Do you want to start a gas station business? If YES, here is a complete guide to starting a gas station business with NO money and no experience.
Okay, so we have provided you an in-depth sample gas station business plan template. We also took it further by analyzing and drafting a sample gas station marketing plan backed up by actionable guerrilla marketing ideas for gas station businesses. In this article, we will be considering all the requirements for starting a gas station business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Gas Station Business?
Starting a gas station or filling station or petroleum station as it is typically called in some parts of the world is indeed one of the means of owning a business portfolio in the oil and gas industry. This is for sure one business that has made a lot of people millionaires or even billionaires. It is true that playing in the gas industry might require loads of funds, but in the long run it sure does pay.
Choosing to start a gas station business also means that you have plans in place already. Plans like how you intend to raise the startup capital, get the required license and permits, how you can compete in the market, how you intend to make your business known to the people, as well as other important factors that must not be overlooked.
Before launching this type of business, it will pay you to carry out your market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your gas station business, it will not take you long before you break even and start smiling to the bank.
So, if you have made up your mind to start your own gas station business, all you need to do is read this article and you will be well equipped.
Starting a Gas Station Business – A Complete Guide
- Industry Overview
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 for motor vehicles. 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, while a minimum service gas station has attendants that operate only the pumps. This is often required due to laws in some cities that prohibits customers from operating the pumps themselves.
In self-service gas stations, the customer performs all the 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 go to a booth to give payment to an employee of the station, and lastly, we have the unmanned gas station that makes use of card-lock (or pay-at-the-pump) system, these gas station are completely unmanned.
The Gas Station industry over the years has experienced a modest amount of volatility. As a matter of fact, as more Americans acquire automobiles, the total vehicle miles increase and this gives room to increase in the demand of gasoline. So also, as per capita disposable income continues to increase, some automobile owners would choose to go for premium fuel, which is priced higher than lower-octane fuel.
Just like other industries, the Gas Stations industry has also experienced its fair share of ups and downs over the last five years. As a result of strengthening domestic economy and improvement in employment over the early part of the last five years, the Gas Station Industry also experienced improvement in performance.
The Gas Station industry is indeed a very large industry and pretty much thriving in all the parts of the world. Statistics has it that in the United States of America alone, there are about 10,719 licensed Gas Station businesses responsible for employing about 120,226 employees and the industry rakes in a whooping sum of $106bn annually.
The major breakthrough in the gas station industry came as a result of the increase in automobile ownership which can be traced to Henry Ford when he started to sell automobiles that the middle class could afford.
In a bid to stay afloat in the highly competitive gas station industry, owners of gas stations now go the extra mile to ensure that they make their facility welcoming and conducive for customers. Gas stations now have vulcanizing services, car wash, convenience stores, coffee bars, snack bars and cigar lounge within their facility so as to leverage on the opportunities around them to generate more income.
The gas station business will continue to blossom because people will always go to gas stations to fuel their vehicles, purchase kerosene and cooking gas or any other related services offered by gas stations. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own gas stations in the United States of America.
The gas station industry can be said to be a competitive industry, but it does not in any way stop entrepreneurs who are financially capable to still make headway in the industry. It is indeed a profitable industry especially when the business is well located. No doubt, busy highways and busy cities with growing population are highly suitable for a gas station. The catch is that if there are automobile users in any city, then that city would have need for a gas station.
Starting a Gas Station Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who need the products and services offered by gas stations cut across all genders; male and female, people from different religion and ethnicity, people with different financial means and businesses; hence the demographic composition for a gas station business is all encompassing.
The truth is that, when it comes to retailing gasoline, diesel, cooking gas, kerosene and the likes, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people or organization, but all those who own vehicles, power generating sets, gas cookers, ovens, steam boilers and so forth.
So, if you are thinking of opening your own gas station business then you should make your target demographics all encompassing. It should include everyone that owns automobiles; celebrities, public figures, politicians, business executives, students, sports men and women, young adults, teenagers, corporate organizations, haulage companies, transport companies, taxi drivers, schools and a host of others that commute along the road where your gas station will be located.
List of Niche ideas Within the Gas Station Business That You Can sSpecialize in
It is important to state that there is no known niche area when it comes to gas station business. Every player in this line of business is usually involved in dispensing nonautomotive fuel and retailing automotive fuels (e.g. diesel fuel and gasoline).
On the other hand, it is important to state that most gas stations also engage in automotive services (e.g. repairs, car washes and general parts), selling automotive-related goods, providing automotive-repair services, providing wheel alignment, wheel balancing, vulcanizing services and retailing of groceries and soft drinks.
The Level of Competition in the Gas Station Business
The competition that exists in the gas station industry is subject to the location that you choose to open your gas station. The truth is that if your gas station is the only gas station within reasonable miles (parameters), then you won’t have any direct competition.
On the other hand, if you are just starting out, then you must be ready to compete with multinational oil and gas companies that also operate gas stations all across the globe. So, it will be right to say the competition in the gas station line of business is tough.
The truth is that no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you dispense the correct quantity and good quality products per time and your customer services is top notch.
But over and above, there are several gas stations scattered all around the United States. So, if you choose to start your own gas station business in the United States, you will definitely meet stiff competition. Besides, there are larger gas station brands such as Shell Gas Station, Chevron Gas Station, Exxon Gas Station, Mobil Gas Station, Elf and Total Gas Station that determine the trends in the industry and you should be ready to compete with them for customers.
List of Well – Known Brands in the Gas Retailing Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time and have become known to people.
These are some of the leading gas stations/brands in the United States of America and in the globe;
- Shell Gas Station
- Chevron Gas Station
- Exxon Gas Station
- Mobil Gas Station
- Elf Gas Station
- Total Gas Station
- BP Petrol Station
- Esso Petrol Station
- Husky Gas Station
- Puma Energy service station
- Caltex Service Station
- Eni Gas Station
- Agip Gas Station
- Sunoco Gas Station
- Marathon Gas Station
- Speedway Gas Station
- Clean Energy – Fremont Pilot Gas Station
- Gas Stations USA Realty
- Murphy USA Gas Station
Gas station business is not a green business, as a matter of fact; you will come across several gas stations when you drive along any road in the United States. So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required amount needed for leasing/renting a landed property along a major road with government approval for a gas station and the amount needed to purchase the needed gas station equipment and tools, and the amount needed for the purchase of gasoline, diesels, kerosene and cooking gas supplies and also the running cost of the business.
Over and above, when it comes to starting a medium scale gas station company, you should be prepared to either rent or lease a standard and centralized facility along a major road or expressway with good human and vehicular traffic. This is going to be one of the areas where you are expected to spend the bulk of startup capital.
Other areas are the amount required in setting up a full-service state of the art gas station facility with the capacity to carry out automotive services (e.g. repairs, car washes and general parts), Nonautomotive fuel, retailing automotive fuels (e.g. diesel fuel and gasoline), retailing cooking gas, selling automotive-related goods, providing automotive-repair services, providing wheel alignment, wheel balancing and vulcanizing services, retailing of groceries and soft drinks et al, the scale/size of the business and also in paying your employees at least for the first three months of starting the business.
Starting Your Gas Station Business from Scratch vs Buying a Franchise
If you are looking towards starting a gas station business, it will pay you to purchase the franchise of a successful gas station. This is because people usually look for brand names when buying gasoline products. But it is important to state that the franchise of gas station does not come cheap, this is why aspiring entrepreneurs choose to start their own gas stations from the scratch.
Starting a gas station business from the scratch can be stressful, but it will give you the opportunity to build your own brand and perhaps compete at the national level via franchising. Please note that most of the big and successful gas stations around started from the scratch and they were able to build a solid business brand.
Possible Threats and Challenges You Will Face When Starting a Gas Station Business
If you decide to start your own gas station business today, one of the major challenges you are likely going to face is the presence of well-established gas stations within the location where you have your gas station. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in bad shape. Unfavorable international oil prices and government policies can also hamper the growth of your gas station especially when they increase the pump price of gasoline. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.
Starting a Gas Station Business – Legal Matters
- Best legal entity to use for a gas station
When considering starting a gas station business, the legal entity you choose will go a long way to determine how big the business can grow; some gas station business design their business for the neighborhood market, some for city wide market, while others for national and international market via franchising.
You have the option of either choosing a general partnership, limited liability Company which is commonly called an LLC, or a sole proprietorship for a business such as gas station. If your intention is to grow the business and have chains of gas stations all across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your gas station business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your gas station business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
In the United States and in most countries of the world, 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. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your gas station business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own gas station business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Fire Insurance
- Risk Insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection / Trademark
If you are considering starting your own gas station business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successful run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Is Professional Certification Needed to Run a Gas Station Business?
If you intend starting a gas station business in the United States of America, you are strongly encouraged to pursue professional certifications. These are some of the certifications you can work towards achieving if you want to run your own gas station business;
- UST Training and Certification / Class A/B and C Operator Certification
- HSE Certifications
- API WorkSafe Certification
Please note that all gas stations in the United States of America are mandated to obtain the appropriate certification, license and permits before they can legally operate in the United States of America and of course in most countries of the world.
List of Legal Documents You Need to Run a Gas Station Business
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own gas station business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Non – disclosure Agreement
- Motor Fuels Retail Outlet License
- Fire Certificate
- Commercial Vehicle Operator’s Registration for gasoline tankers
- Appropriate driver’s licenses for drivers
- Assistant’s licenses for assistants
- Health inspection Certificate
- Proof of ownership, proper identification and vehicle license
- Copy of license for the service support facility and/or a recent inspection report
- Health inspection Certificate
- Copy of license for the service support facility and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Gas Station Business
When it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start-up capital for your gas station business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choosing a Suitable Location for a Gas Station Business
Gas stations and most related businesses are part of the human lifestyle hence it must be situated in a good location; a location that is prone to both human and vehicular traffic if indeed you want to maximize profit from the business. This is why you can only find gas station along major roads and highways.
These are some of the key factors that you should consider before choosing a location for your gas station;
- The demography of the location
- The demand for the products and complimentary services offered by gas stations in the location
- The number of vehicles and vehicle owners in the location
- The purchasing power of the residence of the location
- Accessibility of the location
- The number of gas stations in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
Starting a Gas Station Business – Technical & Manpower Details
On the average, the special technology or equipment needed to run this type of business are gasoline dispensing pumps, gasoline tankers, gasoline storage tankers, fire alarm, CCTV cameras, computers and receipt issuing machines, sound system (for playing music), Point of Sale Machines (POS Machines), internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
When it comes to hiring employees for a standard gasoline station that also offer other complimentary services, you should make plans to hire a competent Chief Executive Officer/President (you can occupy this role), Gas Station Manager, Accountant/Cashier, 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, Carwash Manager, Tanker Drivers and Security Guard. These are some of the key employees that you can work with. On the average, you will need a minimum of 10 to 15 key staff members to run a small scale but standard gas station business.
The Business Services Process Involved in a Gasoline Station Business
Generally, when people cum vehicles stop by a gas station, they go straight ahead to make payment and dispense gasoline in their tank especially if it is a self – service gas station. If the gas pumps are manned by dispensers/attendants, then they will inform the attendants of the amount of gasoline or any product they want to purchase and they will have it dispensed in their gasoline tank.
Since all gas stations require supply of products the retail, there are no hard and fast rule about getting supplies. Basically, it is the duty of the merchandise manager to help the organization purchase gasoline, diesels, kerosene and cooking gas et al.
They go out there to source for good purchasing deals and they also ensure that they do not only purchase at the right prices that will guarantee them good profits, but also ensure that they purchase products that are of high quality. Once the products are bought, they are properly filled into the underground tank and ready for dispensing.
Starting a Gas Station Business – The Marketing Plan
- Marketing ideas and strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a gas station business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well-known brands determining the market direction for the gas station industry.
These are some of the marketing ideas and strategies that you can adopt for your gas station business;
- Introduce your gas station by sending introductory letters alongside your brochure to everyone that owns automobiles; celebrities, public figures, politicians, business executives, students, sports men and women, young adults, teenagers, corporate organizations, haulage companies, transport companies, taxi drivers, schools and a host of others that commutes along the road where your gas station will be located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know where to go when they need to refill their tanks
- Create a basic website for your business so as to give your business an online presence
- Directly market your products.
- Engage in road show in targeted communities from time to time to promote your business/services
- Join local gas station owners association for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing
When it comes to a business such as gas station, it will be right to say that the business cum prices is highly regulated. There is always a benchmark that is set by the Federal government when it comes to the pump price of products such as gasoline, diesel and kerosene.
So there is little you can do to sell your products far below the industry’s average. All you need to do is to ensure that your merchandise manager gets supply of gasoline, diesel and kerosene directly from main marketers not third party suppliers and also ensure that you own your own petroleum tankers. With that, you can be able to get pricing for your products right.
Another key factor that will help you sell your products and offer your services at the right price is to ensure that you cut operational cost to the barest minimum, channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; with that, it will help you save cost for paying sales and marketing executives.
Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
If your intention of starting a gas station business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of gas stations and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your gas station business;
- Place adverts on both print and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products and services
- Install your billboards in strategic locations all around your city or state
- Engage in roadshow from time to time in targeted neighborhoods to create awareness of your gas station
- Distribute your fliers and handbills in target areas
- Contact everyone that owns automobiles; celebrities, public figures, politicians, business executives, students, sports men and women, young adults, teenagers, corporate organizations, haulage companies, transport companies, taxi drivers, schools and a host of others that commute along the road where your gas station will be located informing them about your gas station and the products and services you offer
- List your gas station in local directories/yellow pages
- Advertise your gas station in your official website and employ strategies that will help you pull traffic to the site.
- Position our Flexi Banners at strategic positions in the location where your gas station is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.
Creating a Suppliers/Distribution Network for your Gas Station
In order to successfully run a gas station business, you must establish good business relationship with gasoline depot and petroleum product marketers. Of course, you would need steady supply of gasoline, diesel and kerosene et al from gasoline depots and petroleum main marketers in order to remain in business.
Just ensure that you enter into an agreement with suppliers that will enable your gas station not to run out of products per time. The truth is that if proper arrangements are not put in place in – terms of supply of petroleum products, there will be occasions when you will run out of products and that will be bad for your business especially as you are trying to build a robust and loyal clientele base.