Initial Investment and Operating Costs
The initial costs of opening a gas station range on average from $250k to $2 million even for a small gas station. Unless you have access to large stockpiles of motor grade gasoline, you must enter into an agreement with a gasoline supplier.
Is it profitable to own a gas station? Currently, gas stations and their corresponding convenience stores are some of the most profitable businesses in the United States. Across the country, there are over 100,000 gas station/convenience stores which bring in a cumulative of over $400 billion revenue each year.
In understanding the costs to open a gas station, both the initial start-up costs and the ongoing expenses must be considered. Costs to be aware of include:
- Site prep, construction, inventory, and equipment
- Licenses and permits
- Business insurance and legal fees
- Employee wages, utilities, taxes, fuel purchases, and maintenance
- Financing options, such as SBA loans
Profit Margins and Earnings Potential
Calculating the monthly profit margin of a gas station is essential to determine potential earnings. Subtract expenses from revenue to get monthly net profit. Location significantly impacts the bottom line, with profits largely coming from convenience store sales, car wash services, and food sales.
Gas stations average a 1% net profit margin. With varied annual profits across the country, owners need substantial effort and capital to start a profitable gas station.
Becoming a Gas Station Owner
To become a gas station owner, you need a well-written business plan that outlines your goals, strategies, and financial projections. This plan should include:
- Target market and competition analysis
- Marketing strategies
- Operating costs and revenue projections
Is owning a gas station worth it? Despite high startup costs and shrinking profit margins, well-run stations in strategic locations can still generate substantial incomes. Prospective owners must assess if they can sustain a profitable operation before moving forward.
For those interested in franchising, 15 top gas station franchise opportunities are available to explore. Notably, Chevron, which has been in operation for over 140 years, typically requires an average cost of $1.5 million to $2.5 million per unit and a minimum of $500,000 in liquid capital to qualify.