How to Get the Inside Scoop Before You Buy a Gas Station or
Buy a Convenience Store
By Richard Parker: President of The Resource Center for Buying a Gas Station/C- Store™ and author of How To Buy A Good Gas Station/C-Store At A Great Price© .
The Internet could be the greatest tool ever invented for people who want to buy a gas station or buy a convenience store. On Websites like Gas Stations for Sale or Station USA, you’ll find dozens and dozens of stations for sale. You can review the particulars and even look at pictures that help you zero in on the stations that have the curb appeal you are looking for.
But . . . hold on a minute. You wouldn’t make an offer on a car you saw advertised on the Internet, based on a some verbiage and a tiny little image, would you? Of course not! Like any wise buyer, you’d want to sit in the driver’s seat, blast the car down the highway – and take it home to show it to the family.
Shouldn’t you apply that same kind of serious tire-kicking and a look under-the-hood approach to gas station/convenience stores before considering them seriously? Of course you should.
Here’s how to get the inside scoop on stations that have attracted your attention:
Impersonate a customer. Drive in. Buy gas. Then go into the store. Use the bathroom. Buy something. Pay for it with a credit card to see how well that works. In one visit, you can uncover lots of problems that the seller will never reveal to you – and which are not visible in his or her books or in those Internet listings. By the way, how the owner keeps the bathrooms will tell you a lot about how he maintains his books and records and the pride he does or does not have in running the business.
Drive around the neighborhood at all hours of the night and day. A location that looks ideal in the middle of the afternoon can look horrible at other hours. Is the street in front choked with unmoving traffic during the morning rush? Are there groups of tough young kids loitering on the street corners or drag racing their cars at 1:00 A.M.? Do all the cars and customers disappear on Saturday or Sunday? You will never uncover that information until you visit the area at both night and day.
Talk to owners of other gas stations and convenience stores in the area. They are almost always happy to share their opinions and insights on doing business in the area. They’ll even provide valuable information about the seller of the business you are considering but a word of caution: NEVER, EVER disclose that the business you are considering is for sale. Not only is it wrong and reckless, it’s illegal for you to do so after signing a non-disclosure. If that seller is known for gouging on the prices he charges for car repairs, for example, or if he got shut down several times for selling beer to underage customers – well clearly, that is information you ought to know before you enter into good-faith negotiations with him.
Speak with franchisees. If you are thinking of buying a gas station franchise from one of the major oil companies, meet with other people who own those franchises. We recently interviewed the owner of one such franchise, for example, who reported that her parent oil company raised her rent excessively every three years, forced her to pay to insure their over-tank canopy against damage – and that she was lucky to clear 6¢/gallon. That’s sobering info that you need to hear!
Talk to local police to get a view of crime. You could go to city hall and review police blotter records to find out just how safe the neighborhood really is. But to get an immediate read, walk up to a police cruiser that is parked in the area and start asking questions. You’ll be able to eliminate stations in high-crime areas fast.
Visit the Chamber of Commerce. Ask about new businesses that are planned for the area, whether businesses are starting up, or closing their doors. Even though Chambers are cheerleaders for economic growth in their towns, they are good sources of information. Be sure to make use of their publications, events and other resources too.
Visit the local library. Read two or three months’ worth of local newspapers. There’s no better way to find out about crime, businesses that are coming to the area, new residential developments - and more local trends
Visit the town planning board. Find out what is happening in the area. Is a new mall about to open? Is the road that runs by your station about to undergo a major repaving that will cause traffic disruptions for the next two years? Keep in mind that major roadwork happens about every ten years so find out when it was last done. It’s your business to dig out this information before you buy that gas station or convenience store! Here’s something sobering – a station owner I spoke with in New Jersey told me that the town rebuilt a bridge that ran right in front of his station not once, but twice, in the last three years, causing him to lose more than 90 percent of his income. That’s why you need to visit City Hall before you buy!
Find out all you can about the major employers in the area. If a factory is about shut down and cause layoffs, you need to know that. If a hospital that employs 500 local residents is about to merge with another hospital in the next town, you need to know that too. You can find out a lot of this information in local newspapers. But take your research one step further by reading the annual reports of hospitals and major employers in the area. You can get copies by calling the institutions themselves – or at a local library or investment firm – or by asking your investment advisor to get copies for you.
Talk with the vendors that the seller is using. Don’t fail to do this! Talk to the magazine distributor who services the station/store you are considering – and also to its alarm company, coffee provider, waste-removal company and everyone else. They will provide information you need to hear – about their terms, payables, and about what it was like to do business with the seller of the business you are considering. Some of this can only be done once you have reached an agreement with the seller – the point is, you need to do it BEFORE you close the deal.
Dissect and understand all the ownership details about the station you are considering. “Owning a station” can mean many different things. It can mean owning a business that sits on land that is owned by a major oil company or by another landlord. It can mean owning the whole “kit and caboodle” – the land, the buildings, the pumps. Unless you understand all this information about the different station/convenience stores you are considering, you have no way to comparison shop or make a wise buying decision.
To summarize . . .
The old advice, “Let the buyer beware,” applies to buying any new business and specifically when it comes to buying a gas station for sale. Unless you know exactly what you are buying, how can you decide whether the business you are considering is a steal . . . or a disaster waiting to bankrupt you?
The advice in this article will help you make that call. But take your research to the next level by getting a copy of our special guide, How to Buy a Good Gas Station at a Great Price.
This article represents a fraction of what you’ll learn in How To Buy A Good Gas Station/C-Store At A Great Price© - the most widely used reference resource and strategy guide for anyone thinking about buying a gas station. Read a detailed listing of what you'll learn.
