Gas station businesses attract customers by selling gasoline, which most people need for their vehicle. Gasoline is just one of the many products that gas stations may sell to travelers, though. Many stations also offer foods, drinks and convenience store items. According to IBISWorld, the gas station industry brings in $89 billion annually through selling products like these.
Learn how to start your own Gas Station and whether it is the right fit for you.
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Start a gas station by following these 10 steps:
- Plan your Gas Station
- Form your Gas Station into a Legal Entity
- Register your Gas Station for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Gas Station
- Get the Necessary Permits & Licenses for your Gas Station
- Get Gas Station Insurance
- Define your Gas Station Brand
- Create your Gas Station Website
- Set up your Business Phone System
We have put together this simple guide to starting your gas station. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Gas Station Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
What are the costs involved in opening a gas station?
The startup costs associated with opening a gas station business are substantial. According to JUX Law Firm, business owners should expect to spend around $300,000, which breaks down as follows:
- $2,000 for legal fees
- $2,000 for insurance premiums
- $3,000 for state permits
- $5,000 for promotional signage
- $10,000 for initial inventory
- $20,000 for setting up a convenience store
- $100,00 for setting up the gas station
- $150,000 for purchasing a building
Depending on the location of a gas station and what buildout is involved, the startup costs for a particular station may be more or less. In some cases, the startup expenses can be much more than noted here.
What are the ongoing expenses for a gas station?
The ongoing expenses for gas station businesses are high. Gas stations must pay for the fuel they sell, which alone often runs over $1 million annual for many stations. They must also purchase other products that are sold, and pay employees’ wages, utilities, taxes and permit fees.
Who is the target market?
A gas station business’ ideal customer is either a family that’s traveling or a long-haul truck driver. Traveling families won’t purchase a lot of fuel, but they’ll frequently get snacks or beverages for everyone in the family. Long-haul truck drivers will also frequently purchase some food or a beverage, and they’ll also often spend hundreds of dollars filling up their truck’s tank.
While these are ideal customers, gas station business owners aren’t picky about whom they serve. Anyone who comes into a gas station is a likely customer and will probably spend at least a few dollars on an item.
How does a gas station make money?
A gas station business makes money by selling products to drivers and passengers. Stations are named for their primary product: gasoline. This is just one of many products that gas stations sell though. Most gas stations also offer:
- Pre-made food (e.g. pizza and hot dogs)
- Beverages (e.g. such as coffees, teas and sodas)
- Snacks (e.g. ice cream, candy and chips)
- Grocery staples (e.g. milk, bread and eggs)
- Basic automotive supplies (e.g. windshield washer fluid and tire pressure gauges)
- Beer and wine (if permitted by law)
- Tobacco products and lottery tickets
How much can you charge customers?
The price of gasoline fluctuates on a daily basis, but most gasoline station businesses don’t try to make a lot on the fuel they sell. Instead, they use low fuel prices to attract drivers -- and then sell other products that have higher markups. Most gasoline stations have many pre-made foods, snacks, beverages and convenience items available for less than $5. Each sale may be small, but lots of sales over the course of a day can generate a significant revenue.
How much profit can a gas station make?
Gas stations can generate millions of dollars in revenue, but much of this is often consumed by ongoing expenses. In an example that JUX Law Firm provides, a gas station that earns $2.4 million annually might have ongoing expenses of $2.1 million, and that doesn’t take into account all the salaries and some other fees the gas station must pay. According to The Nest, gas station owners make around $70,000 each year. (Profits may increase once a station’s loan is paid off.)
How can you make your business more profitable?
Gas stations can add revenue streams and increase their profit margins by incorporating sideline businesses. Car washes, auto shops and restaurants are popular side businesses to add.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your gas station is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a gas station. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A gas station is usually run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease office space:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a gas station.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build office space:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your gas station will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Gas Station needs and how much it will cost you by reading our guide Business Insurance for Gas Station.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a gas station
The most effective way to promote and market a gas station business is through onsite signage. Highly visible signs are the best way to attract passing drivers, and people aren’t likely to go far out of their way for fuel.
How to keep customers coming back
Gas station businesses can keep customers coming back by providing low fuel prices and clean facilities. In many cases, these traits alone can set a gas station apart from much of the competition.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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Is this Business Right For You?
Anyone who has an acumen for business and enjoys interacting with people may be well-suited for running a gas station business. Understanding how to operate a business will help ensure that a gas station is run efficiently, and it helps to be a people person because gas stations often serve hundreds of customers in a single day.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a gas station?
On a day-to-day basis, a gas station business owner or their employees will need to:
- Accept shipments
- Restock inventory
- Prepare pre-made food and drinks (if offered)
- Ring up sales for customers
- Clean the gas station (e.g. empty trashes and clean the restrooms)
When not working on these tasks, business owners must also schedule and manage employees, place orders for products and pay bills.
What are some skills and experiences that will help you build a successful gas station?
Running a gas station business requires knowledge of many different aspects of business. Business owners must identify and source products that customers will want to purchase, hire and manage employees, place service orders when equipment malfunctions, and follow permitting laws in their area.
Business owners may want to take some business classes before opening a gas station, or they might want to work as a manager for another gas station first. Joining professional organizations, such as The Association for Convenience & Fuel Retailing, can also help business owners learn about the industry.
What is the growth potential for a gas station?
A gas station business owner may operate a single gas station, or they may have several in a region. Owners who have one station can operate as an independent business or a franchise, while those who have multiple stations in a region often elect to get franchises. Pronto Food Mart in Austin, Texas is an example of an independent station. Chevron is one gas company that has franchises available around the country.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a gas station?
Many business owners opt to purchase an existing gas station rather than open a brand new one. Purchasing an existing station provides more stable and predictable revenue, and it can make the permitting process easier because the station is already operating. A current list of gas stations for sale, which are priced from tens of thousands of dollars to well over $1 million, is available at BizBuySell.
How and when to build a team
Most gas station businesses need at least a few employees to help run the station. Even a small gas station will require several people to cover all the hours that the station is open. Employees, however, often aren’t paid very much. In many cases, they make minimum wage or just slightly more.