Share This Info:  

How To Buy A Gas Station That Pumps Out Profits - Tips For Buyers

Tips For Buyers Of Gas Stations

Anyone who wants to buy a gas station in California to operate, or even to own absentee, had better get an education about the business first, before beginning to evaluate offerings. The biggest challenge is that there are so many variables in this business that trying to make a choice by comparing gas stations on the market is usually an apples vs. oranges puzzle.

Do you want, and can you afford, to buy the property with the business? How large a business do you feel you can pay for and manage? Should the gas station also have a car wash on the premises? What about a deli, a repair shop, a convenience store? And the prospective buyer will need to decide whether he or she is more comfortable offering a name brand and working with one of the major oil companies, or taking over an independent station and buying from petroleum distributors who are not affiliated with any particular brand.

One way to start understanding some of the issues involved in buying into this industry is by thinking about some of the commonly held beliefs regarding the idea to buy a gas station.

Five of the most popular assumptions about gas station ownership are:

- You can determine a gas station's income by finding out how many gallons are pumped every month and multiplying that figure by the typical 20-cents-per-gallon mark-up added to the per-gallon amount the gas station owner pays to the distributor.

There is no merit to the "twenty cent per gallon" mark-up idea. And no standard way that a gas station owner prices the product. In fact pricing gasoline and diesel products is kind of an art, as well as a science. If your station is in the Mojave Desert 100 miles from the nearest competitor you probably can charge whatever you want and drivers who discover they are low on gas will have to pay your prices. Most stations, however, are in competitive markets and run the risk of losing business by charging too much for fuel, or losing money by not charging enough.

One reason price setting is not always an easy exercise is that it sometimes is smart to lose money on the sale of fuel if that strategy attracts, to the location, gas and diesel customers who may then pay for a car wash service, if there is one at the facility; or they patronize the station's convenience store if it has one - where the percentage of price mark-up can be substantially higher than any profits to be made at the pumps.

Buyer Hint: Focus on which gas stations generate the most profit

- A buyer should avoid a station with a repair garage unless he happens to be an auto mechanic.

Here's the facts: Some mechanics might make a good profit in a station that includes a repair facility, but most owners of a garage-equipped station think it's a better idea to rent out the facility and not have to deal with the problems associated with the vehicle repair business. One mechanic-gas station owner told me "there's more money to be made at the cash register in the office than with a wrench, under a car."

Buyer Hint:  Even if you are a mechanic, calculate whether you might make more money by simply renting out the repair facility so you can concentrate on running the station.

- It's best to purchase a station that is unaffiliated with a large oil company. The independent station owner can buy from any fuel distributor who offers the best price and is not locked in to the costs charged by the oil company franchisor. And the owner of a Shell or Chevron or other oil company franchise is obligated to follow the company's strict rules and to participate in its marketing programs.
Fact: For some people, this is good advice. But it means the owner usually will miss a lot of business from holders of an oil company credit card who are in the habit of using it to buy fuel, especially since they receive incentives from those companies to do so. Besides, in the event of a leaky storage tank, the independent owner-operator is on the hook for the cost of dismantling the station, excavating the ground it used to sit on and replacing the fuel storage infrastructure. Then installing a new station. That expense, plus the loss of business for the weeks or months it takes to go through that process has put more than one independent station owner out of business. Franchisees working with oil companies usually can depend on the franchisor to absorb the cost of replacing fuel storage tanks.

Buyer Hint: One question a buyer should ponder is whether he or she would feel comfortable as a franchisee, or would he or she rather be truly independent.

- It makes sense to buy a gas station only if you can purchase the property with it.

In fact, there are hundreds of gas station owners in California who would disagree with that notion. They like the idea of paying rent and letting the property owner be responsible for mortgage and taxes expenses. One owner who carefully analyzed the difference between owning or renting came to the conclusion that the extra cash and mortgage debt that would be necessary to own the land on which her station was situated would generate such a substantial return if invested in other kinds of commercial property that it made more sense, financially, not to have "all her eggs were in one (gas station) basket."

Buyer Hint: Every situation is different. Do the math and determine which approach is most profitable and suitable for you.

- It's easy to determine what a gas station is worth, no matter what other businesses are associated with it, if the buyer simply learns the amount of the owner's discretionary earnings collected over the previous three years and calculates that figure with the industry multiple customarily used to vale that kind of business.

I've seen gas station buyers pay way more for a station than you might think it's worth. And I've seen the opposite, a buyer being unwilling to invest any amount close to what the seller claimed was a fair price based on the so-called industry average multiple. People in the retail petroleum industry and their business brokers have so many different ideas about what is an appropriate industry multiple to use in determining a "fair" price, that it's clear there is no industry multiple.

Buyer Hint: Your final decision will be partly a subjective one, rather than purely the result of ROI calculations. Consider the location of the business, condition of its equipment and terms of the deal.

If a prospective gas station buyer reviews these five assumptions related to making a purchase in this industry he or she may notice that they often are wrong. And yet, there are many exceptions when the buyer might be smart to purchase an independent station, buy the land with it and hire a manager so the buyer can work in the garage as a full time mechanic. The value of understanding these assumptions is to gain insight as to just how complex it can be to decide which gas station to buy. Understanding some of these circumstances, and considering the hints, is helpful in learning how to buy a gas station.

More Information Regarding California Gas Stations On BizBen:

All Gas Stations For Sale - Independent & Branded/Franchises In California

Gas Station Brokers & Agents

Gas Station Articles And Blog Posts - Topics On Buying And Selling

Resources For Buying & Selling California Gas Stations

Peter Siegel, MBAAbout The Author: Peter Siegel, MBA is the Founder (of consisting of business buyers, owner/sellers, business brokers, agents, intermediaries, and advisors (there are over 90,000 users, and 8,000+ listings (many of those gas stations for sale and wanted to buy postings on To get signed up for California gas stations for sale and wanted to buy postings (Email Alerts) before they hit the market phone Peter Siegel (BizBen Director & gas station financing advisor and expert) direct at 866-270-6278.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business

  Helpful Resources To Assist In Selling And Buying California Businesses
Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Mani Singh, Business Broker, Southern California

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Matt Weiler, Business Broker: Gas Station Specialist

Business Broker Specializing in primarily gas stations. Geographic area of focus: San Francisco Bay Area to Sacramento and as far South as Monterey, California. To sell or buy a small or large gas station phone Matt (gas station business broker specialist) direct at 408-623-0920.

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.

Bob Hughes: Business Broker, Palm Springs Area

Bob Hughes is a business broker & is President of Hughes Properties. Hughes has a wide variety of entrepreneurial experience with the personal ownership & sale of numerous businesses, and has sold over 200 small & mid-sized businesses in the Riverside County marketplace. Call Bob at 760-323-8311.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Manjit Singh: SF Bay Area - Business Intermediary

Assistance in the San Francisco Bay Area. Contact me about buying or selling a restaurant, liquor store, gas stations, markets, and c-store businesses. If you are looking to buy or sell a SF Bay Area liquor store, market, c-store, restaurant, etc phone me direct at 510-417-9429.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Valuing A Business - Do You Add The Inventory Amount To The Price Or Not?

A business buyer asks how to handle the inventory amount in the purchase price of a business. Do you add the inventory value to the business value? Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor ) answers this question with the BizBen Network of advisors.

Tips On Successfully Buying A Gas Station Business That Pumps Out Profits

Buyers who think they want to buy a gas station don't realize that finding the station to own in this industry & determining its fair price pose more complex problems than buying most types of small businesses. Peter Siegel, MBA (gas station financing expert at BizBen) at 866-270-6278 explains.

Buy A Business Or Start From Scratch? 5 Key Differences For Business Buyers

Some buyers believe it's better to start a business from scratch rather than buy an existing enterprise. While this may be good advice in some cases, usually it's not the best strategy. Here are five tips to help a buyer make the right decision from from Peter Siegel, MBA (BizBen Director).

Tips When Using Escrow Bulk Sale Services When Buying Or Selling A Business

The final part of the business for sale transaction is the escrow and bulk sale process by Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor) answers questions and describes the escrow and bulk sale process. Peter can be reached direct at 866-270-6278.

What Should I Do If Other Buyers Are Trying To Buy The Same Business As Me?

Buying a small business is hard enough when there is no competition, so how might a buyer navigate the process when there is additional competition from other buyers? Potential small business buyers are offered a few key ways that a buyer can beat out other potential business buyers in this article.

Absentee Run Businesses - A Myth Or Reality When Buying A Small CA Business?

Some buyers search for an absentee business to own, wanting to collect profits generated by a successful enterprise without having to stand at the sales counter or cash register, without having to cook, operate equipment or talk to customers. Here's some insight about finding such a business.

Tips For Faster SBA Loan Approvals For California Small Business Purchases

In this article on BizBen, business purchase financing advisor and SBA loan broker, consultant Peter Siegel (Business Purchase Financing Expert/Advisor & the ProBuy Program Director at BizBen) at 866-270-6278 shares his views of getting SBA loan financing faster for business purchase financing.

Before Buying A California Business, 10 Questions You Should Ask Yourself

Before buying a business, all serious business buyers should ask themselves some key questions about possible buying a small California business, franchise, or opportunity - from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 866-270-6278.

See All News, Tips And Events

Clothing Manufacturing Company For Sale
Southern California Legal Services For Buyers And Sellers
Steve Erlinger Coin Laundry Broker
SF Bay Area Business Broker
Google Plus You Tube
Vlogs and Podcasts

Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Ice Cream Shops
Juice, Smoothie Shops
Liquor Stores
Markets, Marts
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Contra Costa
Del Norte
El Dorado
Los Angeles
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2018, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login

Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.

First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*

You Are A:

Email Address:

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Tips On Successfully Buying A Gas Station Business That Pumps Out Profit...
Read More News
Valuing A Business - Do You Add The Inventory Amount To The Price Or Not...
Read More News