In real estate we are told that location is everything. When trying to decide whether to buy a gas station or convenience store, you really need to find the location with the most profit potential. Is it along side a major highway, near a shopping mall, or perhaps somewhere else?
When trying to find the best location possible to buy a convenience store, keep in mind that you already have some of the answer before you even begin. Unless you are relocating, you will need to find the best station close to your existing home or within a short commuting distance. Don’t even consider the notion that you can become an “absentee owner,” as gas stations and convenience stores aren’t well suited for this particular approach.
To ensure that you’ve a successful business on your hands, you have to be regularly on the premises to watch over what is going on – in and around, your place of business. Profits are likely to fall if the business does not have a good manager and you need to be a hands on operator to multiply your odds of success. If your station is not operating under top conditions don’t be surprised if you do not get the results that you desire.
Important considerations when scouting for a location:
Almost everyone’s definition of the perfect location for a gas station would be along side a major highway, with quick and easy on and off access. Such a location could only be a cash cow for its owners. While this is usually accurate, remember that the major oil companies are well aware of this fact too, and they either own or lease the vast majority of these prime locations already. It’s not impossible, but it will be very difficult to find and buy an independent station here.
While a mall or a shopping center is theoretically a prime location, there are drawbacks. A large volume of business is certainly possible, but by and large the land adjacent to the mall belongs to the company that owns the mall and is leased under strict conditions. Plus, 24/7 access may not be convenient. The company will undoubtedly have a clause within the contract that allows them to expand and replace your station with a different kind of tenant, such as a chain restaurant. Note also that if a big box super store arrives, they may well have their own gasoline station and this can really hurt your profits. If you believe that this location is a good one, the chances are that other entrepreneurs think the same way and may seek to move their station into the location.
If you’re willing to exploit the “convenience store” nature of the business, you might want to look at inner-city or other “diamond in the rough” locations. In suburban neighborhoods you can establish a great business by tapping into the need for people to pop in and buy items on their way home from work, for example. A smaller gas station and convenience store in such a location can be an excellent choice as this type of business almost never happens in a station next to a major highway or at a mall. The chances are that a station in one of these neighborhoods will be priced more competitively, if you are starting out on a tight budget.
When selecting the location consider whether the general area is growing. If you can see new hospitals or new businesses opening up, it is a positive sign.
Be certain that you are buying into a good area, as your gas station or convenience store will only be successful if you have chosen well.
Richard Parker is the President and founder of the Diomo Corporation – The Business Buyer Resource Center. His inspiring materials, seminars and consulting have assisted thousands of business buyers with achieving their life long dream of buying a business.
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