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Buying a Gas Station?

gas-station

Gas stations are one of the easiest businesses to sell among small businesses and one of the most frequently purchased.

A gas station is really just a platform to speculate on the price of gas. The higher the price of the gas, the less the owner makes, and the lower the price, the more the seller makes. I know that this is counter intuitive, but this is the reality of the business. This is because margins do not change and the percent the credit card companies charge does not change. So if you are making 15 cents per gallon, the price of gas is $4.00, and the credit card charge is 4%, the credit card company receives 16 cents; if the price of gas is $2 per gallon, the credit card company is paid 8 cents.

Most gas stations do not make money on the gas; rather, they use the gas sales to pay the overhead costs such as rent, insurance and utilities. The real money is in the convenience store. When you buy a bottle of Poland Spring Water for one dollar, the owner of the convenience store paid 15 cents for it. Not bad! You just paid $1.50 for a cup of coffee? The owner of the C-store made $1.40.

The overall gross margin for a C-store is is 35%; thus if the gross is $1 million, you made $350,000. If you have the gas covering all of your overhead, you are doing quite well. The trick to making serious money is to sell enough gas to cover all of the overheads, and getting the C-store volume high enough whereby you are making well into six figures.

#BuyingGasStation #NewJerseyBusinessBroker

Written by Brad Palmer

Edited and Posted by Geoff Caplan


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