Ever wanted to create a gas station but put it off since you had no idea where to begin? You may even be wondering how much does gas station cost.
While operating your own gas station does present some special difficulties that you need to be aware of, this shouldn’t deter you from pursuing your entrepreneurial spirit. Starting a business can be a difficult task.
After all, in 2018, the oil and gas industry grew to a value of almost $180 billion. In the US, there are millions of registered drivers but only slightly over 100,000 gas stations, so knowing how to open one could be a wise financial decision.
- Open A Gas Station
- Costs For Owning A Gas Station
- Factors Affecting Profitability
- Frequently Asked Questions
How To Open A Gas Station
1. How Much Does Gas Station Cost – Prepare A Business Plan
If you’re researching how to open a gas station, keep in mind that the startup fees are substantial; this financial barrier may require a loan.
Writing a thorough business plan is essential to persuading lenders to authorize your credit application or luring investors to invest in your company. Here are some things to look into before writing a gas station business plan:
Add A List Of Your Goods And Services
Rarely do gas stations only sell motor gasoline. Frequently, you’ll see that gas stations double as convenience stores. You should conduct more studies on additional items and services to increase your profit margins in addition to keeping track of the number of gas pumps and fuel selections that will be offered at your gas station.
The following are typical goods and services one can find at a gas station:
- Radio stations
- Car washes
- Tickets to a lottery
- Market research
The gas business operates in a cutthroat market. When considering opening a gas station, it is essential to do your study on the competition so you can modify your own marketing tactics to increase traffic and profit.
Here are some queries you should address in your market analysis:
- What are the advantages of your rivals?
- What are the weaknesses of your rivals?
- How can you strengthen your company’s weaknesses?
- How can you approach the same issues differently or more effectively than your rivals?
- If you started your firm, would your rivals pose a serious threat?
- How can location help draw customers to your establishment?
When considering how to operate a gas station, location should be a top consideration because it will affect the amount of traffic you draw.
Refer to the market analysis as well as the benefits of your business’s chosen location. Will you pick a site where you have a ferocious rival directly across the street? Will you serve families on vacation and truck drivers from a remote spot along a busy highway?
Investigating burgeoning areas is one suggestion for selecting a business location. These communities will probably be located further away from major cities, necessitating the construction of gas stations to accommodate their long commutes.
2. How Much Does Gas Station – Cost Name Your Company
Register Your Company
Every business functions as a specific type of business structure. Since there is no documentation needed to register as a sole proprietorship, business owners may begin as such. We do not, however, advise running a gas station as a solo proprietor when first starting out.
You want to make absolutely sure that personal possessions will be safeguarded because a gas station is subject to numerous threats, such as leaks and break-ins.
Limited liability firms and corporations are the two most typical company structures that gas stations should take into consideration.
To establish which type of legal structure will suit your needs the best, you might want to think about speaking with a business attorney.
LLC owners have the option of choosing between being taxed as a sole proprietor or a corporation. Additionally, they typically pay reduced annual fees.
Gas station owners that want to stay small often find this company structure appealing, especially if they only have one station. However, LLCs typically have more trouble obtaining funding from investors.
Business entrepreneurs who anticipate raising funds from investors frequently choose corporations as their home. A corporation can be the right company structure for you if you intend to establish a string of gas stations as well as develop the brand to stay competitive with market leaders like Shell or Chevron.
You must speak with your state’s Secretary of State office, whether in person or online, to register as an LLC or company.
Articles of organization for a Limited Liability Company as well as articles of incorporation for a corporation) papers must typically be completed, along with a fee. You can also be required to post a notice in something like a local newspaper in some states.
Select A Distinctive Company Name
You should make sure that your organization’s name is distinctive when learning how to create a gas station in order to avoid being mistaken for the name of another organization.
To make sure your selected name is available, quickly check with the United States Patent and Trademark Office and your state’s Secretary of State business search.
Sign Up For Taxes
You’ll also need an employer identification number as more of a small company owner in order to run your enterprise. When submitting your business taxes, you must utilize an EIN, a nine-digit number. The IRS accepts online applications for employer identification numbers. Soon after applying, you ought to have your EIN.
You might also need to apply for the state tax ID while opening a gas station, depending on the tax laws in your state.
Purchase A Franchise
You may have thought about investing in a franchise for an already-established gas station, like Chevron or Mobil, if you’re researching how to create a gas station.
Even when a competitor provides a lower price, many motorists choose to purchase gas from a well-known national brand. Purchasing a franchise has a number of benefits, including the ability to use an established trademark and follow a tested business plan. However, you would have to give the parent firm royalties.
Make sure a business attorney reviews the legal ramifications of any contractual relationship prior to you signing it if you decide to purchase a franchise.
3. How Much Does Gas Station Cost – Obtain Financing
When you take into account the cost of obtaining real estate, stocking with supplies, paying personnel, and adhering to rules, the answer to how much does gas station cost is… A substantial amount of cash. In this section, we’ll go through the exact requirements you’ll have for financing your gas station.
However, given all the expenses related to running the gas station, it’s smart to set up a different bank account to segregate your personal and corporate finances.
As we previously noted, there is a significant financial barrier to opening a gas station. The following initial expenditures should be covered with at least $300,000 in funding:
- Buying the property
- Permits and licenses
- Commercial insurance
- Enrolling your company
- Promotional materials
- Establishing your gas station
- First inventory (gas, consumables)
- Paying workers
- Finding a gas provider
- According to your franchise agreement, royalties
In addition, there will be expenses after the initial ones. You must pay for personnel salaries, utilities, and inventory replacement if the gas station is open around-the-clock.
Additionally, the cost of refueling your vehicle can add up quickly. A 20-gallon fuel barrel should cost you between $50 and $70. This will add up to how much does gas station cost.
How To Finance Your Gas Station
You might think about requesting a business loan from your bank in order to pay for these significant upfront fees. Unfortunately, gas station operations typically have low profit margins. The average privately owned gas station earned barely 0.02 cents of profit on each dollar of sales as per one study.
To persuade lenders that your enterprise is a wise investment, you’ll need to rely on a sound business track record as well as a detailed business strategy. Traditional lenders still rarely make loans to startup companies. Other sources of funding include:
- SBA financing
- Angel financiers
- Leasing of equipment
4. How Much Does Gas Station Cost – Purchase the Space
When learning how to establish a gas station, this step is crucial: Verify whether ownership of the pumps and tanks will be transferred to your name prior to signing the purchase agreement.
In order to evaluate the equipment’s remaining shelf life, you need also to look into its repair history. This will determine if you should reuse the current equipment or buy a new one.
Please remember to add an environmental contingency clause in your purchase agreement’s draft. After signing the purchase agreement, you are permitted to learn more about the property’s environmental history thanks to this clause.
You have the right to cancel the sale and receive a refund of your deposit when an environmental site evaluation produces adverse results.
5. How Much Does Gas Station Cost – Obtain A Contract With A Gas Supplier
It’s critical to comprehend how you’ll refuel your gas tank on a frequent basis. To find the best local wholesalers to supply your station with fuel, do some research. You should conduct a careful rate comparison to help ensure you maximize the profit margins since gas providers frequently get a percentage of your sales.
Check your franchise agreement if you are running a franchise to see whether they have an existing preferred gas supplier.
Once more, have a lawyer evaluate your gas supplier contract and franchise agreement to make sure you are maximizing earnings as well as avoiding hidden fees.
6. How Much Does Gas Station Cost – Obtain All Required Licenses And Permits
The permissions and licenses required to start a gas station will vary depending on the state. Make careful to research the company regulations in your specific state. In general, the following would necessitate obtaining permits:
- Inspections of fires
- Inspections of tanks
- Water leakage
- Cigarette and alcohol sales
- Norms and codes for restaurants
- License for a motor fuel outlet
- Occupancy certificate
7. How Much Does Gas Station Cost – Obtain Commercial Insurance
We strongly advise you to purchase business insurance to safeguard your enterprise. Daily dangers associated with running a gas station might include theft, worker injuries, property damage, equipment failure, and more. You and your personal assets are kept safe by insurance.
8. How Much Does Gas Station Cost – Promote Your Gas Station
Utilize pole signs as well as exit signs on the highway.
Many motorists simply like to go to the closest gas station, and then drive away while looking for one. It often makes sense for gas station owners to invest in large pole signs plus exit signs for promoting their establishments.
Driving traffic to the gas station can be increased by grabbing drivers’ attention while they are already on the road.
Participate On Yelp
Yelp is frequently used by drivers to locate the closest gas station. They’ll probably select a gas station that has the highest Yelp reviews if that is they need to pick between it and the competitor who is across the street. Exceptional customer service, spotless facilities, and timely responses to feedback are all ways to raise your rating.
Make A Rewards Scheme
Did you realize that acquiring new clients can frequently be more expensive than keeping your current ones? Big brands such as Chevron or Exxon provide loyalty programs for their driving clients because smart marketers are aware of this.
When opening the gas station, establish a loyalty program so you can gradually develop a network of devoted customers.
Join Forces With Restaurant Chains
Nowadays, you might have noticed that 7/11 isn’t the only chain you can visit at the gas station. Plenty more gas stations are collaborating with fast food chains like Subway and McDonald’s.
This may be advantageous for business since it turns your establishment from a gas station into a rest area. Customers will have more chances to visit your convenience shop and make purchases as a result.
Think About Reducing Gas Prices
You may be shocked to learn that a lot of gas stations barely break even while selling fuel. Plenty of gas station proprietors use the convenience stores to raise their profit margins.
The chance that visitors leave the pumps to enter the store to purchase a drink and other items increases if you lower your costs, even by just a cent, in an effort to draw more cars to your site. Keep this in mind when considering how much does gas station cost.
Add Extra Gas Stations
In actuality, filling up your gas tank isn’t enjoyable. People must complete this task to travel from one point to another.
When customers arrive at the gas station that is completely packed, this work becomes much more annoying.
The process of filling up with gas is made as efficient as possible by adding more gas pumps. Simply having gas pumps available can draw customers to your station.
9. How Much Does Gas Station Cost – Become Acquainted With Your Regular Obligations
Establish Operating Hours
Numerous gas stations remain open every day of the week. The gas station may need to be open 24/7 as well if you want to stay competitive. If you decide to do this, you’ll need to bring on more staff to work the night shift.
In order to run the gas station, one must be punctual. The mornings before work is a popular time for cars to stop by for gasoline. Drivers will go to a competition if they find that they wait for you, and you’ll likely lose those clients permanently.
You must maintain an ordered inventory because the gas station probably will sell a wide range of goods, such as drinks and snacks. You can determine when you need to refill by conducting an inventory each day to check your stock levels. To better plan when to restock, ensure to also collect expected delivery dates from vendors.
Establish Safety Precautions
Gas stations that are open around the clock are particularly prone to crime. Your safety and the safety of your staff should be a priority. As an extra security step, think about adding cameras and impact-resistant windows. Additionally, regular deposits to the bank will assist in protecting the cash assets from theft.
Start-Up Costs For A Gas Station
Here is the main cost that you must incur while opening a medium-sized but typical gas station in the USA.
The entire registration charge for a company in the USA is $700.
Accounting services such as CRM software, P.O.S machines, Payroll software, P.O.S machines, and other software and legal fees for acquiring licenses as well as permits, business licenses, and sign permits, among others, totaling $15,300.
$3,500 may be spent on marketing and promotion for the gas station’s grand opening, and another $3,580 was used to print 2,000 fliers at a cost of $0.04 each.
A consultant can be hired for $2,500, which includes business plan writing. All these add up to how much does gas station cost.
How Much Does Gas Station Cost, Factors #1 – Insurance, Leasing, And Construction
The overall premium for insurance coverage for theft, general liability, workers’ compensation, and property casualty is $30,400.
Leasing a conventional building in an ideal, central location by a busy road as well as an expressway will cost you $250,000.
Stationery at $500, phone, as well as a utility which includes gas, water, sewer, water, as well as electric deposits of $6,500 are a few more startup costs.
How Much Does Gas Station Cost, Factors #2 – Cost Of Operation And Inventory
The operational costs for the initial three months were a $60,000 staff salary, utility payments, etc.
The price of the startup inventory, which includes the provision of non-vehicle fuel, fuels such as diesel fuel and gasoline, cooking gas, and vehicle-related goods, as well as fuel dispensing equipment and machines such as automobile repair tools, as well as wheel alignment, is $550,000.
The purchase of a fuel tanker will cost $45,000.
Equipment for the store such as cash register, ventilation, and security, as well as ventilation, is priced at $13,750.
The price of technology including phones, computers, printers, tables, as well as chairs, and furniture was $14,000.
A website’s construction and hosting will cost you $600.
$8000 was spent on the opening celebration.
To effectively establish a medium-sized but typical gas station business in the US, you will require an estimated $2,500,000 ($2.5 million). Please keep in mind that this sum covers all employee salaries for the initial three months of employment and a company with multiple sites in the same locale.
Factors Affecting Profitability
There are costs specific to each industry, yet no matter what kind of business you run, some levies and operational costs are universal. The top profit drainers for proprietors of gas stations are broken down below.
Among the most crucial aspects to think about when selecting whether to run the gas station is the address of the potential company. Of course, it will be more difficult to draw people if your business is located distant from a major road.
However, the location has drawbacks outside only traffic. Since consumers are less inclined to drive a car in an area with an abundance of dependable, affordable, and free public transportation, you might find it difficult to turn a profit.
Where your competitors are located should also be taken into account when choosing a location. While having a competing gas station just down the street could be advantageous for both businesses, having very many rivals close by might hurt your sales.
2. Cost Of Gas
When consumers think of gas pricing, they typically just consider the cost at the pump, but gas station owners also need to buy fuel. Additionally, your cost is often based on the price of crude oil, distribution charges, and refining costs.
Although it’s simple to blame big oil, they aren’t just the ones who have an impact on gas costs. Interestingly, crude oil prices will only account for about 52% of gasoline prices.
You can only set your gas prices so high and expect people to keep coming back to the station because all of these things are unfortunately out of your control. Selling gasoline could result in a loss due to the narrow profit margins on fuel.
So that you can have many revenue streams accessible, it could be a good idea to consider adding more facilities to your gas station.
3. Services Provided
You have a better chance of making more money if you provide your consumers with services in addition to fuel. In fact, the National Association of Convenience Stores estimates that almost 80% of fuel sales in the United States are made at these businesses which also provide extra services like:
- Warm food (such as pizzas, sandwiches, etc.)
- Self-service beverage dispensers (coffee or soda)
- Microwaves for use by consumers
- Public washrooms
Depending on your locality, you might wish to include a few extras like:
- Pet-walking spaces
- A store selling regional mementos or useful travel accessories
- A bustling diner with waiters
- Long-haul drivers’ showers
Frequently Asked Questions
How Many Gas Stations In The US
In the United States, how many service gas stations are there? According to the NACS, an organization for convenience and gasoline retailing, there are over 145,000 gas stations in the US.
How Much Do Gas Station Owners Make
Gasoline typically has a markup of around 15 cents per gallon. This is the total gross profit without taking out the expenses. A shop is left with around 2 cents per gallon in profit after deducting costs including utilities, rent, labor, freight, and credit card fees.
How Old Do You Have To Be To Work At A Gas Station
The majority of gas stations have an age requirement of 18 years old or older for employment. Although some service stations may hire people as young as 16, the minimum age may vary depending on whether you want to run a station or merely work as a cashier.
These tools have been tried and tested by our team, they are ideal for fixing your car at home.