Start A Petrol Pump Business: Dealership Profit, Licensing & Investment
The petrol pump business is always a profitable investment because people never want to give up on this business. After all, it has great profit-making potential.
Despite the increases in fuel prices, the profit indexes of the gas station companies do not suffer any damage.
The guide below will help you with what to do in the process of opening a petrol pump or a gas station.
How To Open A Petrol Pump?
Decide whether you will buy an existing petrol pump or build a complete one from scratch.
Depending on different situations, your decision may vary. You should definitely consider your location. Is there a gas station for sale in a heavily trafficked area that you can afford?
Perhaps you have in mind an amazing piece of land that is currently vacant. Find out about available petrol pumps or vacant lots by calling a real estate agent.
Go through all the lands to find out why they are vacant and ask to see all the financial records available.
Here are steps for starting a petrol pump business:
Prepare A Detailed Business Plan
There should also be information on financial options, marketing plans, future goals, and how you will manage employees.
Include plans for how you will deal with theft and natural disasters and how you will deal with your competitors. You can hire a professional to prepare this plan for you.
Gather Resources To Buy A Petrol Pump
Start interviews with financial institutions. Take your business plan with you and talk to loan officers about business loans. You might consider hiring investors. A business agent can help you find additional options.
Talk to the company that provides the fuel you plan to sell about franchising options. You can also sell the fuel of another company.
In this case, you will need to negotiate franchise agreements and franchise fees. Analyze various fuel companies to find the best option for your particular circumstances.
Obtain All Necessary Licenses And Permits
Find out how much you have to pay for the necessary permits and licenses by contacting the relevant official institutions.
You will need a business license and you will need to obtain extra permits if you intend to sell other things near the gas station. You must also register with the fire department.
Plan A Grand Opening
Use attractive colors to decorate your banners and balloons. Invite customers by advertising your launch specials and free services. Distribute flyers and advertise in local newspapers.
Please note that there are several other things that you should consider before starting a petrol pump business. Make sure you do a complete market study regarding this business.
How To Write A Business Plan For A Petrol Pump?
A business plan is a document, usually 5-6 pages, that guides you on how to run and manage a business.
In addition, when applying for loans and funds, banks and investors want to see your business plan. In this regard, when you enter a business that requires a serious investment, such as a gas station, you must have a business plan.
What topics should you include in your business plan?
Describe The Products And Services At The Station
What kind of fuels will you sell? What kind of products will you place in the mini-market? Will you offer things that can increase your profit margin, such as auto repair, car wash?
Analyze Your Competitors
Analyze other petrol pumps in the neighborhood where your station is located.
Find their strengths and weaknesses. Explain why one more petrol pump is needed in the market. Write down the features that will make you different from other stations. In other words, try to answer this question why people should come to your station and not station X.
Determine Your Marketing And Sales Strategy
Why should people come back to you after buying gas once? Explain your sales and marketing strategies that will make you attractive. If you have a dealership of a large oil company, include the marketing strategies offered by the company.
Prove You Are Eligible For The Job
To convince investors and banks to give you loans, you need to explain who you are, why you are interested in the job, and whether you have the skills to do the job.
Therefore, it will be important to indicate your experience in subjects such as business administration and management.
Renting Or Buying?
Indicate your financial situation and which method would be more ideal for you. State your sales forecasts, estimated annual turnover, and possible expense items and try to create an income-expense balance.
How To Take Precautions Against Theft At Petrol Pump?
Gas stations are unfortunately frequented by thieves. It is extremely important to take precautions against theft at the gas stations that thieves catch their eye because they are open 24/7 and have a constant cash flow.
Various methods can be applied to ensure that both employees, customers, and money are safe.
Security Camera
A security camera is already an anti-theft tool that has been used for many years. Thanks to the security cameras to be placed at various points of the station, you can watch your stations 24/7, save the images and review them again if you encounter any problems.
It is very important that these cameras can see the license plates of the vehicles coming and going to the station. You must have a video recording system where you can see and record the license plates of the vehicles arriving at the station, as you can sometimes spot the theft at the time of the incident and sometimes later.
Safe Security Camera
Of course, the thief can be from the outside as well as from the inside. You should also put a security camera in the safe area so that your staff looking at the cameras should also be safe while stealing.
If you see an inconsistency in the amount of money in the safe, you can decide by watching this footage.
Tips And Warnings
Prepare your business plan in detail. A detailed business plan will ensure success.
Don’t expect the first gas company you choose to accept you.
Petrol Pump Opening Cost
The city where you will open the station, location, and the distribution company you will deal with are the factors that directly affect the cost.
For this reason, the cost can start from $50,000 to $100,000. For this, take care to give detailed information about the station you want to install.
Petrol Pump Opening Conditions And Regulations
- The size of the land on which you will install the station must be at least 1,600 square meters.
- You should apply to the municipality you are affiliated with and obtain a facility and construction permit.
- When the construction is finished, you need to get an occupancy permit for the place. Afterward, you must agree with a distribution company and apply to the municipality for a business license with all the necessary documents.
- After obtaining a business license, you should also obtain a work permit.
Documents Required To Open A Gas Station
- Petition
- Non-Sanitary Enterprise License Application Declaration Form
- Detailed Address Map
- Zoning Status Document (District Municipality (to be requested when necessary))
- Building Occupancy Permit (Settlement)
- Fire Brigade Inspection Report (License and Inspection Directorate Fire Prevention Supervisor)
- Occupational Safety Specialist Contract Photocopy and Declaration Regarding Occupational Health and Safety
- Responsible Manager Statement
- TSE Service Qualification Certificate
- Lease Contract if the Tenant
- Dangerous Goods Compulsory Liability Insurance Policy
- Signature Circulars
Note, some of the documents may vary, you should directly contact the dealership provider for reading the formalities.
Petrol Pump Dealership Profit
Although opening a petrol pump requires high capital, the profit margin is not that high. The profit margin in gasoline and diesel is around 4%. We can say that the profit margin is around 6% in LPG.
These profit margins are average profits. In some regions, we see profit margins as high as 10%. Therefore, attracting high turnover is imperative for high profits. In a region where circulation is intense, fuel stations can earn very high profits.
An average petrol pump can earn between 60,000 dollars and 120,000 dollars annually. These figures are averages. There are also fuel stations that fall far below or exceed these figures.
It Is Profitable To Open A Petrol Pump?
Not only in the USA, UK, Turkey, but almost everywhere in the world, the profit margins of petrol stations are very close to each other, even almost equal.
On average, the profit margin from the turnover is around 6 percent at the gas stations. This situation can be increased up to a maximum of 8 percent with the density of the market, LPG sales, and the sale of other additional vehicle materials.
In this context, the profit margin is not high in petrol stations. Such businesses profit from the release.
On average, even in gas stations located outside the city and do not seem to do much, daily sales are between 20 thousand. In this case, a monthly net profit of 36 thousand is obtained from an average turnover of 600 thousand. Of course, personnel, electricity, water, and taxes were not deducted from this amount.
On average, the monthly net profit in such a business will be around 20 thousand. Of course, this amount can be considered as the lowest figures for gas stations or petrol pumps. The average daily turnover of gas stations in the city or close to the city easily exceeds even 100 thousand.
Tips For Petrol Pump Business
The best advice we can make to investors who want to open a gas station is to find the right area. If you manage to set up a gas station in the right location, it doesn’t even matter which company you work with. Turnover is very high, especially in gas stations close to the first exit points from the city.
Be sure to have a friendly staff at your gas station and make sure that this personnel is knowledgeable about problems such as oil, water, and batteries in vehicles. Never forget that car owners are often careful to sell from the same gas stations.
Recommended Readings:
- Reliance Petrol Pump Dealership, Franchise, Cost, and Profit
- How to Start a Cleaning Business in Georgia (Complete Guide)
Don’t forget to sell LPG and diesel in your gas station in addition to petrol. In addition, be sure to have needs such as a washing station for vehicles, air pressure support and engine oil, engine water, wiper water for vehicles. Finally, do not forget to set up an above-average market at your gas station.
