B2B Markeplace

A gas station for sale can represent a very dynamic business opportunity for an entrepreneur. In this specific kind of business – more than ever before, location is absolutely everything. Even if you might have discovered what you believe to be a “rough diamond,” next to two major traffic arteries or along side a very busy intersection, it’s still unwise to “take the plunge” until you’ve performed a thorough and detailed 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 the sheer volume of vehicular traffic that goes by the specific location you’re considering is almost beyond belief, or you’re concerned that some other buyer might jump in ahead of you, never even think about short-cutting your own discovery process. Ideally, you should invest no less than four weeks of your time into getting an accurate feel for what you’re getting yourself into, before you make any kind of final decision.

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.

While involved in your observational period, you’ll have the opportunity to analyze the “real” operation of the gas station and convenience store and get a fairly accurate feel for whether the financial documentation you’ve been given is actual or contrived. 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.