Don’t Open A Gas Station Until You Watch This!

Summary

Family-Owned Gas Station Business

Parm Paul, his wife Casey, and their partner Jazz own a total of eight family-owned gas stations in Washington state, with the first one purchased in 2019 for $3.5 million with a $1 million payment. The business has grown to generate a yearly revenue of $37 million.

Business Partners and Roles

The business partners, including Paul, brother-in-law Jesse, and business partner Jess, among others, worked together to purchase a $3.5 million gas station, financing $2.5 million of it through an SBA loan at a 5% interest rate. The partners have distinct roles, with some handling administrative tasks while others focus on day-to-day operations, and some are silent partners.

Pros and Cons of Branded vs. Unbranded Gas Stations

The pros of having a branded gas station include having an established reputation, making it easier to attract customers, and receiving some franchise-like support. On the other hand, having an unbranded station requires more effort to market and establish a name.

Key to Success

To be a successful gas station operator, one needs to excel in customer service, understand their target market and community, and involve the store in local activities to gain support. Location is crucial for a gas station’s success, as it determines the volume of business.

Marketing and Community Involvement

Gas station owners don’t have a lot of time for advertising or social media, but they do get involved in community events, such as local teams, farmer parades, and handing out promotional items, which helps put their name out there.

Costs and Pricing

The gas station operator discusses the costs of running the station, including a monthly payroll of around $15,000 to $20,000, which doesn’t include the cost of inventory. The operator controls the prices of products, aiming for a standard margin of around 30%. There are no specific product requirements from ARCO, and the operator has the freedom to choose what to sell.

Challenges and Success Factors

The biggest challenge is competing with other gas stations, but the key to success is knowing the customers and providing good service. The key to running a successful gas station is providing great customer service and maintaining a clean store.

Revenue and Profit Margins

The average monthly revenue is between $250,000 to $500,000 per station, with 60% of sales coming from inside the store and 40% from outside. The majority of profits come from in-store merchandise, typically yielding a 30% profit margin.

Employee Management and Inventory Control

Each store has 7-8 employees, including a manager, with an average hourly wage of $15-16. To prevent theft, the company conducts monthly inventory audits and cycle counts to track inventory and identify any discrepancies.

Security Measures

The speaker discusses their experience with security measures at their eight locations, including logging and recording checks every four hours to ensure no tampering. They use software systems, such as Verifone and S2K, to manage inventory across all stations, which involves a one-time purchase and monthly subscription charge.

Gas Station Contracts and Maintenance

A gas station contract typically ranges from 10 to 15 years, where the owner agrees to sell a specific brand’s fuel. The pumps themselves rarely break, but the nozzles may need to be replaced monthly. The owner has a maintenance contract with a third-party company that performs regular inspections and repairs, which can cost between $600 to $1,000 per year, depending on the work needed.

Operating Hours and Logistics

The decision to operate a gas station 24/7 depends on the location and surrounding industrial or residential areas. As an operator, the owner gets involved in logistics, such as arranging for employees to cover shifts or stepping in to help if needed, but mostly relies on site managers to handle issues that arise during late-night hours.

Food Component and One-Stop Shop Approach

Having a food component, such as a Subway or Domino’s, in a gas station brings in more customers who want a quick bite to eat while filling up their tank. This one-stop shop approach benefits the gas station as it increases foot traffic and sales.

Hiring and Retaining Employees

When hiring employees, the speaker looks for individuals with prior customer service experience and a stable work history, as frequent job-hopping can be a red flag. They believe that providing good training and a positive work atmosphere is key to retaining employees.

Operating an Existing Gas Station

Operating an existing gas station has its benefits, including an established market and customer base, allowing for growth and increased sales. The business requires minimal special licenses, with basic licenses such as liquor, lottery, and food permits, as well as insurance for the business and tanks.

Success and Expansion

The business owner discusses the success of their gas station venture, citing that staffing was not an issue due to the small-town nature and long-tenured employees. The business experiences a moderate seasonality, with summer being the busiest time due to farmer workers and travelers, but remains profitable throughout the year.

Customer Base and Consistency

The majority of customers, around 80%, are local repeat customers who visit daily or even twice a day, ensuring a steady profit stream. To maintain a consistent customer experience across eight locations, a daily checklist is followed by employees to ensure the store is well-stocked, clean, and providing great customer service.

Pandemic Impact and Community Support

The pandemic significantly impacted gas sales, particularly at this location near the Canadian border, with a 50% decrease in gas sales. However, the store received strong community support, keeping it busy inside.

Key Takeaway

The key takeaway for creating the best customer experience in a gas station is to know them, ask what they’re looking for, and have it ready for them. The family-owned business, with eight gas stations, emphasizes the importance of approaching customers and providing personalized service.

Key Vocabulary

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Term	Definition	Example Usage
SBA Loan	A loan provided by the Small Business Administration” to support small businesses.	The business partners financed $2.5 million of the gas station through an SBA loan at a 5% interest rate.
Branded Gas Station	A gas station that operates under a well-known brand name, such as ARCO.	Having a branded gas station, like ARCO, provides an established reputation and some franchise-like support.
Unbranded Gas Station	A gas station that operates independently without a well-known brand name.	Having an unbranded station requires more effort to market and establish a name.
Silent Partner	A partner who invests in the business but does not participate in its operations.	Some partners are silent partners, meaning they invest in the business but do not participate in its day-to-day operations.
Target Market	A specific group of customers that a business aims to serve.	To be a successful gas station operator, one needs to understand their target market and community.
One-Stop Shop Approach	A business strategy that offers multiple products or services in one location.	Having a food component, such as a Subway or Domino’s, in a gas station brings in more customers who want a quick bite to eat while filling up their tank.
Inventory Control	The process of managing and tracking inventory levels to prevent theft or loss.	The company conducts monthly inventory audits and cycle counts to track inventory and identify any discrepancies.
Profit Margin	The difference between the selling price of a product and its cost, expressed as a percentage.	The operator aims for a standard margin of around 30% on products sold.
Customer Retention	The ability of a business to retain its customers over time.	Providing good training and a positive work atmosphere is key to retaining employees.

Watch The Video

Don’t Open A Gas Station Until You Watch This!

Vocabulary Quiz

1. Which word means ‘a partner who does not take an active role in the business’?

A) Business Partner
B) Silent Partner
C) Administrative Partner
D) Day-to-Day Partner

2. Which word means ‘a business’s success being dependent on its location’?

A) Target Market
B) Customer Service
C) Location
D) Community Involvement

3. Which word means ‘a type of loan with a 5% interest rate’?

A) SBA Loan
B) Business Loan
C) Franchise Loan
D) Partner Loan

4. Which word means ‘the process of tracking inventory to identify discrepancies’?

A) Cycle Counts
B) Monthly Inventory Audits
C) Inventory Control
D) Theft Prevention

5. Which word means ‘a business strategy of providing multiple services in one place’?

A) One-Stop Shop Approach
B) Unbranded Station
C) Branded Station
D) Franchise Support

Answer Key:

1. B
2. C
3. A
4. B
5. A

Grammar Focus

Grammar Focus: The Use of the Present Perfect Tense to Describe Experiences and Achievements

The present perfect tense is used to describe experiences and achievements that started in the past and continue up to the present moment. It is often used to talk about accomplishments, successes, and experiences that have a connection to the present. For example, “They have grown to generate a yearly revenue of $37 million” or “The business has been successful in providing great customer service.”