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How to open a gas station

By Bernadette Reyes |

A gas station may be expensive to put up, yet motorists’ inexhaustible demand for fuel makes it quite a viable business. The business is not likely to go out of style soon, as oil is an essential commodity, but success largely depends on its location. It’s not the only thing to consider though. For one thing, the product is highly combustible, so strict compliance in product handling and other safety precautions must be a big consideration as well. You must also consider whether you want to go the franchise route or build your own brand from scratch. Both have pros and cons. So before you pump it up, consider the
following:

CAPITAL. The required capital needed to open an average-sized gas station may range from P3 million to P5 million. For franchised brands, this amount includes the franchise fee. Bulk of the capital goes to inventory, construction of the facility and equipment. The return on investment usually takes three
years or more.

 

LOCATION. Choose a location within the regular route of vehicles. “It should be in a high-traffic area that is classified as either commercial or industrial,” says Archie Gupalor, vice president for the national sales division of Petron Corp. The higher the vehicle traffic, the greater potential for fuel demand. Also, you need to study historical, present and future developments in the area. “Plans to put up commercial centers, for example, are a good indicator of increased commercial activity in the future. This kind of development can drive vehicle traffic, and, effectively, fuel demand in the area,” says Rehum Jay Rabadan, SeaOil’s assistant manager for franchise development. Opting to lease the property for the gas station is more practical because it reduces the amount of taxes that a franchisee needs to pay. “Also, if the area does not yield volumes as projected, a franchisee can relocate more easily since the property is only leased,” says Abigail Ho, government affairs and institutional linkages manager of SeaOil.

LOT AREA. Lot area for a gas station usually ranges from 600 sq m to 1,000 sq m with allowance for frontage. However, in areas with fewer motorists, a smaller space may suffice. “The minimum lot area to set up a Petron Bulilit station is only 150 square meters,” Petron’s Gupalor says. This setup would have two to three pumps that can be expanded as demand increases.

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