Buying a gas station can be a profitable business if you find one that is in the right location and is selling a high volume of gas each month. Like any other investment business, buying a gas station has its pros and cons. From my experience, here are the pros and cons of buying a gas station that I share with my ProBuy and ProSell clients on BizBen (and my clients looking for potential business purchase financing on gas stations being sold throughout California).
Even when people are cutting back spending on other items; gas remains a consumable product that most people need to purchase regularly. While people may try to conserve gas by traveling less or using public transportation when convenient, the fact remains that most people rely heavily on their private vehicle for transportation. As long as we as a society utilize our cars for transportation to work and for other travel, there will be a demand for gas stations.
Over the last several years, we have seen some new developments emerge from the fuel industry with the introduction of alternative fuel options for cars. Some may feel that is a threat to the gas station industry. I disagree. While it is a threat to the demand for gasoline itself, gas stations could still survive because even if the type of fuel we use to power our vehicles changes from gasoline to another product it will most likely be still sold through a fuel station of some sort.
Another pro of buying a gas station is that you donít have to just sell gas. There are several ways you can generate additional income by expanding your services. As you are looking at buying a gas station, I would recommend looking for one that is already offering additional sources of revenue by having a convenience store or a repair shop attached. However, if you find a gas station that is a good buy but does not have either, you could consider adding one down the road.
Labor and the Owner's Role:
Buying a gas station does not require the use of skilled labor unless you have a repair shop attached. If you are just purchasing a standalone gas station or a gas station with convenience store attached, you should be able to keep your labor costs relatively low as these jobs do not require skilled labor. Additionally, I have seen many gas stations that were owned and operated by an absentee owner.
One of the greatest cons to buying a gas station business is the amount of competition in the industry. Most markets are saturated with gas stations. Independent gas stations seem to be fading away as larger chains expand and dominate market. Consumers are always looking for the lowest priced gas and will travel to competing gas stations to get it.
While I feel a gas station is a stable business model, I think it is also important to point out that a major con to this business is the amount of fluctuation it sees. While the need for gasoline will always be there, consumer usage will not only fluctuate daily but also as a whole depending on the economy. Additionally, the cost to purchase gas fluctuates daily making this a tough business to estimate profits.
If you are looking for a 9-5, buying a gas station may not be the best investment for you. A con to this business is that gas stations are often a 24/7 operation. Running a business around the clock will either require you as the owner to be on hand a lot or to hire someone to be there. You will either be giving up your own time or your own profits to operate a gas station.
Buying any business has its pros on and cons. Buying a gas station is no different so consider each opportunity on an individual basis. Assess the pros and cons and determine if buying a gas station is right for you.