There’s no doubt that gas stations are and have been known to be one of the safest investments an entrepreneur can make. They provide for a relatively simple and easy to manage business that typically yields high returns.
This doesn’t mean, however, that gas stations are immune to failure. Like any business, the risk of failure is always present. How owners prepare for these risks will determine whether their business can stay afloat or not when their business is struggling.
Here are some of the most common reasons why gas stations fail and the preemptive measures owners should take to avoid such pitfalls.
One of the biggest reasons why some gas stations fail is their location. There’s a reason we can readily find gas stations outside of freeway exits; the need for gas and constant flow of cars brings in a steady line of customers.
If a business isn’t situated near a busy freeway exit, it’s likely in a residential area. A prospective owner should study the neighborhood. Are there any schools or offices nearby to bring in frequent customers? What’s the population of the city and surrounding area? Are there any limitations on opening a gas station in that area? There should be some incentive for you to open a gas station in a residential area that will ensure you can build returning local customers.
Additionally, you want to look at the competition in the area. While many gas stations do fine with a competitor nearby, their neighborhood might have the customer flow to support multiple stations. Make sure you evaluate what the risk is of opening a station near a competitor.
Most outsiders looking into gas station businesses wrongly assume that gas sales have a significant percentage of the monthly profit. In reality, however, any gas station owner can tell you that gas sales provide for very low margins. Most of the profits come from the supplementary businesses that come with the station.
If you’re developing a gas station business plan, here are some additional services you can add to your gas station to help boost sales.
Brand is a tricky thing to assess because when you sign over rights to a business, you may not necessarily maintain the same brand. And even if you do maintain the same brand, you might not be expecting some of the baggage that it carries.
Here are some important questions to ask regarding your station’s brand.
This might be one of the most overlooked reasons why a gas station might fail, but it’s one of the most important to consider.
Strong business strategies include everything mentioned above and more. Having a strong business strategy means understanding the customers that you deal with on a daily business, the location you’re doing business in, and the best products and services you could provide to meet those needs.
Having a solid business strategy is, among other things, about organization. It’s about having the right tools to help you evaluate and assess your performance. It’s about reviewing which products are selling and which ones are carrying dust on the shelves. It’s about having the right technology to assist you in tracking, reviewing, and understanding your business from top to bottom.
CStore Pro provides a complete management system that will provide your business with everything you need to track sales, reviewing shopper trends, and manage both the short and long-term operations of your business. If you’re confident in dealing with every risk mentioned in this article, take the first step in ensuring your business is well organized and managed, and try CStore Pro’s complete back office technology today.