Do you want to start a gas station and you want to know the cost breakdown? If YES, here are 15 factors that determine the cost of building a gas station. It is important to point out that there are several factors that can determine the actual cost of launching this type of business.
The truth is that some of the factors may not apply to you, because the business model and the kind of business a person wants to build would also affect the overall cost of the business. These factors are unique to each individual and this article may not cover such. Having said that, here are some of the factors that will influence the cost of opening a gas station in the United States of America;
Table of Content
- Estimated Cost Breakdown to Start a Gas Station
- 1. The Type of Gas Station
- 2. The Choice of Location
- 3. The Required Licenses and Permits
- 4. The Type of Facility
- 5. Your Products and Service Offerings
- 6. The Number of Gas Dispenser or Pumps Available in the Gas Station
- 7. The Cost of Hiring and Paying a Business Consultant and Attorney
- 8. The Cost for Branding, Promotion and Marketing of the Gas Station
- 9. The Cost for Furnishing and Equipping the Gas Station
- 10. The Cost for Insurance
- 11. The Cost for Registering the Business
- 12. Source of Your Supplies
- 13. Cost of Recruiting and Training Your Staff
- 14. The Cost for the Purchase and Customizing of Uniforms, Shoes and Protective Gear for Your Employees
- 15. The Cost of Grand Opening of the Gas Station
- How Much Does It Cost to Buy a Gas Station Franchise
- Can a Gas Station be Bootstrapped on a Lean Budget from Home
Estimated Cost Breakdown to Start a Gas Station
These are the key expenses you are expected to make when starting a medium scale but standard gas station company business in the United States of America;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
- Marketing promotion expenses for the grand opening of the gas station in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant (including writing business plan) – $2,500.
- The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
- The cost for leasing a standard facility in a good and centralized location along a major road or expressway – $250,000
- The cost for remodeling the gas station facility and construction of underground gasoline tanks/reservoirs – $400,000.
- Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
- The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for start-up inventory (supply of nonautomotive fuel, automotive fuels (e.g. diesel fuel and gasoline), cooking gas, and automotive-related goods) and for fuel dispensing machines and equipment (automobile repair tools, vulcanizing tools, and wheel alignment tools) – $550,000
- The cost for the purchase of gasoline tanker – $45,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost for the purchase of furniture and gadgets (Telephone, printing machines, computers, tables and chairs et al) – $14,000.
- The cost for building and hosting a website – $600
- The cost for opening party – $8,000
- Miscellaneous: $10,000
You will need an estimate of two million, five hundred thousand dollars ($2.5 million) to successfully set up a medium scale but standard gas station company in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with more than one outlet in key locations within same city.
Starting a small scale but standard gas station company business that can only retail automotive fuels (e.g. diesel fuel and gasoline), retailing cooking gas, and selling automotive-related goods et al in just one location in the United States of America will cost about four hundred and fifty thousand dollars to five hundred thousand dollars (b to $500,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
When it comes to starting a standard and large scale gas station with several outlets in key cities in the United States of America, a gas station with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over seven million, five hundred thousand dollars ($7.5 million).
15 Factors That Determine How Much It Will Cost to Build and Open a Gas Station
1. The Type of Gas Station
A major factor that will determine the overall cost of opening a gas station in the United States of America is the type of gas station the owner plans to open. Gas stations offer one of three types of service to their customers: full service, minimum service or self-service.
A full – service gas station has attendants that operate the pumps, often wipes the windshield, and sometimes checks the vehicle’s oil level and tire pressure, then collects payment and perhaps a small tip, a minimum service gas station has attendants that operate the pumps. This is often required due to laws in some cities that prohibit customers from operating the pumps themselves.
In self – service gas stations, the customer performs all required service. Instructions informing the customer of filling procedures and cautions are clearly displayed on each pump. Customers are expected to go to the store or a booth to give payment to an employee of the station.
Lastly, we have the unmanned gas stations that make use of card – lock (or pay-at-the-pump) system, these gas stations are completely unmanned. It is fact that these different types of gas stations have different start-up cost.
Another major factor that will determine the cost of opening a gas station in the United States is the location. In business, location is key part of what determines the success of the business. There are business consultants who are specialized in helping people choose an ideal location for their business; a location that will guarantee them to profitability.
Renting or leasing a facility in a location that is off the city center or off a major road will be less expensive when compared to renting or leasing a facility in a highbrow area; a location along a major road with high vehicular and human traffic.
3. The Required Licenses and Permits
In the United States of America, you cannot open a gas station without first applying for the mandatory license and permits. You would need operational license, building license, zonal permits, motor fuels retail outlet license, fire certificate and commercial vehicle operator’s registration for gasoline tankers amongst others. These license ad permits cost money and it will influence the overall cost of opening your gas station.
Please note that there may be several inspections you must pass before you can be issued your licenses and permits, and this will also cost you money. In order to get the overall cost of licensing and permits associated with opening a new gas station in the United States, we will advise that you reach out to your city government. You also need to consider state and federal requirements.
4. The Type of Facility
The type of facility for your gas station is also a major factor that will determine the overall cost of opening a gas station business in the United States of America. As regards the facility, you have the option of renting, leasing or constructing your own gas station facility from the scratch.
With renting and leasing, you might just have to spend extra to modify the facility to fit into the picture of what you have in mind, the number of pumps, reservoirs and tanks and additional facilities you want to attach to your gas station, such as a convenience store. Let us assume that you want to construct your gas station from the scratch.
It means that you will buy the land or a property, bring up your design and of course equip the gas station to fit into the ideal picture you have in mind. You will agree that you are going to spend way more when compared to people that rent or lease a facility.
5. Your Products and Service Offerings
Another key factor that will determine the cost of opening a gas station in the United States of America are the products and service offerings of the gas station. The fact that there are different types of gas stations means that these gas stations are designed to offer different types of services. The services offered by a full – service gas station are different from the services offered by self – service gas stations.
A full – service gas station has attendants that operate the pumps, often wipes the windshield, and sometimes checks the vehicle’s oil level and tire pressure, then collects payment and perhaps a small tip and a minimum service gas station has attendants that operate the pumps.
6. The Number of Gas Dispenser or Pumps Available in the Gas Station
Another very important factor that determines the cost of opening a gas station in the United States of America is the number of gas dispensers or gasoline pumps available in the gas station. The budget for opening a 15-pump gas station will be far above the budget for opening a 5-pump station.
Aside from the cost of purchasing and installing these pumps, it will also cost you more to position employees to man these pumps and the more the number of gasoline pumps you have, the more the money you are expected to spend.
7. The Cost of Hiring and Paying a Business Consultant and Attorney
If you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. A business consultant will help with drafting a workable business plan document for the gas station, a marketing plan and strategy, comprehensive SWOT analysis for the business, and other advisory or things that will help you with opening the business.
So also, an attorney will help you with registering the business, drafting contract documents and offering you all the legal expertise that will help you start the business on the right foundation. These services will cost you money and it will indeed influence the overall cost of opening a gas station in the United States of America.
8. The Cost for Branding, Promotion and Marketing of the Gas Station
The cost for branding, promoting and marketing the gas station are yet key factors that will determine the overall cost of opening a gas station in the United States of America. Trust me, if you need massive results as it relates to winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing.
It is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your gas station.
9. The Cost for Furnishing and Equipping the Gas Station
Another factor that will determine the cost of opening a gas station is the cost of furnishing and equipping the gas station. You will quite agree that aside from the basic facilities such as gasoline pumps, you can also add up a convenience store.
You will need to budget for items like – a fridge, deep freezer, microwave oven, storage hardware (bins, rack, shelves, food case), counter area equipment (counter top, sink, ice machine, etc.), (Flat Screen TVs, sound system, DVD players, Satellite dish and decoder, furniture (table, stools and sofas), telephones, filing cabinets), store equipment (cash register, security, CCTV, ventilation, signage), and security and fire alarms and prevention gadgets amongst others. All these will cost money and it will influence the overall cost of opening your gas station.
10. The Cost for Insurance
The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a gas station in the United States of America. In the United States, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from.
Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your business.
11. The Cost for Registering the Business
The cost of registering the gas station is yet another cost that will influence the overall cost of opening a gas station in the United States of America. Although the cost of registering a business an obtaining all the needed documents is affordable, it will no doubt add to the overall cost of opening your gas station.
12. Source of Your Supplies
Another major factor that will determine the cost of opening a gas station in the United States of America is the source of your supplies. A gas station which is also called a petrol station, filling station, fueling station, or service station is a business facility which retails gasoline (petrol), diesel and lubricants and other supplies if they run a convenience store.
So, as expected, it will cost more to transport these supplies from a farther distance and that will indeed influence the overall cost of running the gas station – the cost is expected to be more if you don’t have your own gasoline tanker.
The fact that you are opening your gas station as a new business means that you are expected to recruit and train your staff to conform to the kind of gas station you want to operate. The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire expect trainers that will help you train and bring your new hires up to speed.
When it comes to starting a standard gas station company business on a large scale, you would need the services of the following professionals;
- Chief Executive Officer
- Gas Station Manager
- Human Resource and Admin Manager
- Pump Attendant
- Convenience Store, Coffee Café, Snacks Bar, Cigar Lounge Manager
- Vulcanizing Services, Wheel Balancing, Wheel Alignment and Automobile Repairs and Maintenance Manager
- Car wash Manager
- Security Guard
14. The Cost for the Purchase and Customizing of Uniforms, Shoes and Protective Gear for Your Employees
Another factor that will determine the overall cost of opening a gas station in the United States is purchasing and customizing of uniforms, shoes, caps, protective gears amongst others. Pump attendants, other workers and security personnel all have different uniform and they are expected to put on these uniforms when on duty. All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a gas station.
15. The Cost of Grand Opening of the Gas Station
No gas station opens its door for business without first organizing opening party to officially launch the business. This means that the cost of the grand opening of the gas station is part of the factors that will determine the overall cost of opening the business.
You can choose to do a soft opening if you operating on a low budget or you can go for a grand opening party. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the gas station.
These are some of the factors that will determine the overall cost of opening a gas station in the United States of America. Please note that there are other factors not listed above that will sure influence the overall cost of opening your gas station which is why we will advise that you work with a result driven business consultant in your city to give you the needed guide.
How Much Does It Cost to Buy a Gas Station Franchise
In the United States of America, the Average Cost of Purchasing a Gas Station Franchise is: Annual costs $250,000 to operate and you need around $160,000 annually to buy and stock products. Examples of 3 Well – Known Gas Station Franchising Companies in the United States of America are;
- Shell Gas Station Franchise
- Chevron Gas Station Franchise
- Exxon Gas Station Franchise
Can a Gas Station be Bootstrapped on a Lean Budget from Home
If you a looking for a small scale business that you can successfully bootstrap on lean budget right from your home, then you should not consider starting a gas station business. Because of the nature in terms of product, size and cost of the machines and equipment involved in starting and operating a gas station company, it is obvious that it cannot be bootstrapped on a lean budget from home.
As a matter of fact, the gasoline and other products that are sold in gas station can be highly volatile hence you will not get permit from the required authority to build a gas station within your residential apartment.
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