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Thinking About Owning Your Own Gas Station? Well, Don’t!

Have you ever dreamed of owning your own business? The appeal of being your own boss can be quite exciting. But of course, you’ll need to choose a particular industry that appeals to you. It’s best to follow your passions yet at the same time be practical.

You know what’s not practical. Aspiring to own your own private gas station. Here’s Why.

Narrow Profit Margins Regardless of the Price of Gas

With the National Average of gas prices staying steady at around $2.75, drivers all over the United States aren’t complaining. And with gas maintaining at this affordable price point, drivers aren’t as reluctant to travel. A simple fill-up wouldn’t cost much at all. This would lend you to believe that gas station owners will be able to make a decent profit due to the increase in fuel purchases. Not so fast.

Privately held gas stations are not seeing much growth. In fact, the average profit margin sits at just below 2% for gas station owners. Comparing this to other privately held business in the United States, gas station owners are seeing 6% less growth each year.

According to Sageworks, a private financial company that develops analysis and risk management software, gas stations are under-performing. And it appears that the rise and fall of gas prices really have no effect on the bottom line. The profit margins for the gas industry are fairly fixed.

Can Anything Be Done to Break the Cycle?

A majority of privately owned gas stations double as convenience stores. There is nothing better than grabbing an obscure snack from Nobody Lives Here, South Dakota. Increasing the focus on selling merchandise, food, and drinks may be able to bump the profit margin upward. However, it’s difficult to demonstrate this on paper. It may be too difficult to sustain an emphasis on convenient store “goodies” if gas sales remain stagnant.

Sageworks analyst Libby Bierman says, “if you look at the historical data, [private gas] companies have had thin margins for the past decade, regardless of the cost to fill up. It doesn’t look good for the privately own gas station industry no matter what approach you take. It’s probably a good idea to venture toward something a little more lucrative.

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