One interesting observation that I was able to pick up while dealing with most of the buyers is the myth that gas stations are easy to manage and operate and it requires low skill employees and/or management. Most buyers want to buy a gas station and hire low wage store clerks to run the business while they cash in the profits. Unfortunately I have to DISAGREE with this assumption completely. Gas station business is one of the most demanding and challenging businesses to operate in the retail industry. For one, it is a cash business hence the importance to have good management control of the cash that comes in each day. Secondly it is an inventory intensive business, where it is very important for an owner to manage the inventory and knows what to buy and what not to buy based on sales patterns. Thirdly, gas station and c-store businesses are changing rapidly. Today this businesses sell more than just your average gas and chocolate bar. Today they include services like money transfer, phone cards, groceries, etc. as such an owner needs to be constantly involved in understanding what the consumer demands. Furthermore, an owner who spends time observing his or her customers and gets to know them might be able to add products most desirable by its customers base and increase the revenue of the store.
When buying a gas station, there is also the issue of financing. As most buyers will find out that banks are very hesitant to finance gas stations due to both the lack of capital assets in the business and the potential environmental risk associated with it.
Most buyers are also misinformed on the profitability of gas stations and c-stores. Most of them talk to us with the expectation of wanting to make over $100,000 a year owning a gas station while not putting in 100% of their time and effort. Unfortunately the reality has been that most successful gas stations with good profit margins are family owned and operated and the owners are involved in the business 120% of the time. In my experience as a business broker, I have seen very few small businesses with absentee owners able to generate high profit for the owner and yield a return of over 15% on the cash investment. So for all those buyers out there thinking that owning a gas station business is an easy business to run.....please think again and I encourage you to speak with an experienced business broker first before planning to go further.