Often times, a gas station for sale can represent an incredible business opportunity for a highly motivated entrepreneur. In this specific kind of business - more than ever before, location is absolutely everything. You may have found what you consider to be a “gem,” near two major arteries or close to a busy intersection, but never be tempted to jump in with both feet first until you have conducted an adequate process of due diligence.

One of the most significant mistakes that an individual can make, particularly if they’ve never run, owned or bought a business previously, is to allow their enthusiasm take the lead over their good judgement. Even if you cannot believe the amount of vehicular traffic that passes the particular location you have in mind, or are worried that other purchasers could jump in before you, never be tempted to shortcut your discovery process. Most ideally you should spend at least four weeks getting a real feel for what you’re letting yourself in for, before you act.

However, if you have found one you really like, and you’ve decided to buy gas station business with a convenience store as well, you need to ensure that you’re generally pleased with the documentation which is presented to you by the seller, and of course, you don’t notice anything in particular that’s “sticking out” which might cause red flags to appear, then you should inform the seller that you’d like to have an observational period to give you the opportunity to find out whether or not you’d like 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 whether the financials that you have been given represent an actual or a contrived position. If you are inheriting employees you will be able to see how they operate and how effective they are at making you 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 come up with a number of ideas that you can ideally implement following purchase to increase revenues and profits.

Get ready to check all the following items during your due diligence work:

• The financial records, profit and loss statements, balance sheets, tax returns, and registers.

• The inventory records, being on the lookout for discrepancies.

• The employee records - watch to see that they are well-maintained, all legal elements are covered and the liabilities are unearthed.

• All equipment should be inventoried and maintenance records checked. Is a process of regular maintenance scheduled?

• Review all supplier contracts and attempt to contact the major suppliers. Are there any clauses which cause renegotiation following a sale – if so, you will need to be sure that you are covered before you proceed any further.

• A business such as this can be heavily regulated. You do not want to purchase gas station business problems caused by their failure to keep up with inspections or any citations issued due to irregularities.

Important: Get environmental reports and be certain the business is in full compliance. Have your attorney check for any prior infractions. Make sure all tanks meet the latest standards, and proposed ones. If not you may face an enormous expense soon after taking over, not to mention the lost business from closing down to make these adjustments.

If you are 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.” Make a note of anything, however small, that you think might have grounds for improvement and while you should not live and breathe at the location for the entire period of time, you should nevertheless aim to be there during strategic moments – during opening, during major deliveries, during rush periods, during slow periods, during closing.

It isn’t advisable to cut short your observation period, as time spent now could represent a wise investment in your time.

Richard Parker is the President and founder of the prestigious Diomo Corporation - The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream to buy a business.

(No Ratings Yet)

 Loading ...

Share This  |  Email It  |  |  Subscribe to It!
This entry was posted on Monday, November 23rd, 2009 at 9:42 am and is filed under Business and Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.