How to Own a Gas Station & Is It Worth It

Owning a gas station might be your version of owning the American Dream. While you can stop at a gas station on many corners on your drive through town, the path to owning one of those gas stations is more complex than opening some other kinds of businesses. We will explore how you can become the owner of a gas station.

Key Points:

• According to the National Association of Convenience Stores, around 118,000 convenience stores sell fuel. 
• The same study found that over 60% of these stores are single-store operators, which means individual business owners are investing instead of multi-store corporations. 
• Gas station owners will need to comply with a relatively long list of rules and regulations about fuel sale safety. 

Step One: Research the Gas Station Industry and Ownership Options

The first step of opening any kind of business is doing your research about the industry. You’ll want to learn everything you can about the landscape of owning a gas station in your area and what ownership options there are.

"Opportunities don't happen. You create them." — Chris Grosser

What Types of Gas Stations Are There?

As a driver, you’ve likely noticed a wide range of places to fill up your tank. Here’s the breakdown of different kinds of gas stations:

• Branded: A branded gas station, or franchised gas station, happens when an individual business owner buys the rights to operate under a specific brand name. For example, you might spot Shell or Exxon stations. 
• Unbranded: An unbranded gas station isn’t under the umbrella of a franchise. 
• Full-service: Full-service stations have attendants to pump gas for drivers. 
• Self-service: Drivers pump their own gas at self-service stations. 
• Associated convenience store: Many gas stations also have an associated convenience store that stocks food, drinks, and more. 

Why Is Owning a Gas Station a Popular Business?

• Built-in demand: Unlike some other types of businesses, it’s easy to see the constant demand for motor fuel. 
• Easy to determine a good business model: You won’t need to reinvent the wheel when opening a gas station. But you can set your station apart from the crowd by offering the best services in town. 

Is the Gas Station Industry Very Competitive?

The gas station industry can be very competitive. But the level of competition varies based on your individual location.

• Market saturation matters: In some areas, too many gas stations make the industry very competitive. In other areas, a scarcity of gas stations makes the industry feel less competitive. 
• Price, products, and services: The basic goal of a customer is to get their tank filled. But the price point and other services offered make a big difference. 

What Gas Station Ownership Options Are There?

Everyone has a different path toward gas station ownership.

• Start from scratch: You can open an unbranded gas station without any help from a franchisee in the location of your choice. 
• Purchase an existing gas station: If you find a station in a location that works for you, the owner might be open to selling it. 
• Franchising: You can become a gas station franchise, which means you’ll get support from a franchising organization. In exchange, you’ll pay an upfront fee and a portion of the profits to the franchise organization. 

What Are the Most Popular Gas Station Franchises?

Gas station franchises are easy to spot as you drive through town. Here’s a look at some of the most popular options.

• Shell
• BP 
• Chevron
• Exxon Mobil
• Phillips 66
• Circle K

Step Two: Understand the Costs and Requirements of Owning a Gas Station

As with all businesses, it’s critical to learn about the costs and requirements of owning a gas station business. Here’s a look at some of the practicalities:

• Land: The starting point is to purchase the land to build on, unless you plan to purchase a pre-existing station. 
• Construction: The construction costs to build a gas station can be considerable. Between installing the tanks and creating a building, it’s a big undertaking. 
• Equipment: Gas stations require specialized equipment, including pumps and safety gear, to start operation. 
• Permits: Regardless of where the gas station is located, you’ll likely need to procure a wide range of permits and licenses before you can serve customers.

"Continuous learning is the minimum requirement for success in any field." — Denis Waitley

Is It Profitable to Own A Gas Station?

The profitability of a gas station depends on several factors.

• Fuel costs: Fluctuations in fuel prices can cut into your bottom line. 
• Franchise costs: If you choose to franchise, the choice may put a dent in your wallet. 
• Profitability: It can be very profitable to own a gas station, especially with a convenience store attached. However, you’ll need to make regular adjustments to your operations to maximize profits. 

How Much Does It Cost to Buy a Gas Station?

The cost of buying a gas station varies dramatically based on the location of the station and the age of the equipment.

• Wide range of costs: Based on some estimates, you can expect to spend between $250,000 and $2 million to purchase a gas station. 
• Location: A prime location in an expensive area will lead to a higher sales price. 
• Equipment age: A station with brand-new equipment will be more expensive to purchase than an old station with outdated equipment. 

How Much Does a Gas Station Franchise Cost?

If you want to open a gas station franchise, the costs will vary based on the franchisee you choose and your location. Below are some estimates to consider.

• Sunoco: The initial investment into a Sunoco franchise might run you between $25,000 to $600,000. 
• Shell: With an annual franchise fee of around $30,000, your initial investment might range from $2 million to $6 million.

Anyone serious about opening a gas station franchise should reach out directly to the company. You’ll get a more accurate estimate of costs based on your actual location. 

Franchise vs. Independent Gas Station: Which is Right for You?

Everyone has different business goals. Here’s what to consider when choosing between a franchise and an independent gas station.

• A tried and true plan: Most franchisees are selling the ability to walk you through an effective plan that has worked for thousands of others. If you want a helping hand as you build your gas station, you can rely on support from a franchise. 
• Control: If you prefer to stay in complete control of the process, then an independent gas station might be a better fit for your situation. 

Step Three: Decide if Owning a Gas Station Is the Right Choice for You

Owning a gas station might be the right fit for your business goals. But it’s not the right choice for everyone. Weigh the advantages and disadvantages before moving forward. 

Pros and Cons of Owning a Gas Station

Pros

• In-demand product: The demand for fuel is built into the economy. People use fuel to move around town. 
• Additional products: Selling gas will likely only be a part of your business model. You also have an opportunity to sell items inside a convenience store. 
• Limited labor requirements: You likely won’t need the help of skilled laborers to run your gas station. 
• Independence: You have the ability to set your own hours as you build this business.

Cons

• Fluctuations in fuel prices: Fuel prices are volatile, which require constant adaptations. 
• Long opening hours: While you can hire help, most gas stations are open for extended hours. 
• Electric vehicles on the rise: If electric vehicles eventually replace gasoline vehicles, gas stations must evolve their business model. 

Step Four: Develop a Business Plan for Your Gas Station

If you decide to move forward with opening a gas station, it’s essential to develop a business plan.

• What is a business plan? A business plan is a document that contains an outline of your business goals. Its goals beyond listing your dreams, the document should include steps on how you plan to achieve those goals. 
• What’s included? A business plan should include an executive summary, a business description, market research, staffing strategies, financial projections, sales strategies, and more. Take a look at a business template for more direction. 
• Why you should make one: Without a business plan, you are building a business without a destination in mind. Plus, most investors and lenders will ask to see this document before parting with funds. 

"A small business is an amazing way to serve and leave an impact on the world you live in." — Nicole Snow

Step Five: Obtain Financing for Your Gas Station

It’s unlikely you have the cash on hand to obtain a gas station. The good news is there are many ways to get your hands on the funds you need to move forward. 

What Types of Gas Station Loans Are Available?

Like other types of businesses, prospective gas station owners can pursue loans. Here are some gas station loans to consider:

• Business lines of credit: A line of credit is a type of flexible lending solution through which you can tap into funds on an as-needed basis. It’s a good option if you aren’t sure about the cost of a project. You might like to visit our list of the best business line of credit options.

• Equipment loans: Gas stations require specialized equipment, which means you can find equipment loans. 

• Working capital loans: Large working capital loans can help you get your gas station business operational. 

Where Do You Get Gas Station Financing?

You can obtain gas station financing through a variety of lenders.

• Traditional lenders: If you have an established relationship with a traditional bank or credit union, they might be willing to provide a business loan. 
• Online lenders: Online lenders offer business financing opportunities, which you can use to fund your gas station business. 

Can You Get an SBA Loan for a Gas Station?

The Small Business Administration provides backing for SBA loans, which are administered through lenders across the country. Depending on the situation, you may be able to use an SBA loan for a gas station. But as the business owner, you’ll need to meet specific financial requirements. 

Step Six: Select an Appropriate Site for Your Gas Station 

The right location can make all the difference for the success of your gas station. Here are some factors to consider:

• Customers crave easy access: The right location on a busy street can make all the difference to your gas station’s success. 
• Competition: Find an area that can support another gas station. 
• Modes of transportation: Opening a gas station in a neighborhood that primarily relies on public transportation might not be the right move. 
• Pay attention to market research: Take all of the available information into account when selecting the right place to build your gas station. Don’t ignore any potential red flags. 

Step Seven: Navigate Legal and Regulatory Requirements

Gas stations owners encounter more legal and regulatory requirements than the average business owner. Here’s what to keep in mind:

• Zoning: You must keep zoning ordinances in mind when choosing an appropriate location for your station. 
• Permits: Most local and state governments will require you to obtain a variety of permits, including safety permits before you can serve customers. 
• Licenses: You may need a license to sell gasoline in your particular location. 
• Environmental regulations: The potential for environmental harm means that gas stations must abide by environmental regulations. 
• Ongoing maintenance: Gas station owners must stay up to date with their permits and required maintenance to continue operations.

Do your homework to learn about all of the local, state, and federal laws that you must follow. If you have questions, reach out to the regulatory agency in question. If you don’t follow the rules, the authorities might shut down your operations. 

Who Regulates Gas Stations?

Gas stations are regulated on federal, state, and local levels. As a gas station owner, it’s up to you to find out which regulatory authorities you need to work with.

• EPA: The United States Environmental Protection Agency has rules in place about gas station environmental procedures. 
• FDACS: For example, in the state of Florida, the Florida Department of Agriculture and Consumer Services regulates gas stations. 

Environmental Regulations and Compliance for Gas Stations

If you open a gas station, be prepared to follow environmental regulations.

Essentially, these regulations are in place to ensure your gas station doesn’t cause undue harm to the environment. For example, you’ll be required to install appropriate tanks and maintain them in a manner that avoids leaks. You might like to read more about requirements for a green gas station here.

Step Eight: Acquire the Necessary Equipment and Supplies

It’s impossible to run a gas station efficiently without the right equipment and supplies. While some of the necessary items are obvious, like gasoline and pumps, other necessary tools are less obvious.

• Supplier relationships: You’ll need to build relationships with fuel suppliers to keep your station running smoothly. 
• Appropriate tanks: The types of tanks you use to store the gasoline matter. Do your research to find the best kind of tank for your area. 
• Easy to use pumps: Intuitive pumps are especially important for self-service stations. You want to make everything as easy as possible for your customers. 

What Do You Need to Open a Gas Station?

Here’s a list of equipment and supplies you may need to get your station open:

• Gas tanks
• Fuel pumps
• Fuel
• Convenience store building
• Convenience store supplies, including food, drinks, and more
• Shade structure

Step Nine: Hire and Train Staff and Management

It’s a challenge to run a gas station without help. You can hire and train staff to keep your operations running smoothly.

• Provide incentives: You want your employees to want to work for you. Consider providing a competitive compensation package to attract the right talent. 
• Provide training: Don’t throw your employees into the mix without proper training. The right training can make sure everyone is on the same page. 

Step Ten: Market Your Gas Station Business 

When you are ready to open your doors, you’ll need to consider your marketing strategy. Here are some common ways to spread the word:

• Signage: Large signs on the property can let potential customers know that you exist. 
• Promotions: Everyone loves a good deal. Consider running promotions to draw customers in. 
• Loyalty programs: An effective loyalty program will keep your customers coming back for more. 
• Services: A varied lineup of services can entice customers to choose your gas station. 
• Responsive employees: Happy employees that help your customers can help you build a loyal customer base. 

Step Eleven: Manage Daily Operations and Finances

Opening your doors is cause for celebration. But it’s just the beginning of your business. You’ll need to manage finances and daily operations for years to come.

Here are some things to stay on top of:

• Fuel procurement
• Pricing
• Inventory management
• Staffing
• Record keeping customer service

Diversifying Gas Station Revenue Streams: Services and Retail Opportunities

Selling gas might not be your only revenue stream. Here are some other services and retail opportunities to consider:

• Convenience store
• Car wash services
• Food and beverage services
• Loyalty programs
• Auto repair services

Don’t be afraid to get creative. Consider adding anything that you would want to see as a customer. 

Keys to Owning a Successful Gas Station Business

• Do your research: Careful research can help you determine the best path forward. 
• Be flexible: Changing times require all business owners to adapt to new situations. Make necessary changes along the way. 
• Make staff a priority: A happy and competent staff can make a big difference to your customers. Invest in employees and the right training. 

Final Word

Owning a gas station can be a lucrative business opportunity. As a prospective business owner, it’s critical to run the numbers before diving in. Also, make sure you are comfortable dealing with a significant amount of regulatory paperwork required to maintain your gas station for the long term.