Tips for Buying a Gas Station

Looking to invest in a business with steady growth and nice profits? You might want to look for gas stations for sale. In fact, gas station owners earn anywhere from $40,000 to $250,000 a year (depending on many factors), so this might be a business worth exploring.

Tips to Help You Find the Right Gas Station Business

Whether you’re looking to be an owner/operator running the business's day-to-day operations or an investor who hires a manager to run the station and enjoys the profits with little involvement in the business, here are some things to consider before shopping for a gas station.

1. Consider Whether You Prefer a Franchise or Independent Station

Gas stations for sale fall into two categories: franchises or an independently-owned stations.

Franchises carry a well-known brand name. Think of Exxon or BP. Customers will already know and trust the brand, so you may have to work less to attract new business than you would if you opened an independent gas station. On the other hand, you’ll have to pay franchise fees to the franchisor and adhere to their policies and rules. The brand may regulate pricing for products in the convenience store. You may also have to meet quotas on gas sales. Generally, as a franchisee, you have less flexibility and say in how you run your gas station.

An independently owned gas station can give you a little more flexibility in running it. You can decide which products to stock and what prices to sell them for. And you’ll save on the franchise fees you’d pay if you’d bought a gas station franchise.

2. Scope Out the Location

For many customers, buying gas is a matter of going where there’s a conveniently placed gas station. If the station you’re considering is difficult to reach, you may not see the traffic (and sales) you’d like.

Spend a few hours observing traffic to the gas station you’re considering purchasing. How many cars per hour stop to pump gas? Now, compare those numbers to other stations nearby.

3. Find Out Why It’s Being Sold

One of the most important things to do as part of your due diligence when buying any business is to understand, as best you can, why the owner is selling it.

Naturally, the owner may not be forthcoming about the fact that sales have plummeted over the last few years, but the financials should paint an accurate picture. Ask to see all financial statements so you can better understand if revenues (or lack of thereof) are the reason the business is for sale.

Be wary if there’s not an obvious reason for the sale, such as the owner being ready to retire. You don’t want to get stuck with a gas station that is across the street from construction for a larger competitor, or with a business that’s mired in debt that you, as the new business owner, would be responsible for.

4. Consider Whether You’ll Want a Convenience Store

You might be surprised to learn that gasoline profit margins are fairly low. For gas station owners, it's the products sold in the adjoining convenience store that bring in the profits.

Realize that owning a gas station with a convenience store, while potentially bringing in more profit, will require more labor and management, as you (or your manager) will need to continually keep an eye on inventory to ensure you always have your customers’ favorite snacks stocked.

5. Make Sure It’s Environmentally-Friendly

If you look at older gas stations for sale, make sure that they comply with state regulations for the tanks, which often are required to be double-lined. If they’re not, you’ll end up spending thousands to retrofit them to meet environmental regulations, and you won’t attract business during this period.

6. Consider the Crime Rate

Because gas stations are often open late at night, they tend to be the target of robberies.

In 2022, gas stations and convenience stores were the site of 13.8% of all robberies and 4.5% of all violent crimes. These numbers may be higher in areas where crime is already elevated, but any gas station anywhere is at risk. 

If the station you want to buy isn’t already outfitted with safety equipment, you may need to invest in bulletproof glass and transaction windows, cameras, cash trays, and perhaps even a registered gun.

Consider that you may also have trouble finding employees who want to work in a high-crime area at night.

7. Find Out Who Owns the Pumps

You might assume that if you buy a gas station, you’ll also buy the pumps, but that’s not always the case. If the gas station is a franchise, the parent company may own the tanks. If the station is located on leased land, the property owner may own the pumps.

Get the details on who owns the pumps and how, if possible, they can be transferred to you. Also, find out when they were last serviced and whether they are compliant with all environmental regulations.

8. Do Your Due Diligence

Another must when buying any business, as I touched on in #3, is to do your due diligence. Ask to see financial statements for the last several years. You want to understand what your expected business expenses will be, as well as historical profits.

Talk to employees to understand the business from their perspective. Are they paid and treated fairly? What is their relationship with the current owner?

Also, speak with other business owners in the vicinity. This can help you understand how the neighborhood fares commercially and whether crime is a concern.

9. Consider How Involved You Want to Be

Some owners of gas stations actually work daily in the store. This helps them keep an eye on operations and reduce the risk of shrinkage. 

Others prefer to hire a manager to run things, checking in occasionally. The risk here is not having full control over how things are run and not having as close an eye on things. Also, you’ll have the expense of the manager’s salary.

10. Keep an Eye on the Future

While searching for gas stations for sale, don’t discount the fact that what a gas station looks like in just a few years may be drastically different from what it looks like today, thanks to growing investment in alternative fuels and electric cars.

In fact, Shell estimates that by 2030, it will have 200,000 electric charging points on the road globally. These cars won’t need to visit your gas station – unless you give them another reason to visit.

Consider how you can cater to this changing market by offering alternative fuels and charging stations. You can also add other services to your gas station to attract business, such as a car wash, restaurant, or mechanic.

Conclusion

Buying a gas station can be an investment for your financial future. With steady profit margins (and ever-increasing gas prices), you’ll never lack for business as long as you deliver great service to customers and give them more reasons to come back.

Once you’ve considered each of these points we’ve covered here, head to DealStream.com and start shopping for gas stations for sale.