Just about anyone involved with real estate will tell you that the location is absolutely 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 assessing the best location to buy a convenience store, remember that you already have part of the answer before you even start. 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 be tempted to think that you can be an “absentee owner,” as gas stations and convenience stores are not ideally suited for this approach.
To make sure that you have a successful business on your hands, you need to be near to the premises to keep a good eye on what is happening. 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 isn’t operating efficiently, you shouldn’t be surprised when don’t see the results you’re hoping to achieve.
Important considerations when scouting for a location:
Everyone’s definition of an ideal location for a gas station would be right next to a major highway with easy off and on access. In most instances, such a location could only be a spinning cash machine 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.
