GSB-01: Introduction- What is a Gas Station Business- Why should Anyone Look inside This Business

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Hello there, I am Shabbir Hossain thank you so much for tuning into [spp-tweet tweet=”Gas Station Business 101 podcast”]; I really do appreciate all of you for joining me.

This podcast is and will be all about gas station business, where I will discuss why and how to start a gas station business, how we can manage, market and operate them the most effective and innovative ways so we all can make more money, my goal is to show you how you can increase profitability and improve your bottom line. If you are new and looking to get started in this line of retail business then this is the show for you, if you are already a seasoned gas station business owner, this show is also for you, as I will discuss many ways to improve your business and add extra revenue, so your bottom line numbers look better than before.

Those of us that have been in this line of business for many years already know that the cost of doing business has gone way up while the overall profit margin has gone down. To give you an example or two, 20 years ago when I started in this business the minimum wage was around $5 now it is around 8, from commercial liability insurance to utility bills they all have gone up anywhere from 10-20% while gross profit margin went down from around 30% to about 25% so as you can see it is a double edged sword so to speak. And to tackle that sword we really have to put our heads together and come up with more ways to increase sales and therefore ultimately increase bottom line dollars.

Before we start I should give you little background about me, as I mentioned I am Shabbir Hossain, I am a proud Bangladeshi American, I have a bachelor’s degree in marketing from University of South Alabama, I am married to my wonderful wife, Rita, we have two daughters.
I started in gas station business couple of years after college  though I didn’t plan to get into this business, but more likely fell into it somehow, maybe a story I will save and share another day.

My very first gas station business was in Tampa Fl, and since then in last 20 years I have bought, owned, leased and or sold more than 25 stores. In this ongoing journey of 20 years, I learned a few very valuable lessons. Not every business is exactly the same; they are all unique in their own ways. It is never one size fits all for this type of businesses, it may work wonder for McDonald’s everyday but for a neighborhood convenience store or a gas station it can be a pathway to failure. I will explain why in later episodes.

I have decided to start this podcast so we can all have  knowledge sharing media platform, as I mentioned earlier this is a business that has too many moving parts and each one is very unique in their own way, even after doing this business for 20 years I do think I still have a lot to learn and adopt, so my goal is to share the knowledge we all have with each other, and to do it successfully I will need your feedback, input , and suggestions so I can come back and share them with the rest., I know everyone of you have something valuable to contribute where we all can learn from you as you will learn from me

So let’s get started, since this is the very first episode, I have decided to start from the very beginning and talk about some basics like what is a gas station business and why and how to get into one.

But first here are some facts about gas station business, there are little over 151,000 gas stations and conv. stores in the US alone, out of those 151k about 126k are selling fuel, so those are gas stations in real sense, the rest are conv. stores without fuel.

The combine sales for all these 151k stores as of December 2013 were 700 billion with a B!!  It is a pretty huge number!!! Almost 3/4 of a trillion dollar if you think about it. When the whole US GDP is only around 17 trillion. Now that I got your attention let’s talk about the growth of this industry. Just in 2013 there were little over 2000 new stores built across the US, again another big number. So as you can see it is a fast growing industry, more and more people are finding out about this recession proof business and jumping into it.

What is gas station business:

A typical gas station has two main parts -Gasoline or fuel and then there is the Conv. store where we sell from soda pop, candy, milk and snack foods. Most typical conv. stores carries around 2000 items or SKU, you can think of them as a mini grocery stores but with fuel
If you are new to this, you may ask why I should get into this line of business, well the answer is simple, it is a true recession proof business, and after 2008 every gas station business owner will agree that even though the business slowed down but never just went away, instead it came back stronger. Regardless if people have jobs or not, they still need fuel for their cars, if some of them are smokers, they still need their cigarettes, soda, candy for their kids well you get the picture, we provide some of the very basic necessities to our community.
Another reason is the risk of failing is much lower compare to most other retail businesses, again it goes back to what you are selling, and you are selling the basic necessities for our daily life. Fuel for your car is neither a luxury, nor the gallon of milk for your kids. Not every retail shop sells basic necessities; think about a pizza shop, a clothing store or a sporting goods store, none of which are considered basic necessities.

Now that we established it is good line of business to get into let’s talk briefly about how to get into them. It is a vast topic and I will touch on some major points but if you need more in depth information, I would direct you to my blog which can be found at www.gasstationbsuiness101.com or you can also read my book on Amazon call “How to find and buy a gas station business”

Now there are 3 ways to start or get into a gas station or convenience store business:
1st is to buy an existing business,
2nd is lease an existing business

3rd way is you can build a new gas station and start that way. though if you are new to this business, I will strongly recommend you not try this 3rd option.

Depending on your budget, leasing is usually the most cost effective way to get into this business; this is how I got started in this business. Leasing also gives you greater flexibility to get out of it in the event if you decide this is not for you.

If you are in the market to buy such a business there are few things you have to decide first

Do you want a gas station or a convenience store?

If you want to buy a gas station, should you worry about what brand of fuel it carries, I get asked this question quiet often what brand should I buy and how important is branding.

Even though the question sounds simple enough but the answer is not so simple. the best answer is it depends, well it depends on many factors such as your geographic location, the locality and neighborhood that business is located in and what are the dominant brands in that area. Some brands are stronger in some cities and states than others, for example BP brand is always been the strongest brands in Ohio, one big reason is BP is based out of Cleveland, Ohio. So if you are in Ohio I would say if you can start a BP branded store you will have strong credit card base to support your business.
But if you are buying a Conv. store than the most important factor is what neighborhood is that business located at, typically conv. stores without fuel only thrives in densely populated inner city locations. But there are always exceptions to every rule, so just keep that in mind.

Getting into a business such as this takes a big long term commitment, there is certainly a decision making process we all go through but most importantly the question you should ask yourself first is “am I cut out to do this”, Before you answer find out what it take to be a successful gas station business owner.

Dedication, attention to detail, love for numbers, repeating the process and being a people’s person are what most successful business owners possess
If your answer is yes then you are on your way to a good start to a better and brighter future for you and your family.
Next let’s talk money, a common question I get asked a lot is how much does it cost to get into a gas station business, the answer once again is ….it depends, well yes it does, a gas station in NYC with real estate may cost you as high as 3-7 millions dollars when a similar type station may cost only 1.5 million in a small city of Alabama, Mississippi or Tennessee. Same goes for leasing; it can be very high in some parts of the country when not so expensive in other parts. It all boils down to the basic economics of supply and demand, where demand is high since supply is limited the price will be higher.

On the other hand leasing a similar store can cost much less then when you buy it with real estate, so if you are on a limited budget, your goal would be find a good station that is for lease.

A typical lease deal often requires that you pay for goodwill; goodwill is an amount you pay to seller for the opportunity that he or she is transferring to you so you can make money from operating the business. On top of the goodwill money, you also have to pay for the entire inventory aka the merchandise that is in the store. There are some additional expenses such as security deposits, first months; rent and such.
If you are wondering whether you can get a bank to finance your deal, then the answer is yes, provided you have good credit, enough collateral, tax returns showing solid income for previous years along with good business plan than yes there are plenty of loan options available out there.
We will touch on financing in more details at a later episode, but just remember banks typically only finance when you buy with real estate and not a leased property as there is nothing tangible for them to hold on to in the event you default.

Okay I think we covered some basic grounds today, I also wanted to keep the session short and sweet.
In the next few episodes I will be covering some more basic topics like How to find a gas station that is right for you, how to come up with the right valuation and how to get financing. Then we will get into the biggest and best part which is marketing, which is a vast topic and I will break it down in parts so we can address each of the key components separately and in depth.
So please stay tune

We are the end of today’s episode, and I will be recommending a book every week that I think you can benefit from reading not just in your professional life but in your personal life as well. Recently I have taken up reading, and I realized how it can take my mind off so many of the daily life stress and not only that it is a great exercise for your brain and mind.

I recently read a book call 4-Hour Workweek by Tim Ferris; it is a fantastic book about how to work smart and not hard. You don’t have to write it down, just go to my blog and you will find everything we talked about today in my show notes under the tab podcast and session 1, including the link of this book on Amazon.

If you have any question, please feel free to ask me and I will try my best to answer them. You can reach me by going to my blog at gassattionbusiness101.com and go to the tab where it says “Ask Me“, you can also reach me via Facebook at Facebook.com/csbacademy, if you rather use Twitter, you can find me at @csb_Academy
I hope you can take away something from each episode and implement in your business and see some positive result.
Once again I want to thank you from bottom of my heart for staying with me, please feel free to contact me for any comments, suggestions or questions you may have as I would love to hear from you.
Until next time, take good care of yourself and remember to work smart and not hard.