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Top 3 things to know when buying a filling or petrol station business for the first time

June 19, 2018

Top 3 things to know when buying a filling or petrol station business for the first time

Entrepreneurs who aspire to own a filling station in South Africa are often surprised about the realities and demands of running a 24-hour business in the fuel retail sector. We attempt to offer encouragement, perspective and a healthy dose of reality from our experience and soon to be published Guide 'Fuel Retail 101, An introduction to the industry'.

1. You're not just investing into a filling station. You're investing into multiple businesses

A fuel retail franchise is no longer just a filling station - it has become a one stop shop catering to many needs and a variety of customers. Not all filling stations are the same, as many offer different services. Depending on the type of service station (explored in detail in our Guide), some of these areas as above illustrated include:

  • Forecourt - this is the section of the business which focusses on selling fuel and lubes.

  • Shop - A major component of a service station, often good supplement to the forecourt and a major draw card to the business.

  • Bakery/Food Offering - While some of the oil companies have chosen to partner with well- known brands (this will be explored below), others have opted to grow their own brands at the same time.

  • QSR (Quick Service Restaurant)- Over the past 10 - 15 years, QSR's have started forming an integral part of the fuel retail industry, with stronger partnerships being formed with the major oil companies and fast food brands.

  • Other Components - LPG, Car Wash, ATM, Trailers etc.

2. The filling station owner is more than just a business owner.

The nature of the business means that the business owner is not only concerned with making sure that fuel and goods are sold. The business owner fulfills (among others) the following roles:

  • Human Resource Manager. A service station employs up to 30 staff members on an average site, and up to 100 staff members on large site. Many have labour resources to support them (such as PetroCONNECT labour relations), however the main responsibility is always with the employer to make the right decision in the moment.

  • Financial Manager. Many new business owners of service stations fail because they do not have the right support and systems in place to ensure for proper controls, systems and cash flow planning. We support new dealers with PetroCONNECT Systems.

  • Marketing Manager. A service station owner needs to be innovative with the marketing of the site to the immediate community, and not only rely on the oil company's guidance for marketing and advertising.

3. Getting funding to start a filling station.

Have you asked yourself the following questions or investigated the following essential components when starting a filling station:

  • What type of franchise are you considering and why?

  • Do you qualify?

  • What are the costs?

  • What are the hidden costs?

  • Do you understand compliance?

  • What are the bank requirements?

  • What are the Oil Company Requirements?

  • Are you ready to move forward?

  • Who can support me?

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