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The Ultimate Guide to Owning a Gas Station

In this guide, we’ll navigate several spheres to what you need to know about owning a gas station; how and where to find gas stations available for sale, as well as how to set yourself up to operate your gas station business.

Jerry Uke
Jerry Uke
Market Analyst
Cover Image for The Ultimate Guide to Owning a Gas Station

At Zonado, we've helped ease a host of transactions in commercial real estate. Based on our findings from people who have owned and sold gas stations, we've put together this guide to help you do the same. Gas stations look like structures that take years of planning to put together. If you are that person who wants to figure out how to buy and own one, you’ve come to the right place.

In this guide, we’ll navigate several spheres to what you need to know about owning a gas station; how and where to find gas stations available for sale, as well as how to set yourself up to operate your gas station business.

To succeed in this business, it’s important to understand how the industry works. We’ll start with origins, answering the question below:

Where do gas stations come from?

Gas stations are an important unit of a much larger spectrum which is the oil and gas industry. The industry is made up of three segments which are;

  1. The Upstream

  2. The Midstream

  3. The Downstream

The Upstream includes organizations that explore oil and gas wells. In other words, the Upstream goes for the unrefined crude which can you can find deep inside the ground. Midstream companies transport sourced products from the oil and gas wells to refineries. This is where the sourced material turns into consumable products. Gas stations belong to the downstream segment of the oil and gas industry. This is where the products get refined and distributed to consumers like you and me. This is why you’d notice that gasoline is not the only type of oil and gas product that sells at gas stations. You could find out more about how the oil and gas industry works here.

Why You Should be Thinking of Owning a Gas Station

There are a host of benefits you could enjoy if you run a gas station business. Let’s take a look at these benefits below:

  • Your product will always be in demand: Transportation is one thing that is essential in every community in the world. People need to get to various places and products need to move from one place to the other, and this affects every sector in business as well. Thus, if you owned a gas station, you would be selling an essential product that people would always need.

  • You can sell more than fuel: When you own a gas station, you can introduce add-on businesses that can help you maximize your gains. You can sell more than fuel. Most gas stations add a convenience store. Consumer products such as cleaning agents, drinks, supplies, or groceries sell here. To add to that, you could open up a car washing service, or even a repair shop to give more value to your customers, and boost your revenue.

  • You control everything: Save for the set rules put in place by the regulatory bodies responsible for governing the distribution of oil and gas products, you get to control every other aspect of your gas station business. What this does for you is that it gives you options. Depending on how fast you grow as a company, you can choose to run as an independent company or open up a franchise. If things aren’t going so well, you can also decide to sell your gas station to an interested buyer.

  • You could own a gas station franchise: You have the option of being a gas station owner by opening your business under an established brand as a franchise. Customers always tend to patronize established brands over others. If you go with franchising, you would get the same customer recognition as the parent brand. One downside of running as a franchise is that you would have to operate according to the set standards put up by the parent brand. Some of the biggest franchises in Canada are; Petro Canada, Shell, Esso, and Husky.

  • Insurance options: Every business runs at some kind of risk or the other. For gas stations, one of the biggest threats is the possibility of a natural disaster. Or even mistakes that could lead to fire outbreaks or explosions. The good side to this is that when you run a gas station under a franchise, you would have access to insurance. This would cover damages caused by environmental and natural factors. In the case of franchises, the parent company of the franchise takes care of some major cost-intensive responsibilities. These include tank upgrades and leaks depending on your agreement with the franchisor.

  • You wouldn’t always require skilled labor: Depending on the nature of add-on businesses you choose for your gas station, a huge percentage of the labor you would need to employ can be low-skill labor that is easy to find and replace. This means that you can keep your wage expense low and controllable.

The Future of Fossil Fuels

While it is still very much relevant, there’s been a lot of talk about the possibility of fossil fuels like diesel and gasoline becoming obsolete in 2030. Countries like Norway, India, Germany, Canada, China, and others have proposed different levels of bans on the production and use of fuel-powered vehicles. All of which will take effect within the coming decades.

Asides from the environmental damage done by the processes of producing fossil fuels. There’s a need for the world to completely transition to using green energy. Car-producing companies like Tesla have been at the forefront of making electric vehicles as an alternative to this problem. Other car giants in the world such as General Motors and Daimler Ag have also hopped on the train, making their models of electric vehicles.

Yes, this isn’t promising news for the future of gas stations. But on the bright side, it’s a huge opportunity to switch from being a gas station to becoming a power station for these electric vehicles. As far back as 2019, a gas station in the U.S made a full conversion to an electric-vehicle charging station.

This happening opens up a world of possibilities. As we evolve to the new normal, your gas station has the option of adapting to the current reality. This will let you maximize your gains in the process.

Whatever happens, there’s always going to be a need to power up the vehicles we use, either by fueling or charging.

So as an intending gas station owner, you shouldn’t be afraid of the likely changes that would take place in the industry. You need to be ready to embrace this change and make your gas station business evolve with it.

Where to Find Available Gas Stations For Sale

So you’ve decided that you would like to go ahead and buy that gas station. The focus now is where to find available gas stations for sale. It’s very unlikely for you to see a ‘for sale' sign at any gas station because that would reduce the faith of the customers in the business.

But, there is another way to find gas stations that are up for sale and this is through the internet. Depending on your location, here are some of the best online solutions where you can find a gas station up for sale:

1. BizBuySell

Using BizBuySell is easy. All you need to do to find an available gas station is use the search engine on the website. You can filter the search for several preferences like location and keywords.

Once you find a gas station you like, you get to contact the seller by sending a message on the website. As a potential buyer, you are not required to make any payments to use the platform. You need 5 steps to get your gas station which are; Exploring your options - Picking the right gas station - Making an offer for payment - Making payment - Closing the deal.

BizBuySell also provides learning resources to tutor you on how to carry out each of these 5 steps above.

2. BusinessesForSale.com

Businessesforsale.com shows gas station options up for sale on a worldwide scale. This removes the location boundary. It also gives you access to gas stations in different cities all over the world.

The platform uses a keyword-first approach to using the search engine. You can choose the advanced search option. Here you can use filters to narrow down your search for preferences on price range, location, and business categories.

3. LoopNet

LoopNet has a robust platform with a good number of success stories over the years. In numbers, LoopNet has sold 1 million properties since its start.

Running a search would open up a simple module to show you details of available options. Getting more details about any selected listing would need you to sign up on the platform. The search engine allows you to search by location or property type.

4. Business Sell Canada

On this platform, you can find available gas stations in Canada. But, the website’s user experience might make it a difficult process for you.

To use this website to find a gas station. You can choose to use the available search engine. Or, scroll through a list of available listings that includes different businesses. When you find a gas station you like, the contact details of the owner are there for you to reach out to them. Pictures of available listings are not included on the platform so you would not be able to see the listing until you have contacted the owner.

5. Zonado

Zonado’s the best option if you are searching for gas stations within Canada. The platform is also free to use. Getting the results you are searching for is followed by just a few convenient steps.

Zonado allows you to filter specifically for Gas Stations on its search engine. This is in addition to the other filters available to suit your preference. Properties get put up by both Realtors as well as property owners so the chances of finding what you’re looking for are quite good.

A standout feature for Zonado is the option for you to list a particular property you are wishing to get as a Want. So if you run a search but couldn’t find a gas station you liked, you could submit a Want specifying your price range, as well as the areas which you like.

This allows 2 things to happen - users on Zonado who may be aware of an opportunity can message you right on the platform (you don’t need to put out your contact information) and Zonado will alert you when a listing matching your criteria gets added to the website. Doing this 100% free as well.

Sign up free and add a Want here.

What to Consider Before Making That Purchase 

After you find the right gas station to buy, you shouldn’t jump right into it. There are a number of further checks to make before you send that check in to make the purchase. It can be quite tedious, but this part is important. You can call it Due Diligence. Here are some of the details you don’t want to miss:

Location:

Several factors will come to play to determine how well your gas station sells its products. These factors will include environment, quality of service, pricing, and the condition of your infrastructure. But, the location of your gas station is as important as anything else.

Gas isn’t like any other product where the average consumer can choose to buy when they feel like it. A lot of vehicle owners go to get gas right at the point when they need it. Research by Exxon Mobil showed that only 20% of consumers care only about the price.

While preferences may differ from one vehicle owner to the other, two things stand out which they all always want; speed and convenience. Every vehicle owner wants to get their gasoline as fast and as convenient as possible. Thus, you need your gas station to be at the most accessible location possible.

You might want to think of how close your gas station is to major roads, how visible it is for someone who’s driving by, and how fast it is to get gas at your station.

Environmental History:

One of the biggest threats to your gas station will always be environmental hazards and possible natural disasters. These include storms, cyclones, and landslides. You would need to do a history check, to find out how prone the location of your gas station is to environmental hazards. As much as possible, you would want to avoid any of such occurrences.

Staying in a location prone to environmental hazards could mean a lot of negative things for your gas station. You could wake up to find out that a storm damaged some of the infrastructures you have at the gas station.

Making these extra checks can be as easy as running a Google search. Or, asking locals some questions when you go to survey the gas station you want to buy. This might as well help you avoid a situation like this one.

Finances of Current Owner:

In as much as it might not exactly affect the outcomes of the business when you are in charge, you need to investigate the financial records of the gas station before going ahead. You could do this by asking for inventory details of the gas station from the current owner.

Getting this will help you identify the performance of the business at the time. This could help you watch the progress when you take over. Also, this knowledge can inform your decision to proceed with the purchase of the gas station or not. 

Required Renovations:

You would need to carry out an investigation to find out the condition of the infrastructure in the gas station you want to buy. You may find out that there is a need to carry out some renovations. It’s important to find this before closing the deal. So, you can reach an agreement with the current owner of the gas station about this.

You would likely want to avoid a gas station where there is a lot of equipment needing renovation. This should be a huge red flag for you as it suggests that more infrastructure would very likely get damaged in the future. The cost of carrying out a thorough renovation could likely measure up to the cost of purchasing another gas station, depending on the size of the gas station.

Local Laws:

Every city has local laws that affect the way business runs in that city. For your gas station, these laws can affect just about anything. From the products you can sell in your convenience store, to taxes and quality assurance. You need to get familiar with these local laws so you don’t end up flouting any of them unknowingly.

You could do this by making inquiries with the relevant government authorities. You would need to consider three kinds of laws; federal and provincial laws which apply to every business within the country and the different provinces, and municipal laws which are more specific to businesses in cities, counties, and smaller settlements in general.

In addition to the generic laws of business. There are also laws specific to businesses in the oil and gas industry in Canada. Municipal laws are best obtained from the physical location of the municipal office where your gas station is.

Business Plan:

While it’s okay to rely on the natural operations expected of your business to carry you through, you need to have an actual plan to scale the success of the gas station. Leaving it to the natural factors might work, but it’s not enough to bank on that. You would need to draw up strategies to ensure that your business stays on the fast lane to success.

You must treat and nurture your gas station business like any other business. Take some time to study the local community where your gas station is. This would help you figure out the right products to sell, based on the credible demographics you found.

You also need to set achievable targets in sales, profit margins, customer satisfaction, and quality of delivery. Study the growth of your gas station in these areas and make informed efforts towards all-around improvements.

Setting up Your Gas Station

To be ready to set up your gas station, you have to close the deal first - this involves the final process of purchasing the gas station. Closing the deal can be a tricky process. Depending on major factors like location, infrastructure, revenue, and business model, the cost of purchasing your gas station could vary on different levels. Starting from as low as  $50,000 to as high as $50M.

Financing the purchase gets carried out by different methods. It is very advisable to proceed at this stage with good legal counsel.

Beyond big banks, there are a number of lenders you can work with to finance the purchase. Find a list comparing interest rates here.

Now, how do you set up your gas station? Let’s take a look at a couple of steps that would make you ready to kick off operations at your new gas station.

Management Structure:

Building an effective team is one of the most difficult things to achieve in every business. As much as you would like to be in total control of your business, you can’t do everything on your own. You would need help from a team, and this includes everyone who would be your employee.

Be sure to hire people who share your vision for the business, and are willing to dedicate quality time to achieve the business goals. Doing this would give your new gas station the structure it needs to operate with minimal hiccups. But, you may not be very experienced at this. If this is your first foray into running/owning a business, learning about the fundamentals of setting up an effective team would serve you well.

Expenses:

 If you were building your gas station from scratch, the cost estimates to expect is here. If you choose to purchase one, you would still have a pile of recurring expenses to plan for. These include taxes, insurance, and operational costs.

In Canada, the federal government stipulates 10 cents per liter of gasoline. An extra layer of gas taxes which vary by province and also by city (in some cases) also exists. Combining both, an average of 27 cents per liter gets taken in gas taxes. On the bright side, this gets infused into the amount consumers have to pay when they purchase gas.

For Insurance, the average price of a standard General Liability Insurance policy for small gas stations ranges from $97 to $139 per month based on location, services offered, payroll, sales, and experience. A more detailed guide to gas station insurance is available here.

Profit margins for gas stations are thin. External factors such as the fluctuating international gasoline prices play a role here. The average gas station makes within the range of 5-20 cents per gallon of gasoline sold. This means that if you sell 15000 liters a day, you could earn between $200 to $800.

Most gas stations make a better profit from getting their customers to use the convenience stores attached to the gas stations.  

Visibility:

Gas stations act as natural marketers for themselves. This is due to the nature of the product and the visible physical locations they use. Still, you can’t bank on that alone. Your gas station business would need a publicity strategy to spur its traffic. You should be at the forefront of this part because your gas station would rely on traffic to succeed.

You would need to pay attention to the little things that could convince a vehicle owner to drive into your gas station over others. This is relevant if you forego the major franchise options and opt to build your own brand. Investments in making your brand more visible and trustworthy will pay dividends for years to come. As a franchise owner, however, this is something you don’t have to stress over.

There you have it. You’ve set up your gas station after going from that first search to finding a suitable gas station to buy, to doing proper due diligence, making payment, and taking the final steps to kick off your journey as a gas station owner. Stay tuned to Zonado for opportunities and knowledge on finding and owning commercial real estate in Canada.

Jerry Uke

Market Analyst


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