Valuable Tips On Buying A Profitable Gas Station Convenience Store
posted in Bricks and Mortar Business |In times gone by a gas station has often been seen as a very lively investment, certainly when gasoline was a relatively stable commodity and the price was low, especially in the USA. In the past, there wasn’t so much pressure to cut down on oil sales or to be selective in our energy use, due to carbon emissions and consequent global warming effects. Now, however, conspicuous energy consumption is seen as being very bad policy and as gas prices have forged ahead in recent times, we’ve even started to look at electric or hybrid vehicles as alternatives. Nevertheless, it seems clear that as a society we will still rely on gas for our vehicles for the foreseeable future and as we develop, the typical gas station has become more of a convenient destination for a variety of other services and products as well.
Perhaps more so than any other business, location is very important when it comes to the selection of a gas station for sale. You might think that the value of the location is obvious, but if you talk to local authorities before you go too far, you will be able to see if events such as road construction would factor into your equation, or whether certain environmental issues need to be addressed including storage tank upgrades, or if there have been past issues with litigation. If you’re not careful, your income potential could be decimated!
There may not be a significant margin when it comes to a unit of gasoline sales, so often the value of a gas station when you buy a business will include ancillaries and other products or services. If the location you are looking at is not so advanced in these respects, consider the potential. For example, what about installing a convenience store or finding another organization to handle it for you on a licensing basis. Is it possible that you could build a very good quality car wash on the property and achieve revenues this way?
To buy gas station business assets successfully, note that operations that are known to be full service (gas, car wash and c-store) will generally command up to three times whatever the owner benefit figure is. Owner benefits can be made up of salary, profits, any perks, while adjusted for interest, depreciation and any other capital expenditure that you might have to make. If a simpler establishment is of interest to you, for example maybe due to its potential, you might expect to pay just one or even two times the owner benefits.
Be careful when you look at the business financials, refer to your supplier contracts and have a good conversation with the landlord in advance. Many deals trip up at the landlord/tenant stage, as the landlord often takes it upon him or herself to try and ensure that the incoming new owner is up to the job of making the business a success!
Keenly observe what is going on at the gas station during the process of observation. Be careful if you see the owner working “hands-on” for considerable periods of time. If many of his family members are seen putting in a lot of effort, they may be working below market rates, being paid under the table or maybe not at all; what if you had to recruit paid staff to do their jobs? Make sure that you observe the busier time periods, counting traffic and people, so you can gauge the potential accurately and know how to create a good offer.
Richard Parker is the President and founder of the prestigious Diomo Corporation – The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream to buy a business.
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