Why a podcast about Gas station business? Well, gas stations are in every street corner, they are dime a dozen, but why are there so many of them? Well, because they do make money. More importantly they are truly a recession-proof business. But how do you stand out in this crowded market? Here in this podcast my goal is to you bring you the best information possible to help you start, run and grow a successful gas station/convenience store business. Whether you're just starting out or you're a veteran in the gas station business, I am going to show you some new and innovative ways to get you to the next level and stand out in the crowd.
As a 20 plus year veteran of gas station business, I am always trying new and innovative methods to increase sales and profitability. Technology and marketing strategies are changing every day and the "old school" methods are not working anymore, you can be sure if you subscribe this podcast , you'll stay up to date on everything that is going on in this industry. Branding, Business Plans, Business loans, innovative marketing Strategies, theft control, gas station business bookkeeping, regulations, pricing - you name it, it's here for you. Check out my blog at GasStationBuisness101.com and let me show you the way to becoming successful in this profitable niche business.
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GSB-61: Progress Report # 3 for December 2016: Actual Business Evaluation & Sales Analysis of a Real Store
samedi 22 avril 2017 • Durée 43:24
Remember the store I helped some investors buy in 2015 that was losing money? I shared two updates so far and now here is the 3rd one about how that store is doing now. This is a long awaited episode, but here it is. Enjoy!
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 61. This is the show where we discuss everything under the sun about the gas station and convenience store business, how to buy these businesses, how to operate them and how to grow them to be a million dollar success.
Now on to the show.....
On Episode 23, I brought you a real life store sales data and analysis, where I was helping a group of buyers decide if they should buy a location or not. If you recall, in that episode I published the real sales figures of the store and some projected ones as well. Based on their sales data I created some P&L's of my own and it showed for the month of October the seller had lost about $2500. But despite the fact that the store was losing money, I did go ahead and recommended that they buy the store based on few factors which I discussed in that episode 23 as well. If you recall, in that episode (episode 23) I discussed few issues, and few opportunities of the store and we covered 9 points:
The store and its location
Demographics
Age and brand
Physical inspection of the store and the issues we noticed
Recommended upgrades and how much those upgrades would cost
Indoor Issues
Outdoor Issues
Sales and financials
Projected P&L vs. Real P&L
If you have time, please go back and listen to Episode 23 and 29 this way you will know the whole story.
In episode 29 I shared some P&L for March 2016, in that episode, I did compare P&L's from October 2015 which the sellers provided us to what the new owners did in March 2016, and if you recall there was a drastic difference between those two. The new owners increased the business and made it a very profitable one. But to get to that increase, the new owners implemented these nine strategies that I proposed.
Strategies we implemented:
Address all maintenance issues
Upgrade all lighting and put a fresh coat of paint
Clean up the store
Remerchandising the store based on its traffic flow
Bringing in products that sell in the area
Advertise heavily via reader board, pump toppers and on the front door
Bringing in EBT and money order
Implementation of new fuel and merchandise pricing strategy
Full on marketing and promotional campaign
As you can see it was not one single strategy that made the business profitable but a combination of many factors. It was not an easy task, but the credit goes to the management team of the store who were able to follow directions and implement everything we suggested for the store.
Now let's take a look what and how the store has done since March 2016 until December 2016, instead of showing you month by month P&L, I can tell you that the new owners have seen a gradual increase in business and enjoyed a positive growth each month. Let's now take a look at the P&L from this last December.
But remind you in most areas, November through February are usually the slowest winter months. Business usually slows down quite a bit compare to the summer months. So I figured if we can see something positive even in December then we can be assured that the business will make more sales and show more profit during the summer months.
Here is the P&L for the same month of December 2016
(If the Excel Spreadsheet is not viewable, please visit my blog at GasStationBusiness101.com to view them)
Let's look at the Profit and Loss history of this store. If you remember in October 2015 right before the new owners took over the store lost $2574.51, then the new owners took over in December, and by March the store became profitable which I shared in episode 29, the P&L then showed a profit of $5193.33.
Now fast forward to December 2016, which is a slower month for most gas station business, and with less fuel sales, the store generated $6,875.46. It is important to share that in this past one year, their best month was August 2016, and for that month the net profit was $9,612.90., But I wanted to give you a full year's snapshot so I brought December and not August in this calculation.
What have they done differently? Well, nothing other than keeping up with the proper inventory, making sure the pricing is right and superior customer service. That's the secret sauce of success in this line of business.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
In the meantime, if you haven't subscribed to this podcast, feel free to do so, and if you like this show, I would love to see a review from you on iTunes or where ever you download this episode from.
Here is a link to my podcast page on iTunes, if you follow this link you can give me a review right on that page. Trust me it will make my day and won't cost you anything other than maybe 30 seconds of your time.
Thank you once again for joining me in this episode; I will see you in the next one.
Cheers!
GSB-60: 5th Q&A Episode | Part -2
samedi 8 avril 2017 • Durée 42:26
In this 2nd part of our last Q&A episode, I answer remaining 5 questions all related to buying gas stations and how to understand the numbers and if the stores are really making money or losing money. I also answer questions about how to grow your business with financing and how to take on a new partnership. I think you may find this episode helpful if you are in the market to buy a business. Here I analyze some sales numbers and see which ones are making money and which ones are not. Stay tuned.
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 60. This is the show where we discuss everything under the sun about gas station and convenience store business, how to buy these businesses, how to operate them and how to grow them to be a million dollar success.
Question #4
Hope this email finds you and your family well.
I personally want to thank you for writing a book about Gas Station Business. You have explained very well process of how to buy and what to keep in mind before purchasing store.
I am in Gas Station with C-Store business since The year 2005. I have been thru many challenges similar to yours which you have explained in your book. I am currently looking for something to understand how to get finance to expand like big national corporations? Can you explore few points of financial strategies in order to expand in gas station business?
Your help will be highly appreciated.
Question #5
Dear Shabbir,
I will be running a gas station from April 1st. Let me give you the picture; the store owner still has 3.4 million volume of gas volume under contract. He splits his profit, expenses, credit card fees, and maintenance fees with a small oil company.
GSB-51: How to Negotiate and Win - 13 Must Have Skills
dimanche 6 novembre 2016 • Durée 48:50
In business we all have to do some degree of negotiation, when buying a home, a business or just with your suppliers or vendors, but we don't get to win each time, but we should win if we know and practice this 13 negotiating skills, stay tuned and let's find out what and how they work
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 51. This is the show where we discuss how to start, run and grow a gas station business successfully and give you an inside look at many real life case studies so you can follow and be successful in this business.
This episode is also important because it is based on my new book " How to Master 13 Negotiating Skills and Win in Business" that I published a few months ago, I know I didn't mention it here before, but this is one book I have been working on for a while now and was finally able to finish it. It was a soft launch, as I wanted to get some feedback from people and see what they think of this book. Now that I got some great feedback, I am happy to announce that it is out and available on every digital and print platforms out there.
But this episode is not about my book but about the 13 skills that will help you win in business and in life
Let's dive right in and get started..
The first and most important lesson in negotiation is never to show desperation, no matter what you are buying or selling, the smell of desperation can spread really fast and ruin any chance at winning a deal.
There is some basic legwork that you need to do before each deal or negotiation, even long before you go to the table and sit down. You need to collect some data by research and discovery ahead of time so you can take the time to analyze it and then determine what your exact game plan is going to be.
I know this may sound confusing, but after I discuss all 13 skills sets I will walk you through a real-life example of a negotiation that I had done recently and how these skills sets worked in that negotiation process. I will share the details and the outcome of the negotiation so you can visualize how these 13 skills work in real life business situations.
GSB-50: 4 Very Unique Questions & Answers About Underground Fuel Storage Tanks
vendredi 28 octobre 2016 • Durée 56:12
In this episode, I answer four very unique questions about the underground storage fuel tanks. Some of these are very unique problems; these problems can happen to any gas station operators. I highly recommend you listen to this episode and take notes...
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 50. This is the show where we discuss how to start, run and grow a gas station business successfully and give you an inside look at many real life case studies so you can follow and be successful in this business.
This episode is a direct response to 4 of our podcast listeners, they all have questions regarding UST or underground storage tanks, I could have included these questions in our next Q&A episode, but I decided to keep this very important topic separated from all the rest.
Back in Episode 40 and 41, I spoke at length about some of the risk factors that come with buying a gas station business, in those episodes, I covered some of the risks associated with UST. If you haven't listened to those episodes, I highly recommend that you do so, this way you will get the complete picture. But today I will take a different angle and talk both from a tenant's point of view and from an owner's point of view.
The first question comes from Andres and he wrote:
"I own the gas station business but not the property. The landlord (fuel distributor) is responsible for the underground activity and I maintain all above ground. In case there is a soil contamination, a tank leakage or a tank replacement need, the landlord will have to take care of that. However, I would face a business interruption. Is it normal to include in the lease with the landlord that, in case such things happen, I will not pay rent during the time period when I can't operate my business? Even more, would the landlord indemnify me? How far can I push it in the contract normally?"
The second question came from Tina and she wrote:
The land is owned. The business is owned. But the tanks are leased. So...who insures the leased tanks? What kind of insurance? If the tanks are not double lined...can the leased tanks be replaced through the company which is leasing them? What should be reviewed for UST through the TCEQ website? Who registers the tanks? How much does registration cost?
GSB-49: Buyers Be Aware - Listen Before Buying Your Next Gas Station Business
dimanche 16 octobre 2016 • Durée 49:56
Did you just buy a gas station business and now finding out that even with high sales volume the business is not generating enough profit for you? Are you struggling to just meet your basic business expenses? Or are you about to buy a business that will put you in the red? Some of our listeners have just found themselves in that exact situation, so stay tuned and let's analyze all that in this episode.
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 49. This is the show where we discuss how to start, run and grow a gas station business successfully and give you an inside look at many real life case studies so you can follow and be successful in this business.
This episode is a direct response to 3 of our podcast listeners and the issues they are facing about their new business venture. I won't mention them by name since I didn't ask for permission ahead of time, so I will just refer to them as person A, B, and C.
Here is the situation, Person A recently sent me an email where he mentioned he recently bought a business but now a month and a half later he is still putting money into the bank just to meet his expenses. Person B sent me an email with a lot of sales data from a store he is thinking about buying and asked for my advice, and lastly person C just sent me an email which said he followed my advice that I gave on various podcast and bought a business but now he sees two of the categories in his new business has less profit margin than what I suggested. The two categories are automotive and cigarettes, where he said my suggestion was 15-17% on cigarettes but he found out his new business has only 5% margin, in the automotive category my suggestion was around 50%, but he sees around 18% margin. But what is alarming is that his cigarette sales are around 37% of his total merchandise sales while the automotive is only 3%
Do any of you remember listening to episode #1 and #33, in these two episodes, I shared my own life story and how I failed miserably in my first gas station business venture, and how I was taken for a fool by the sellers. I am not suggesting that this is what is happening to this three gentleman, but as buyers, we do have to be aware and be very careful, so this does not happen to any of us, right?
Let's start with Person A first, in his case, he is not sure why he is not making any money, in last two weeks we have shared a lot of sales and purchase data with me along with some of the selling prices on some of the products. Here are his numbers and since I am not sharing his name, I will share the numbers this way his privacy won't be compromised.
GSB-48: 8 Everyday Issues We Face as Gas Station Business Owners
jeudi 6 octobre 2016 • Durée 43:44
If you are not yet a gas station business owner, then you may want to listen to this episode, as I discuss what is like to be a owner or an operator of a gas station business, what are the daily challenges, and issues we face every day, and if you are already in this business, stay tuned and see if the challenges and issues I talk about matches what you face every day.
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 48. This is the show where we discuss how to start, run and grow a gas station business successfully and give you an inside look at many real life case studies so you can follow and be successful in this business.
The idea for this very episode came from David, he sent me an email asking me to explain the day to day life of a gas station owner, so David here it is..
As a business owner we all get up every morning and hurry over to our business to start our day. Every business comes with its own sets of challenges, similarly gas station business comes with its own as well. today I want to discuss some of these daily issues and challenges and how we can manage them properly so they don't become a big burden on your shoulder.
Here are the 8 issues we will discuss today
Cash shortage/Overage
Error in daily paperwork
Merchandising issues
Vendor issues
Theft - Internal & External
Maintenance issues
Employee/Schedule issues
Various Inspections
If you are like me, the very first thing I do when I walk in to a store, I pick the daily close out report to see how much business we did the day before. Then I sit down and go through each shift report to see if there were any issues there. Next I will count money from all shifts and do my sales data entry in my bookkeeping system and balance the cash and the credit. Next, I check on any vendor and merchandising issues. Every store has some degree of theft, I try to analyze and see if there is any other safety measures that can be taken to minimize it. I then check on any issues related to maintenance either outdoor or indoor. Next comes the employee and scheduling issues, again every store has some degree of employee and or scheduling issues that needs to be resolved. Lastly I check on various compliance issues that we may have either from the local health department or from the brand inspectors.
GSB-47: How to Flip Gas Stations for Profit
mercredi 21 septembre 2016 • Durée 48:24
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 47. This is the show where we discuss how to start, run and grow a gas station business successfully and give you an inside look at many real life case studies so you can follow and be successful in this business.
Today's' episode is a rather interesting one, and this idea came from Moe. Moe sent me an email about a month ago asking about this very topic as he found an opportunity to take over a store for very little money. I did answer his questions via email but I figured this is a topic that can benefit most of my other listeners. So here it is.
As I said, we all know someone who flips home to make a living, and often they make good money doing so. But there is a growing market where people buy and sell gas stations for a big profit. But if you want to do this business there are few very key points you need to measure first and make sure you fulfill all those requirements. It can be a risky business, it can even be a money pit, so you have to be extra careful to do this business. But if you do it right the payout can be huge.
6 Key factors to consider and analyze before deciding to get into this business
What type of gas stations are better for flipping
Where and how to find them
Who can flip gas station
capital requirements
Manpower requirements
Management skill requirement
Once you have fulfilled the requirements and bought your first store to flip, your real work begins.
Find out the causes of failure of the business.
5 Main Reasons Businesses Fail
Mismanagement
Lack of competitive pricing and promotion
Lack of merchandising
Store outlook and maintenance issues
Change in demographics or change in regulations
Once you know what cause this business to fail, you need to take a comprehensive approach to fixing not only that single issue but all the other factors as well. It will be like opening a new store where you touch and improve on every part of the process.
GSB-46: How to Start, Run and Grow a Successful Deli Business Inside your Gas Station
samedi 17 septembre 2016 • Durée 46:45
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, This is only podcast show of its kind where I discuss every aspect of gas station business from how to find and buy the right location, how to market your business, how to do bookkeeping, how to minimize theft to what type of insurance do you need to have for your business. So it is a one stop shopping for any of you that are in this line of business. You may ask how does he know it all? Well I don't and that is why I go and ask the experts sometimes, and I also want your participation in this, because I know some of you out there may be great at something that I am not, so together we can share our knowledge and empower the rest of our community for a better future for our business. Sounds good?
Let's get started
In Episode 17(click HERE to listen to that episode or to see the show notes) I touched on this very topic briefly, but I wanted to make an episode out of it as I have had many email requesting more information on this very topic.
There are two ways to setup a deli in your store.
Fist, you can have limited deli food. This applies to stores that have limited space and small; the other way is opening up a full deli where you offer a full menu from Breakfast to dinner.
But before you open up a deli in your store, there is a certain degree of due diligence you need to do to find out if deli will generate enough business to make it viable for your store. Deli is not for everyone; deli tends to thrive in rural and blue collar neighborhoods, So some research needs to be done to find out if your store should benefit from having a deli business.
Looking at the demographics of the immediate area of your store can tell you if it will be a good idea or not.
Look at data like:
GSB-45: What is a Fuel Supply Agreement? How to Understand and Indentify Issues in that Document....Explained
vendredi 9 septembre 2016 • Durée 57:35
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, This is only podcast show of its kind where I discuss every aspect of gas station business from how to find and buy the right location, how to market your business, how to do bookkeeping, how to minimize theft to what type of insurance do you need to have for your business. So it is a one stop shopping for any of you that are in this line of business. You may ask how does he know it all? Well I don't and that is why I go and ask the experts sometimes, and I also want your participation in this, because I know some of you out there may be great at something that I am not, so together we can share our knowledge and empower the rest of our community for a better future for our business. Sounds good?
Let's get started
The idea of our topic today came from a gentleman name Yash, he sent me a few emails so far and in one of them he asked me to cover FSA and commercial lease, so again this episode is fully dedicated to Yash, Yash my friend, thank you for bringing such an important topic to the forefront of our discuss.
On that note, if any of you have any other topics that you think everyone can benefit from, please let me know and I will cover that one a future episode.
Before I start, let me just let every one of you know that I am attaching a sample fuel supply agreement in the resource section of my blog at http://gasstationbusiness101.com/resources for you to download and read, and see what it really looks like. This way once you listen to this episode you can go back and look at the agreement for a much better understanding.
23 Key Points of a Fuel Supply Agreement to Pay Attention to
Parties and Premises
Duration
Product/ Commodity Schedule
Quantity/Allocation (Keep an eye on the minimum quantity)
Methods of Payment
Liability/Credit
Credit card acceptance
GSB-44: How to Read, Understand and Indentify Potential Issues in a Commercial Lease Agreement
mardi 30 août 2016 • Durée 55:34
Welcome to gas station business 101 podcast. This is episode number 44. This is the only show of its kind where we focus on all aspects of gas station business and we discuss, analyze and try to improve the process by trying to see what works and what doesn't.
Today's topic a very important one and it is all about commercial lease and how to read and understand this complex document. What to look for as potential problem in these leases.
The idea for this episode came from two people, Yash and Jasmine, so thanks to both of you for bringing up such a good topic out front for everyone else.
Most commercial leases are complex by nature as it is a legal document but it gets even more complex when it is prepared for a gas station because there are two parts of a gas station business, a convenience store part and then there is the fuel part.
To understand this document fully I am attaching a full commercial lease as a sample which you should be able to download from my blog site, by going to the show notes for this episode or you can go under the resource tab and find it there.
In this episode I will not read every word of a lease because that would not only take a long time to do but it will be not worth your time as you can just download that copy and read it yourself. Instead what I will do is explain few important points of a commercial lease and some potential issues that maybe be hidden in a commercial lease.
Below is a link you can download and view a Commercial Lease for a Gas Station
If I take his contract, I have to split the fuel profit 50/50, but I get 3 cents cheaper than other gas store. If I don't take his contract, I have to pay 3 cents more than his contract price. Which deal will generate more profit for me? Being a 1st-time business runner, I would appreciate your suggestions.
Question #6
Hi Shabbir
Thanks for the great article, it helps a lot. One question, though: when a seller say his store sales are 37k, does that figure normally including lotto and scratch off sales?
I am asking because one of the stores I looked at treated lotto, scratch off tickets and prepaid phone cards separate, so inside sales were more than what they were saying.
Thanks and keep it up
Question #7
Thanks for the great info. I had limited fund like around 100k, and most money making gas stations as I saw on websites are expensive. Do you think it is a good idea to go in partnership with a stranger? I have posted on cl for partnership and got responses, but I am curious about it.
Answer: Check out episode #21 where I spoke in details about how to create effective partnerships.
Question #8
Andres sent me this question, he is a long time listener and contributor of this show, he asked
Hi Shabbir I hope you are fine. Do you have a good template to control cigarettes in your stores? I would imagine your employee has to count the cigarette boxes when he starts the shift and also at shift end to reconcile the daily sales, right? If not, how do you do it?
Tune in and listen to this episode for all the answers.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
In the meantime, if you haven't subscribed to this podcast, feel free to do so, and if you like this show, I would love to see a review from you on iTunes or where ever you download this episode from.
Here is a link to my podcast page on iTunes, if you follow this link you can give me a review right on that page. Trust me it will make my day and won't cost you anything other than maybe 30 seconds of your time.
Thank you once again for joining me in this episode; I will see you in the next one.
Cheers!
Skill 1 - People Skill
Know how your behavior affects others. Understand various negotiating styles and which one you're dealing with. Change your style of meet the needs of the listener.
Skill 2 - Listening Skill
Using steps to learn the interest of others. Three levels of listening to gain information. How to perceive yourself while listening to win at negotiating.
Skill 3 - Develop a Full Plan Before You Go To Negotiate What a detailed plan should include. What alternatives should you be prepared for? Additional planning to be prepared.
Skill 4 - Knowing What You Want
Know what you want to gain. Know what you are willing to concede. Know timeline and expectations.
Skill 5 - Knowing What They Want Know their interests. Know their walk-away alternative. Know their authority. Know their arguments, questions and tactics.
Skill 6 - Knowing When to Walk Away Know your acceptable range. Know their acceptable range. Know your deal breakers.
Skill 7 - Know How Much to Compromise What is a compromise? What can't be compromised? The perception of compromise.
Skill 8 - Knowing the Barrier Identifying the seven barriers Language differences Culture differences Physical barriers Personal problems Preconceived notions Reputation Exhaustion Overcoming barriers
Skill 9 - Knowing How to Control Your Emotion How do you want to feel and why What to do beforehand to put yourself in an emotional state. What can through off your emotional balance in a negotiation. How to regain emotional balance. How you want to feel when you're finished.
Skill 10 - Using the Time (Clock) to Your Advantage How deadlines affect negotiations How you can use deadlines to your advantage.
Skill 11 - Finding Mutual Gain Five principles of mutual gain. How to negotiate for mutual gain.
Skill 12 - Make Them Look Good, Let Them Brag Why this is important. How to do this.
Skill 13 - The Power of Paper Why you should put it in writing. When you should put it in writing.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
Lastly, If you are about to buy a gas station for the first time, make sure to read my book "Gas Station Business Smart Start-up" How to measure profitability, how to come up with a valuation, how to calculate ROI, how to write a business plan and how to get financing for your new venture. You can find this book on most all retailers including Amazon, Apple iTunes, Kobo, Smashwords and Barnes and Noble.
If you want to see the " How to Master 13 Negotiating Skills and Win in Business" just click on the name and the link will take you to Amazon. You can also find this book on Kobo, Barnes and Noble, Apple iTunes store and many other book retailers.
Don't forget to sign up for my very important newsletter; you can simply sign up for it by going to http://gasstationbusiness101.com/subscribe
I am working on a very important episode which will be our next episode, and it will be all about how to build a gas station from the ground up, the idea for this very episode came from a listener name Shanewaz, and he even sent me a breakdown of the whole episode. Thanks to Shanewaz in advance and I think it will be a great episode.
Thank you once again for joining me in this episode; I will see you in the next one.
Cheers!
The third one came from Michel, he wrote:
"Hello, I enjoy your podcast very much. Great information and useful tips. Could you do a podcast on how you manage inventory effectively? Also, what do you think is the best way to handle, record and comply with UST regulations and compliance. Thank you."
Last one came from Rakesh, and he wrote:
"I am getting complaints from customers time to time that my gas has water/dirt in it, I called a local repair company and they told me to call a tank company to wash my tanks!!! I am confused, please help"
Here is an image of how the UST sits underground and various layers of earth look.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
Lastly, If you are about to buy a gas station for the first time, make sure to read my book "Gas Station Business Smart Start-up" How to measure profitability, how to come up with a valuation, how to calculate ROI, how to write a business plan and how to get financing for your new venture. You can find this book on most all retailers including Amazon, Apple iTunes, Kobo, Smashwords and Barnes and Noble.
If you are interested in learning more about small business and gas station marketing strategies, you should check out my book Sales Genie, Retail Marketing 101. In this book, I show you 5 Proven Ways to Increase Retail Sales and boost profit by 25% in just 60 days. You can find this book in every online bookstore from Amazon to Apple and every other one in between.
I would love to see a review from you on iTunes; this will mean a lot to me so please take a minute and put up a review for me on your app store. thanks.
Thank you once again for joining me in this episode; I will see you in the next one.
Cheers!
Last month these were his sales:
Fuel: 67,457.23 gallons
Merchandise $71239.05
Out of the 67K gallons, he sold 61900 gallons of regular fuel and 5100 gallons of premium and plus grade fuel.
The breakdown on merchandise were (I rounded the sales figure off)
Cigarette $27,000 X 15% = $4050
Beer $16000 X 23% = $3680
Soda $12000 X 33% = $3960
Grocery $9000 X 35% = $3150
Tobacco $3000 X 23% = $690
Novelty $2500 X 40% = $1000
Auto $1000 X 50% = $500
Deli $500 X 35% = $175
__________________________________
Sales $71,000 Estimated Gross Profit $17,205. The gross profit margin here is $24%
For the same month, he purchased $62,500 merchandise, which seems high for 71K total sales.
If inventory level remained the same both at the beginning of the month and at the end of the month, then he should have ideally only replaced what he sold at cost right? If so then his purchase should have been$71,000 - $17,205 = $53,795, but he bought $62,500 which was $8705 more. But this is not always bad; this can also mean he may have $9,000 worth of extra inventory sitting on his shelves, but to find that out it is a good idea to have your inventory counted on the 1st day of every month. In his case, he hasn't but he told me he doesn't think he has that much extra inventory. Instead, he thinks he has less than what he started with.
Now if his inventory has decreased compared to what he started with while he bought extra $9,000 worth of inventory, which can mean three things:
His profit margins are lower than we estimated
His having massive amount of theft
Or a combination of both
After I had concluded these 3 outcomes, I asked him to investigate and to tell me what are his profit margin by each department/category, he came back a few days later and informed me that his cigarettes were off by 4%, Beer was off by 3%, tobacco was off by 5%, auto was off by 6% and novelty was off by 10%. Only deli margin was higher than my estimated, and it was at 45% instead of estimated 35% and rest of the categories were pretty much same as predicted.
So, the new calculation looks like this now
Cigarette $27,000 X 11% = $2970
Beer $16000 X 20% = $3200
Soda $12000 X 33% = $3960
Grocery $9000 X 35% = $3150
Tobacco $3000 X 18% = $540
Novelty $2500 X 30% = $750
Auto $1000 X 44% = $440
Deli $500 X 40% = $200
__________________________________
Sales $71,000 Actual gross profit $15,210; the gross margin for him here is around 21%.
The difference between my estimate and the actual gross profit was $17,205 - $15,210 = $1,995.
Remember the difference of $8705 in inventory? Well that amount can now be reduced by $1985, so actually it should be $8705 - $1995 = $6710. He is still missing this much inventory in his store and now since we know the real profit margin, I can safely predict that he is having a serious case of theft in his store.
Person B sent me a lot of sales data, and since he hasn't bought his store yet, I have decided not to share any of that here, but what I want to share with you is that he found a good store and the sales and profit margins both look great, the store is selling around 80,000 gallons a month while the merchandise sales are right around $75,000 with combined gross profit margin is around 26% and he has done some hard work analyzing numbers and the spreadsheet he shared showed the purchase is very much in line with the sales and as Is aid the store has great profit margin both in and outside. So I advised him to go forward with the purchase.
Now, let's talk about person C, in his case he already bought the store, and he too analyzed his profit margin in each category and compared them to my suggestions and noticed that there are only two categories where he was off by big numbers compare to what I suggested.
Cigarettes my suggested margin is 15-17% he found out his was only 5%
Automotive category my suggestion is 40-50%, but his is 18%
The problem is Cigarettes represent 37% of total store sales while automotive at just 3%.
Do you see the problem here? Typically cigarettes carry anywhere from 20-40% of the total merchandise sales, but the since this is typically a low-profit margin category so if your store has lower sales in this category like 20-25% you are doing better than people with stores where they are having 40% of their sales coming from only cigarettes.
In his case, this is very unfortunate because let's assume his store sales are at $70,000, if you take 37% of that sales which is $25,900 is cigarettes only, and at 5% margin he is making $1295. This is a serious problem, let's assume he is making 30% combined gross profit on the rest of categories
But now let's look at if his cigarette margin was at 15%, how this number would change
$70,000 - $25,900 = $44,100 at 30% = $13,230 + ($25,900 X 15% = $3885) = $17,115
The difference is $17,115 - $14,525 = $2,590
Typically when gross profit is this low, it is hard to meet all your fixed and variable expenses and still make a profit.
So once again before you buy a business make sure to check episode 40 and 41 where I spoke at length about doing proper due diligence. In a nutshell remember to always check their sales vs purchase, if the seller tells you they are doing $70,000 merchandise sales and 50,000 gallons you want to check their records of actual sales documents like daily close out that comes out of the registers and not what they entered in their bookkeeping system, because when you go to buy a business you have to assume the seller may tell you lies, so I always tell people to let the seller prove to you that they are honest and truthful by showing you actual sales and purchases for at least last 2 years. This way you can draw your own conclusion. Don't look at their P&L; don't look at their balance sheet or income statement. These documents mean very little to you when it comes buying a gas station.
3 Things matter to you when doing due diligence:
Verifying actual sales
Verifying the purchases
Verifying their profit margin by category
Once you are satisfied, then move on to other parts of due diligence like expenses, payroll and such, but do follow the list I outline in episode 40.
Let's now talk about what if you bought a business like this person C did, how to fix this issue, how do you raise your margin so you can start making money? One advice is if you find yourself in this situation, please don't start raising prices day after you buy the business, which can harm your business beyond repair. Instead, you have to take a smart but slow yet steady approach.
Here are the six steps I would take:
Check on competitor's margin
Contact all three cigarette company reps and renegotiate the contracts
Raise price in at least three different increments with long intervals in between
Run 2 and three pack or even carton pricing special
Run at least two other promotion on other categories like Beer and maybe Soda
Start giving superior customer service and increase the WOW factor.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
Lastly, If you are about to buy a gas station for the first time, make sure to read my book "Gas Station Business Smart Start-up" How to measure profitability, how to come up with a valuation, how to calculate ROI, how to write a business plan and how to get financing for your new venture. You can find this book on most all retailers including Amazon, Apple iTunes, Kobo, Smashwords and Barnes and Noble.
Thank you once again for joining me in this episode; I will see you in the next one.
Cheers!
Once again a big thanks goes to David as he is the one who came up with this topic, so this episode is fully dedicated to him.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
Lastly, If you are about to buy a gas station for the first time, make sure to read my book "Gas Station Business Smart Start-up" How to measure profitability, how to come up with a valuation, how to calculate ROI, how to write a business plan and how to get financing for your new venture. You can find this book on most all retailers including Amazon, Apple iTunes, Kobo, Smashwords and Barnes and Noble.
Thank you once again for joining me in this episode, I will see you in the next one.
Cheers!
6 Key Improvement areas
Fix any and all maintenance issues
Updated fresh outlook on a budget
Remerchandise the store
Innovative/aggressive marketing and promotion
Well trained employees
Install a good bookkeeping and store operation procedure
Once you successfully implemented each of the above improvement measures, it's time to wait and see the results. On an average, it takes anywhere from 4-6 months for a dying store to come back to life and show growth. In my opinion, a flip from start to finish should take no less than four months and no more than 12 months. Once you see the sales are at a point where the store became profitable, it is time to put it on the market. But don't try to hide the fact as to why you bought this business when buyers ask you why you are selling the business.
Once again a big thanks goes to Moe as he is the one who came up with this topic, so this episode is fully dedicated to him.
If you have any question, feel free to send me an email at shabbir@gasstationbusiness101.com, or you can post it on my Facebook group page by going to shabbirhossain.net
Lastly, If you are about to buy a gas station for the first time, make sure to read my book "Gas Station Business Smart Start-up" How to measure profitability, how to come up with a valuation, how to calculate ROI, how to write a business plan and how to get financing for your new venture. You can find this book on most all retailers including Amazon, Apple iTunes, Kobo, Smashwords and Barnes and Noble.
Thank you once again for joining me in this episode, I will see you in the next one.
Take care
Age of the population
Income level of the population
Housing (median prices for houses and if there are rental apartments around you)
Are there other stores with Deli within 1.5-mile radius
Ask your customers if they want to see food in your store
After doing the research, if you are still not sure, smart a small limited menu deli.
Limited menu deli is essentially what you see when you walk into a 7-11 or Circle K type corporate stores, where they carry cold sandwiches, hot dogs, and other pre-packaged ready to eat meals.
Once you decide you will want to start a deli business these are the next steps to carry out:
Health dept requirements
Equipment requirements
Space requirements
modification requirements
What food to sell
How to price your food items
The benefits of having a deli inside your store:
Extra income stream
Increase in sales of other products
Increase sales of fuel
Lunch hour rush
Loyal customer base
One small announcement, I recently published a book call How to Master 13 Negotiating Skills and Win in Business, it is a soft launch, but any of you are interested in seeing it, just click on the book title and you will get to see it. This book is one of the three that I have been working for a long while; I was finally able to finish it recently. As of now, I am putting the finishing touches on a book that I co-authored, and that book is all about the various types of investment visas for people that are interested in investing in the USA.
If you would like for me cover a topic I haven't yet, feel free to email me or post it on the Facebook group, and I will try my best to have an episode on that topic, but remember if I pick your topic I will dedicate that episode to your name.
Don't forget to sign up for my newsletter; you can sign up for it by going to http://gasstationbusiness101.com/subscribe or you can directly go to my site and at the bottom of every page there is a subscribe button.
Cheers!
Failure to Perform
Excess Quantity/ Determination of quantity or quality
Trademark
Audit/Inspection of records
Customer service and complaints
Assignment
Environmental compliance
Price regulation
Equipment and fixtures
Termination
Insurance
Law compliance
Guarantor
Key person rider
Survivorship
Choice of law/ attorney fees
Click HERE to download the Sample Fuel Supply Agreement
If you would like for me cover a topic I haven't yet, feel free to email me or post it on Facebook group and I will try my best to have an episode on that topic, but remember if I pick your topic I will dedicate that episode to your name.
Don't forget to sign up for my newsletter, you can sign up for it by going to http://gasstationbusiness101.com/subscribe or you can directly go to my site and at the bottom of every page there is a subscribe button.
Cheers!
Payment methods and due dates
Insurance
Indemnity
Assignment(Sublease)
Maintenance
Casualty
Right to Entry
Default
Remedies
Personal guaranty
Brand identification and minimum Standard
Additional Exhibits or attachments
Potential risk factors to look for
Couple of quick announcements before we finish here..
I am still seeing people registering for my forum on my site, as I mentioned before, that forum is not working properly, so please join my Facebook group instead and there you can post questions, get quick answer to any question you may have. To join my Facebook group simply go to shabbirhossain.net and it will take you straight to my group.
If you would like for me cover a topic I haven't yet, feel free to email me or post it on Facebook group and I will try my best to have an episode on that topic, but remember if I pick your topic I will dedicate that episode to your name.
Lastly I want to send a big thanks to Nitin Gangwani, for his kind words as he gave me a 5 star review on iTunes, Nitin if you are listening I sure do appreciate your kind words and that sure makes my day.
Don't forget to sign up for my newsletter, you can sign up for it by going to gasstationbusiness101.com/subscribe or you can directly go to my site and at the bottom of every page there is a subscribe button.
Next week I will have another very important episode where we will discuss everything about FSA or Fuel Supply Agreement and that episode will be dedicated to a long time listener name Yash as he is the one who gave me that topic.
