance might also become costly, so you need to include this in the budget estimation as well. Be sure to add an estimation of legal costs, such as the attorneys' fees, for outlining the business contracts and consultations.

You will need funds for the set-up of the gas station, so be sure to add an estimation of the expenses for advertising, promotions, and signage. Include the cost of your gasoline supply and convenience store inventory in your budget planning. You could try researching store warehouses and gasoline suppliers to see if you may get a contract that is more cost-efficient.

Remember to plan the budget for your employee costs as well. Count in the day-to-day expenses, such as gasoline and other utilities. Doing research in the industry might help you decide the standard employee salary, as well as the cost of gasoline.

5.               Choosing an Ideal Location

The location of your gas station can be a huge influence on how much traffic you might attract, so this needs to be a basic priority when you’re brainstorming and planning to open a gas station.

Make sure to have a market analysis so that you can choose a location that will be beneficial to your business. Decide whether you would want to pick a site where you have a ferocious rival directly across the street or would like to serve families on vacation and truck drivers from a remote spot along a busy highway.

When picking a business location, you should also research up-and-coming neighborhoods. These neighborhoods might be further out from big cities and may require gas stations for fuel to go the longer commutes without any worries.

To make more of a profit, try avoiding the locations where you see wholesale retailers offering deeply discounted gas prices.

6.               Registering a Business Entity

Each company operates as a distinct form of a business structure. Since there is no documentation needed to register as a sole proprietorship, you can start operating that way, too.

But, it’s risky to do so as it might be exposed to many dangers like leaks and burglaries. To make sure your personal assets remain protected, it might not be a good idea to register your business as a sole proprietorship.

Limited liability companies (LLCs) and corporations are the two most popular company structures that you should take into consideration for your gas station needs. Consider discussing it with a business attorney and determine which legal structure would benefit your needs.

LLC owners have the option of choosing between being taxed as a corporation or as a sole proprietorship. Additionally, they usually pay lower annual fees, making this business structure good for you if you want to stay small and have only one gas station, but you might see them having more difficulty trying to raise money from investors.

Corporations may be a better option for you if you expect or want to raise capital or get any profit from the investors. If you’re willing to grow the gas station brand and compete with industry leaders, or you are expecting to have your own chain of gas stations, then a corporation might be the ideal business structure for you.

To register your business as a corporation or LLC, you’ll be required to consult the Secretary of State's office either in person or online. You might have to complete some paperwork and pay a fee. In some countries, you may also need to publish a notice in the local paper.

7.               Choosing a Business Name

You need to make sure that the name of your business is distinctive when planning your setup of a gas station. You want to ensure that your name is not mistaken for the name of another organization. Consult with the Secretary of State business and conduct a quick search so you can verify that your desired name is available. Also, remember to confirm whether or not the domain name is available.

8.               Registering for taxes

Since you are a small business owner, an employer identification number will be required to operate your business. This is a nine-digit number called an EIN. It will be used when you go to file your business taxes. You may apply for your EIN online with the IRS, it only takes a few minutes to receive it after applying. A tax ID might also be needed if your country's tax regulations say so.

9.               Obtaining a Gas Supplier Contract

You will need to obtain a gas supplier contract so that you can get the gas for your station. The supplier agreement will state that the gas supplier will receive a certain percentage of your gas sales. You’ll find different suppliers who will offer you different contracts, so the profit from gas sales varies around the globe.

Think carefully before signing a fuel contract with any local suppliers. Try shopping around for companies that might offer you more profit than other companies on your gas. The exception is when you must sign a contract with a specific association or company as per your franchise agreement.

Discuss it with your attorney and ask them to look over the contract with your supplier. That way, you can be sure there's no legal loophole and that all the agreements are beneficial for you as well.

Final Words

Opening your gas station may seem like a difficult process if you don't know the basics, so researching is a must if you want to open your business successfully. Knowing how and what to do will help you go ahead confidently.

To go through the whole process smoothly, make sure to follow the aforementioned tips whether you plan to buy your gas station or open one through a franchise. Analyze your business market from time to time, and always keep marketing your business to help it grow further.