Are you considering opening a gas station? First research the market, which can make all the difference.
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Congested cities, such as New York, San Francisco and Boston, are difficult places for gas station owners to operate. The temptation is to sell to the property for big profits in markets where real estate is booming. In fact, a recent study by WNYC radio found that Manhattan has lost more than 20 gas stations in the past decade.
Competition is stiff in the industry. For instance, big box retailer Costco has entered the fray and is opening gas stations across the country. Unlike its warehouse stores, Costco gas stations do not require membership fees. The pricing is very competitive, and motorists are willing to sit in line for the cheaper prices. Small, independent gas stations have a hard time competing. It is not unlike book store retailing in which Barnes & Noble often knocks out mom-and-pop retailers.
Still thinking about opening a gas station? Here’s advice on how to open a gas station and compete in the 21st Century.
More pumps, the better
No one likes to wait – particularly for a commodity, such as gasoline. People don’t mind as much when they have to stay in line at Disney World or at a movie theater. Stopping for gas along the way to a destination is a nuisance, and the faster that you can have customers in and out, the happier they will be… and they will keep coming back.
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Offer non-gasoline items
Items that attract customers include beverages – both soft drinks and beer – snack items and cigarettes. Drivers won’t mind stopping for gas as much if they know they can purchase other items that can make the journey more pleasurable. On a hot summer day, cold drinks are most welcome. Many gas stations are expanding and adding 7/11 or other convenience stores that offer staples such as milk and bread, in addition to snacks and beverages. Stopping at the gas station can eliminate -- or at least delay -- the need to stop at a grocery store.
Make the gas station a destination
Biz2Credit has funded numerous gas station-convenience store combinations in the Midwest. Because people are so crunched for time, they look to combine their tasks.
Further, gas stations are increasingly partnering with food franchises, such as Subway. These “destination stations” provide an opportunity for travelers to take a break and refuel both the automobile and its passengers. The interstate highway rest stop model is proving effective on other roadways, as well. Be sure the rest rooms are well maintained. If they are not, word will get out, and it will hurt your business.
Innovation is the key to any business. When consumer needs change, companies must respond to the marketplace. Remember to consider this when weighing the pros and cons of opening a gas station.
Rohit Arora is co-founder and CEO of Biz2Credit, an online resource that connects 1.6 million small business owners with 1,300+ lenders, credit rating agencies and service providers such as CPAs and attorneys. Since 2007, Biz2Credit has secured more than $1.2 billion in funding for thousands of small businesses across the U.S. Follow Rohit on Twitter @biz2credit and on Facebook https://www.facebook.com/biz2credit.