How to Open a Gas Station: Everything You Need to Know
The gas station is sector is primarily defined by the station's location. When a motorist is running low on fuel on a long road trip, he or she doesn't have the option to choose between an independent station or a larger chain store.3 min read
What Is a Gas Station?
Wondering how to open a gas station? Owning a gas station can be a smart business decision. But it's important to know how to open a gas station before you start. A gas station, also called a service station, offers all types of fuel products for motorists, including:
- Liquid petroleum gas (LPG)
Some gas stations also offer electricity hookups for electric cars.
The typical fuel station has at least two and up to six pumps with 20 to 30 hoses for pumping fuel. A moderate fuel station typically pumps 325,000 to 350,000 liters of fuel every month, although the amounts vary based on usage. A gas station should offer more than just fuel. Most have an attached convenience store with products such as:
- Automotive accessories
- Food items
- Other items for sale
Add-on businesses offering niche services are more common at fuel stations, such as lodging or landscaping tools. A fuel station owner should double up with additional services to increase the chances of success.
The gas station is sector is primarily defined by the station's location. When a motorist is running low on fuel on a long road trip, he or she doesn't have the option to choose between an independent station or a larger chain store. The motorist will simply go wherever is closest to fuel up.
Profit margins have been steadily increasing for gas stations, making for a good investment. While more secure fuel station owners own their own tanks and pumps, many owners lease their equipment as a conventional option.
Although a gas station can be unique in what it offers in addition to gas, it must also provide reliable service and make sure the tanks are filled so customers can get gas. Legal regulations also apply to service stations. Therefore, the owner should invest in liability insurance. Fuel station owners can run their businesses in unique, individual ways. But they must always adhere to health and safety policies.
People rely on fuel across the globe for vehicles, including:
- Lawn equipment
- Recreational vehicles
To achieve success when opening and operating a fuel station, the owner must plan carefully and have money available to invest. For most fuel stations, the owner must invest hundreds of thousands of dollars to enter into a franchise agreement for a specific brand of fuel.
Opening a gas station in California requires more money upfront, as the state requires permits for:
- Fire inspections
- Underground operation of the tanks
- Water discharge
- Other health and safety concerns
In California, another regulation is double-walled tanks, even if the fuel will be stored far from a water supply. It is one of the only states to require these types of tanks. Regulations can make it challenging to open a business. But each state government offers a list of requirements so owners know what is needed.
Although the cost of fuel is on the rise, this hasn't impacted the profit index for fuel stations.
Making A Business Plan for Your Gas Station
Before opening a gas station, the first step is to get a professional opinion from an accountant who can help you understand your income and estimated expenses. When you develop a business plan for your gas station, it should include detailed information instead of just including a basic outline. With a detailed, fleshed-out business plan, investors and lenders will be more interested in being part of the business.
The business plan should also include a full description of:
- Additional amenities (e.g., car wash, vacuum, or air stations)
For example, the description should include the number of planned gas pumps, how many restrooms will be available for customers, and any types of food that will be sold in the convenience store. The business plan must also include a detailed analysis of the competition and local market.
Make sure to detail the locations of any similar businesses and how your station will succeed among the competition. Include detailed information in the plan about the management and organization of the service station. This information should include detail about the management, including who will:
- Be responsible to manage the inventory and convenience store
- Manage the financial aspects
- Take care of legal issues
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