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Gas stations are an essential business. Most cars still run on fuel and drivers expect to see several gas stations or filling station options in their area.
Getting into the gas station business may seem expensive, but you can actually open a gas station with no money. This industry is expected to grow in the future and you’ll need a firm understanding of the industry and how to structure your business before getting started.
Can You Start a Gas Station with No Money?
To start a gas station with no money, you’ll need to use other people’s money which is commonly referred to as financing. There are several options for gas station loans and funding opportunities.
In order to access funding, you’ll need to meet certain eligibility requirements and have a detailed business plan. Here are 15 key steps to help you start a gas station business with little or no money.
How to Open a Gas Station with No Money
Step 1: Understand the Gas Station Industry
It’s important to understand the gas station industry early on so you can determine if this is the right business option for you. Gas stations provide fuel, convenience items, and some even offer car washing services, air pumps, and other services for drivers on the road.
The gas station industry is currently worth more than $148.3 billion was expected to increase by 2.6% from 2018 to 2023.
The industry did see a sharp decline during the global pandemic as oil prices increased rapidly but projections are on the rise once again as the demand for oil persists. Some common challenges gas station owners face include
- The price of oil constantly changing which then changes prices and profits
- Maintaining enough fuel reserves to serve customers during heavy traffic times and emergency situations such as bad weather conditions
- Receiving timely fuel supplies, especially for gas stations in remote areas
Choosing a credible and high-quality fuel partner can help with some of these issues. Some of the biggest gas station chains in the U.S. are Exxon Mobil, Shell, Chevron Corporation, and Circle K.
Step 2: Perform Market Research and Feasibility Studies
Performing market research before starting a business will help you narrow down your target audience and understand how to best serve them. Market research also involves analyzing other competitors in your industry to see how they operate and if there are any gaps in the market you can fill.
Start by narrowing down your target customer. While anyone should be able to stop at your gas station and fill up their vehicle or make a purchase inside, you may want to include more diesel pumps to better serve truck drivers if your desired location is a hot spot for trucks to stop.
According to JBS Industries, gas stations will fully-equipped car washes and special convenience items and food stand to be more profitable than the ones that just offer fuel. While gas may attract drivers to stop, convenience items and extra services can boost profits.
Step 3: Explore Your Gas Station Financing Options
Next, explore your funding options to see how you’ll obtain the funds needed to open a gas station. There are various financing options available for gas station acquisitions.
Here’s what you need to consider about each option.
- Seller financing. If you’re buying an existing gas station, the owner may offer what’s called seller financing. The buyer must make a down payment then regular payments to the seller to pay off the loan. This option makes the deal more attractive to prospective buyers who don’t have the cash upfront. But, it also means the original owner is vested in the business (until the loan is paid off) and may still have a say in how it's run.
- Business loans. Business loans are also available based on your credit and other factors. The Small Business Administration offers different loans including microloans for under $50,000. Banks, credit unions, and online lenders can also help you fund your business with cash quickly. The main drawback of business loans are the interest and fees attached to the loan.
- Crowdfunding. Sometimes, business owners use crowdfunding campaigns to gather donations from others to invest in startup costs. Crowdfunding can work if you have a worthy cause and lots of supporters but you also have no control over who donates and how much you’ll receive.
- Private investors. Private investors may be able to invest in your gas station business, but you’ll need to provide a strategic pitch and show detailed projections to demonstrate how investors would get ROI. Even then, some investors see gas stations as a risky option due to the unpredictable income and thin margins so this probably shouldn’t be your first option.
- Grants. Grants are a highly sought-after form of business funding because it’s money that doesn’t need to be paid back. Each grant has its own eligibility requirements so this will involve some research and planning on your part. Still, it’s well worth it to explore grants you may qualify for and apply.
Step 4: Select What Type of Gas Station to Buy or Build
Next, you’ll want to determine what type of gas station you want to open. You have a few options including a franchise, independently owned, or specialty gas station.
- Franchise. Franchise gas stations are owned and operated by someone who’s paid a franchise fee to a national supplier such as BP or Exxon.
- Independently-owned. An independent gas station is a business that you own outright and you have full control over your fueling partners, items you sell, and what you name the business.
- Specialty. Specialty gas stations also offer unique services such as premium fuel, car detailing, or oil changes. These businesses may sell different items such as themed t-shirts and souvenirs or even food that’s made to order.
Opening a franchise gas station may provide you with more resources such as trademarks, brand recognition, established supplier relationships, and a proven system. However, it may be a more expensive investment due to the franchising fee.
You also may be required to meet certain sales quotas and will need to meet certain agreement terms.
An independently-owned gas station gives you more freedom and control over how you run things. However, you’ll need to work hard to establish agreements with suppliers and pick out convenience items to sell to customers.
Step 5: Evaluate Gas Station Competitors
It’s important to research and analyzes local competitors in the gas station industry before opening your gas station. Review factors such as the competitor’s location, pricing, and services.
Ask yourself questions like:
- Which areas does your competitor excel in?
- Where do they fall short?
- How can you overcome the obstacles that your competitor faces?
- How will you deal with competition and make your business stand out?
Having competition is healthy and it’s a great way to learn from other successful business and determine how you’ll set your gas station apart. The marketing opportunities are also endless.
Maybe you can offer a discount on fountain drinks or free coffee with a fill-up. Or, you can partner with a local pizza brand to sell slices around lunchtime and provide a discount for people who purchase fuel as well.
Brainstorm a few ideas you can test out to differentiate your gas station from competitors.
Step 6: Choose a Legal Entity and Register Your Business
Registering your gas station as a legal entity is important because it will separate your business finances from your personal finances. Some common options include starting an LLC, partnership, or corporation.
Setting up a Limited Liability Company, or LLC, protects you from personal liability while a corporation such as an S-Corp allows you to put yourself and employees on payroll. Some corporations even require that you establish a board of directors and other managerial positions.
Each state has its own fees and requirements to register your business. Business formation sites such as Legal Zoom and IncFile can help you get started and obtain all the necessary documents you need. Or, you can consult with a lawyer.
Step 7: Write a Gas Station Business Plan
A business play lays out how you intend to operate your business and important factors such as your target customer, marketing strategy, and financial projections.
The SBA has several resources on how to create an effective business plan. Each plan starts with an executive summary that explains what your company is, your mission statement, and any other basic information. You’ll also need to add a:
- Company description
- Market analysis
- Organization and management structure
- Services or product line(s)
- Marketing and sales
- Type of funding
- Financial projections
Step 8: Raise Startup Capital for Your Gas Station Business
Use the financial plan you lay out in your business plan to expand on how you’ll fund your business and meet other monetary needs. As mentioned earlier, you don’t need to use your own money to start a gas station business, but you’ll need to consider gas station loans and raising capital through investors.
Consider applying for grants and local fundraising opportunities such as partnering with a local restaurant or caterer and receiving a percentage of the sales for one day.
You can also offer to honor your first 100 donors by making a plaque with their names on it to appear in your business once you open.
SBA microloans and peer-lending platforms such as LendingClub are other options to help you raise some capital.
Step 9: Find an Appropriate Location for Your Gas Station
Next, start scoping out some locations for your gas station. Consider areas that are easily accessible but also get a decent amount of traffic during the day. If your gas station is in a rural area and harder to get to, this could directly impact sales by limiting your customer base.
If your goal is to attract travelers or truck drivers, securing a location right off the interstate is always a competitive option. Also, don’t get discouraged if you see other gas stations in the area.
Think of how many times you see two gas stations directly across the street from each other and how both seem to be doing well and bringing in traffic.
Step 10: Get the Necessary Certifications, Licenses, and Permits
You will need a variety of licenses and permits to safely operate your gas station business. This includes state and local licensing which often involves an inspection and proof of ownership.
The Fire Marshall in your area may also need to clear the property to check for any fire hazards. Depending on which convenience items you’re selling, you may also need permits especially if you will sell enclosed alcoholic drinks.
It’s important to stay up-to-date with all the local, state, and federal regulations and ongoing requirements for your business.
Step 11: Build or Buy Your Gas Station
You’ll either need to build a new gas station from scratch or buy an existing gas station to start your business. It can cost anywhere from $250,000 to $2 million or more to build a gas station. You will need to hire an experienced construction company and obtain the correct permits and licenses to build.
New gas stations also require that you work with a construction or building manager to determine the number of gas pumps, underground storage tank sizes, and equipment you’ll need to build the structure.
Buying an existing gas station will likely be cheaper but the prices can still range from $300,000 to $900,000 or more. The cost will depend heavily on factors like the size of the gas station, location, as well as the current level of profit.
Step 12: Obtain Any Business Insurance That’s Required
Each state has its own licenses and fees for business owners. To open and operate a gas station, you will generally need a Motor Fuels Retail Outlet License which is a tax license you need to sell motor fuel in your state.
You will also need licenses to distribute food and beverages and to sell lottery tickets. In addition, explore insurance options such as property insurance, workers’ compensation for your employees and environmental liability insurance.
Like any other retail business, gas stations could be subject to theft, burglary, vandalism, and other hazards. Your employees could also get hurt doing something on the job so refer to an expert on business insurance options to determine which coverages are a fit for you.
Step 13: Find Suitable Suppliers and Build Relationships
Partnering with the right suppliers can make your gas station more successful. Network and build relationships with reliable suppliers for fuel, merchandise and other products and services you want to offer at your gas station.
This may involve having a few meetings with suppliers and comparing quotes to narrow down your decision. Check references to see how well the supplier has worked with others and assess the quality of their product.
Step 14: Develop a Marketing and Promotion Strategy
Marketing your gas station is an important aspect that can help bring in more customers and boost sales. You can also use gas station loans to fund marketing materials such as flyers, loyalty rewards programs, and signage.
Prioritize customer service by thinking about which features people would really appreciate and how to make your customers feel valued. Many gas stations offer a loyalty rewards card that customers can attach to their car keys and scan each time they get gas or buy a product.
These points then add up to rewards that can be used for free or discounted items inside the gas station. Some other clever marketing and promotion strategies include:
- A free slice of pizza or hot dog with a fill-up during opening week
- Displaying mini ads at each pump
- Promoting that you have super clean bathrooms (compared to other gas stations that may not be able to make this claim)
- Partner with apps like Upside to promote your gas station and make sure your business is registered with Google Maps
Step 15: Hire and Train Staff then Open for Business
Once your gas station is funded, licensed, and insured, and you have a solid business plan, it’s time to look into hiring staff. Print signs and flyers near the location of your gas station to announce that you’ll be hiring for several positions.
You can also utilize online job boards such as Indeed, or attend local job fairs to find candidates. Be specific in your requirements and carefully screen applicants to make sure they are qualified and hardworking.
Partnering Up: Attracting Business Partners to Share the Costs and Risks
Don’t let all of these steps to start a gas station with no money overwhelm you. It’s certainly possible and you don’t have to do it all alone. It helps to work with a business partner to share the costs and risks of starting a gas station.
In fact, some of the most popular U.S. businesses like Costco and Red Bull got started by a group of business partners. Consider joining a local Meetup group geared toward entrepreneurs or join another group for small business owners (either online or in person).
This will help you connect with like-minded people and build relationships with potential partners. You can also attend conferences and industry events to connect with potential partners.
Announce your plans to friends and family and mention that are looking for partners and investors to help with gas station financing. You never now who other people know and can connect you with.
Tips for Successfully Opening a Gas Station with No Money
One of the best tips for successfully opening a gas station with no money is to get mentorship and rely on resources like this article to help you get started. Carefully laying out the steps you need to take will help you become more proactive.
Also, working with a mentor or business coach who has already been through the process can provide you with a lot of key insight and resources. Here are some additional tips to successfully open a gas station.
- Become an industry expert. Be sure to learn everything you can about the gas station industry and operating a business. If possible, you may even want to seek out a role at a gas station business or a manager position so you can learn more about day-to-day operations.
- Improve your credit and manage your finances. Gas stations are expensive to open so you’ll likely need to qualify for business loans. Make sure you have good credit, pay debts down, and manage your income well to appear as an attractive borrower to lenders.
- Perform market research. Performing market research is important because you want to understand your market and competitors before you go into business. Plus, you will have a hard time securing financing and investors if you haven’t taken the time to research and analyze market conditions.
- Perfect your business plan. Work on making your business plan clear, realistic, and effective. This requires lots of careful planning and research but it will take some of the pressure off in the future since you’ll have a clear plan.
- Network with potential partners. Start networking with other people who are interested in investing in a business and could potentially be a partner. Partners help share the burden of each preparation task and also help you secure more funding.
- Seek out various funding opportunities. When it comes to funding your gas station, carefully assess all your funding opportunities and don’t expect to get the money you need for startup costs all from one place.
Starting a gas station is no simple task, but it can be a rewarding industry for the right person. Start studying the industry now and narrowing down your goals and desires for a gas station business.
Even if you don’t have the funds now, develop a plan and estimate costs so you can get ready to seek out funding opportunities.
Also, remember that you can lean on reliable business partners, franchise partners, mentors, and other business resources to help you along the way.