A gas station for sale can represent a very dynamic business opportunity for an entrepreneur. More than ever in this particular type of business, location is everything. He may have found what he considers a “gem,” near two major arteries or near a busy intersection, but never be tempted to jump in two feet first until you’ve done a proper due diligence process. .
One of the most significant mistakes a person can make, especially if they have never run, owned or bought a business before, is to allow their enthusiasm to overcome their better judgment. Even if you’re absolutely stunned by the incredible amount of traffic passing through the location in question, or worried that other buyers might make an offer before you, never be tempted to bypass your discovery process. Ideally, you should invest at least four weeks of your time, having a full idea of what you’re getting yourself into, before you act.
If you’ve made the decision to buy a gas station convenience store business and for the most part you’re happy with the basics the salesperson presented to you, and you don’t notice anything obvious that might cause red flags to pop up. , then you should have a conversation with the seller right away and tell him that you would like a watch period before deciding whether or not to buy.
During your observation period, you will be able to analyze the actual operation of the gas station and convenience store and get a very good idea of whether the financials you have been given represent a real or artificial position. If you are inheriting employees, you will be able to see how they operate and how effective they are in making money. This is infinitely preferable to just sitting down with them for thirty minutes and asking them questions. Above all, this observation time will allow you to generate a series of ideas that you can ideally implement after the purchase to increase revenue and profit.
Be prepared to check all of the following items during your due diligence work:
– Accounting books, profit and loss accounts, balance sheets, tax returns and records.
– Inventory records, being on the lookout for discrepancies.
– Employee records: check that they are well maintained, all legal elements are covered and responsibilities are unearthed.
– All equipment must be inventoried and maintenance records verified. Is a regular maintenance process scheduled?
– Review all supplier contracts and try to contact the main suppliers. Is there a clause that causes renegotiation after a sale? If so, you’ll need to make sure you’re covered before proceeding.
– A business like this can be heavily regulated. You don’t want to buy into the gas station’s business troubles caused by their failure to comply with inspections or issued citations due to wrongdoing.
Important: Obtain environmental reports and make sure that the company complies with all the requirements. Ask your attorney to check for prior crimes. Make sure all tanks meet the latest and proposed standards. Otherwise, you may face a huge expense soon after taking over, not to mention lost business from closing to make these adjustments.
If you’re generally happy with the paperwork, use your observation period to do just that—observe. Keep your eyes and ears open at all times and see what makes this business tick. Take note of anything, however small, that you think could be improved and while you shouldn’t live and breathe in the place for the entire length of time, you should aim to be there during strategic moments: during opening, during deliveries important, during peak periods, during slow periods, during shutdown.
It is not advisable to shorten your observation period, as the time you spend now could be a wise investment of your time.
