Gas stations make for excellent investments for those looking to start or expand their own small business. You can buy gas stations in any town in any state on any street corner, which is both a good and bad thing.
The last census put the total number of gas stations at around 120,000. With so many choices out there, separating the wheat from the chaff is a challenge.
Ask yourself these five questions before you buy a gas station.
What Environmental Issues Might Lurk Underground?
After you buy gas stations, you also inherit any existing environmental conditions. Once the sale is complete, any problems found from that point on will be attributed to the current owner; it is extremely difficult to prove that a mess was there when you bought the property. Before taking the plunge to buy gas stations, it pays to have an environmental survey conducted. Pay attention to extra services that are offered on the same site as the gas station, such as a car wash or auto repair shop that can also be a source of environmental issues.
What Are You Getting When You Buy Gas Stations?
Are those extra services and equipment part of the sale? Does the actual building and the land have different owners? What does the current lease terms look like and will you have to renegotiate or be locked in to legacy terms? Not all of these questions are readily apparent and could be a potential red flag lurking beneath the surface.
What Do The Records & Financials Look Like?
Poor recordkeeping can disguise the true value of a gas station, especially for locations with gas pumps, a convenience store, car wash, and other amenities. An owner might insist that they have "cash sales" that they include in the store's total revenues or sales. Bottom line -- if they can't prove it, don't add it into the valuation. Insist on seeing at least the previous two years worth of financial statements and have them checked by an accountant or CPA.
What Other Hidden Problems Might There Be?
Maybe there is major road work scheduled right in front of the gas station, scheduled to take at least 6 months for completion. How would you stay in business if you had limited business right at the start? Check with local authorities and records to make sure you buy gas stations at a good time.
What Are Your Financing Options?
Make sure you are fully capitalized. Can you qualify for a Small Business Administration backed loan? Is the seller offering financing terms? Do you have to dip into your home equity or 401k to muster up funds? The terms on your startup capital will dictate how much risk you can tolerate; it is a risky proposition to literally bet your house to buy gas stations.
Also, it is important to conduct the usual due diligence checklists before you buy gas stations in addition to these five industry specific questions. Doing the necessary 'homework' and research really pays off when buying any business, and gas stations are no exception. By knowing all the facts ahead of time, you'll be able to make a smart business investment.
Looking to buy a gas station business? See all gas stations for sale in California - or sell a gas station business and reach thousands of gas station buyers.
About The Author: Peter Siegel, MBA is the Founder & Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ California businesses for sale, 500 new & refreshed postings/posts daily) working with buyers, business owners/sellers, brokers, agents, investors, and advisors). Reach him direct at 866-270-6278 or 888-212-4747 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
|Harry Sidhu, CBB, Broker - SF Bay Area, Central Valley, SAC Region
Assisting both sellers and buyers of businesses - dealing mainly with Liquor Stores, Grocery Markets, Gas Stations, Smoke Shops, Restaurant Related, Retail Related, Service Related. Serving SF Bay Area, North Bay, Sacramento area. Call Harry Sidhu, CBB for assistance at 510-366-6130.
|Michael Davidson, Business Broker - Southern California
Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Taj Randhawa, Business Broker Specialist - Gas Stations, Liquor Stores
If you are interested buying or selling a gas station, liquor store feel free to phone me for a consultation. My vast experience & specialization in gas stations & liquor stores helps me in serving my clients with full confidence, trust & sincerity. Serving Central Valley, SF Bay Area. 559-259-4247.
|Michael Floorman, Business Broker, BTI, San Francisco Bay Area
Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.
|Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire
UBI Business Brokers has been successfully selling businesses in Southern California since 1965. Our Agents have over 100 years of experience in selling small to medium size businesses throughout Southern California. We service Orange County, Inland Empire, San Diego. Phone Lee at 714-363-0440.
|Prabhjot Randhawa, Broker: SF Bay Area, Northern Central Valley
I'm a Business Advisor at Liberty Business Advisors of San Fransisco. I have over 20 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 10 businesses.
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