Gas station entrepreneur
You want to own your own business? We all see oil prices shooting up at the gas pumps so how about starting your own gas station? Here are some things I've learned from successful technology entrepreneur who has diversified his retirement funds into a gas station here in San Diego. Oil may sound like pure profit, but it really isn't all that pretty for gas station owners.
$.07/gallon - We may be paying $3.80 per gallon for it, but they are only making $.07/gallon. Thats about 2% margins. This is on the high side. I have heard of others making $.02/gallon. With about 450,000 gallons sold per month, this equates to about $31,500/ month in gasoline sales revenues. That looks like a big number, but its not all profit. Theres still plenty of overhead to cover.
Convenient store - This is the true money maker. Selling those cigarettes, gatorades and dirty magazines rakes in about $120,000 per month. The gas pumps draw 'em in but the candy bar's make the money. Another classic example of making people go to point C to get them from A to B (i.e. movie theaters and popcorn/soft drinks)
Car wash - Another profit machine for the gas station. This is an automated system with pretty low upkeep ~$2,000/month. Each car costs about $8.00 resulting in a monthy profit of ~$8,000.
The Bottom line: Theres a lot of money being moved around, but in the end the net result is about break even. Sure you're not in the red, but its not the cash cow you thought it was when you invested a few mill into it.
Conclusions: Retail gasoline, like everything else, is super competitive. You need a massive up front capital investment to get started. You need to run three separate entities - gas pumps, retail, and car wash just to make a little profit. Location and name brand gasoline will certainly boost your profits - there are definitely many very profitable gas stations out there, they are the minority.