If you are thinking of buying a gas station for sale in the Greater Toronto Area or in southern Ontario, Canada there are a few things you should think about before you make the purchase. Buying a gas station can be a bit more complex than many other types of businesses for sale due to environmental or franchise variables.
They can also be a great investment if structured properly.
Demand for gas station businesses is high
Gas stations are one of the most popular businesses that people generally enquire about. They are (relatively) easy to operate and can be a good investment for the right owner. The demand for gas stations (may) even remain high if the price of oil continues to fluctuate. If there is a major shift to “green” energy in the future people will still require local and accessible centres to fuel their vehicles.
Make sure it is a fair comparison
If you are in the market for a gas station for sale please ensure that you make fair comparisons. It is important to compare “apples to apples”. The selling prices of gas stations (and profitability) can vary widely so take a close examination of all the facts.
Ask important questions like:
- Are the premises leased or owned?
- What other factors are influencing the price or profitability: convenience store, car wash, café, etc.
A gas station can be a great investment but please be sure to make sure your comparisons are on par.
Some Things to Look for in a Gas Station for Sale
Location. Traffic & accessibility are the keys here. An ideal situation may be access off of a major highway with little or no competition. A busy street with good access from several directions is also highly desirable.
Convenience Store. A large convenience store may also attract traffic. The bigger the better, in fact. Generally, all things being equal – a gas station with a large convenience store will attract more customers than a similar one that has a small convenience store.
“Curb Appeal”. What shape is the gas station for sale in? Is it clean? Is it attractive and welcoming or is it run down, dirty and needing of some significant TLC? This is important. A gas station that is clean and welcoming should attract more traffic.
Neighbourhood. If crime is a concern for you (and it should be) some neighbourhoods are more prone to crime than others. Gas station businesses can be targets for criminals so choose your location wisely.
Some Issues to Consider
Environmental Issues. Consult with an expert regarding the environmental and licensing issues surrounding a gas station business for sale. You may encounter issues such as contamination, tank lining and remediation. If there is an environmental issue to contend with you will want to know before you buy the business. Clean-ups can cost into the thousands of dollars. Investigate if there is any pending or past law suits or actions taken as a result of environmental issues. The new owner of a gas station may be held liable.
Road Construction. Check with the city to see if there is any major road work planned for the street that the gas station is on. Road construction can cause serious financial issues for a gas station business if it prevents customers from coming to you.
Franchise or Independent? If you buy a franchised gas station business under the flag of one of the major companies then you typically will buy gas from them. Independent gas stations are not necessarily held to one supply source but they may be able to sign agreements with distributors to get pricing breaks on gasoline purchases.
Buying a gas station business can be a great investment. It is important to also remember that buying a gas station is not necessarily a “hands off” investment – contrary to what some people may think. It involves a lot of hands-on work to make it a success. A gas station business is like most other small businesses in that books needs to be kept, employees need to be managed and proper planning must be in place to make it a success.
It is very important to do thorough investigation before you buy and to consult with legal, accounting and environmental experts before you make the purchase.
Petro-Canada business opportunities - information on starting a Petro-Cananda gas business.
If you are thinking of buying or selling a gas station business in the Greater Toronto Area or in southern Ontario, please contact Steve Skrlac.