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| First Time Buyer - Gas Station |
Question:
I am planning on purchasing a gas
station
by the middle or end of 2004
and thought about starting my research
now and would appreciate any suggestions.
1) How does one evaluate the purchase
price of a gas station with conv.
store. 2)I could bring around $130,000
cash towards the purchase price but
what is the possibility of getting
a loan ( SBA or any other financing
entity ) for the balance $220,000
if I have a good business plan. 3)
Are there any good resources for me
to lean on to help me research this
subject. 4) What are the pros and
cons while purchasing a gas station.
I have been dong some research for
the last couple of days and it does
seem like owning a gas is not as risky
and has a higher return of investment
compared to the other options like
fast food franchise etc. I do realize
there are some EPA regulations which
need to be evaluated before purchase.
Answer:
"What I recommend you do is determine
what your sales territory is. What's
its radius? Double that and
add a healthy 10% more distance then
go and talk to people out that distance
that are in the same business
you want to start up. Literally,
drive there. Do not do the following
over the phone or email or through
snail mail. Show up on their
doorstep during the slow time of their
business
day. Tell them that you want
to start up a similar business
at such-and-such a location and if
they would consider you competition.
If they say you would be, drive
further away from your proposed business
location until you find a business
that says you're not. If you have
to go to a different country, do so.
Once you find a business
that says your two territories won't
overlap, ask if they wouldn't mind
answering some questions about how
to start and run a business
like theirs. Play to their egos
and they'll love to talk to you. Everyone
likes to feel important and worth
listening to especially business
owners when it comes to their businesses.
Have a list of questions written
out on a notepad, but do NOT write
down their answers. Instead,
bring a tape recorder (yes, put it
right out in the open no need for
spyware and besides it plays to their
egos as their words are being treated
as worthy of being recorded) and concentrate
on getting as much information out
of them as possible as well as picking
up the other half of the answers they
give in body language. If they
say something you don't understand,
speak up and ask for clarification.
Let them wander off your list
of questions since where they wander
to might be a place you never thought
of asking questions about and should
have been. However, keep an
eye on the questions you've written
down and try to ask them all before
the interview concludes. Of
course, always yield to customers
that come in.
After you've interviewed one owner,
go home and digest what was said.
Listen to the tape on your way home.
Think over it all. Adjust
your business
plan accordingly. Adjust the
questions on that notepad and then
on your next free day, head off in
another direction and do the same
thing. Try to interview at least twenty
businesses. A hundred businesses
would be ideal. Interview the
good, the bad, and the ugly. If
you're lucky, you'll interview one
that is going out of business
or has just went out of business
so you can hear about the dark side.
Likewise, interview those businesses
you think are bad. Keep in mind
that since they're still in business,
they are probably doing something
right if just being the only game
in town for your products/services.
Share as you give. Let them
know what you think is a good idea
and they may tell you their own gems.
Don't get paranoid that they'll
steal your good idea. They will!
Or rather, you should HOPE they
will as that means your ideas are
actually good ones. These are
the individuals that are the best
judges of your business
ideas. However, you'll never
know if your business
ideas are good unless you tell these
business
owners them. Also, if you're
not willing to share, don't expect
them to as well. In fact, it
will likely take you telling them
your best idea for them to tell you
theirs. Also, ask them to read
over your business
plan right there before you. Naturally,
don't leave a copy of it behind. What
one of these business
owners is going to tell you will be
better than ALL the advice from ALL
the business
professors on the face of the Earth.
Even from the ones that are
going out of business!
These business
owners are DOING IT RIGHT NOW whereas
business
professors live in the fairyland of
academia.
Don't forget these individuals after
you interview them. Send them
a nice t hank-you snail mail letter
for taking the time to answer your
questions. When your business
opens, send them an invitation to
come and see it. Ideally, hold a special
Grand Opening dinner and invite all
the good business
owners you interviewed to it. Give
them a group tour of your business
(no matter how small the shop is even
if it is a desk and a computer in
a corner) and then treat them to a
nice meal. I'd recommend a barbeque
at your house/apartment so it is informal
and relaxed. Do NOT drink alcohol
or do drugs at this dinner. Listen,
listen, and listen some more. You've
got the most valuable think tank right
there eating your hamburgers. They'll
just naturally talk shop and focus
most of that talk on YOUR shop. The
only bad part of all this is that
it would be bad form for you to tape
record it thus why you need to remain
sober so you can remember it all.
Then after they leave but before
you do clean-up, write down all the
important things they said.
And don't stop doing this after you
open your business.
At least once a month (if not
once a week), visit still more businesses.
And for one afternoon, make
this part of any vacation or business
trip you take anywhere. In fact,
you'll very likely get more out of
these interviews AFTER you open your
business
than before you did. After you
open your business,
you can really start to talk shop
since you're now currently running
a shop. This worked great for
a little-known starting-out pizza-parlor
owner by the name of Tom Monaghan
the founder of Domino's Pizza.
Now if you want to really succeed,
see if the good ones are also willing
to sit on your Board of Directors
(or Board of Advisors, if you don't
want to give them any control power).
The rest of your Board of Directors
should be made up of marketers (at
least have one) and one accountant.
I'd recommend the board number
nine. Your Board of Directors
will help you keep the big picture
in mind and an eye on the future.
Lastly, if you're not willing to do
the above, you don't have what it
takes to start and succeed at your
own business.
Period."
Additionally
"Work on a business plan. Regardless
if you're going to get a business
loan or not. A business plan
forces you to think of all aspects
of your business. Question every
aspect of it. Think how you
can do it better, cheaper, and faster.
Always remember to K.I.S.S.
it. Keep It Simple, Smart. [Yes,
I know it is usually said as "Keep
It Simple, Stupid", but it is
the smarts that make things more complex
and difficult than they need to be.
Stupid people keep it simple
(usually too simple) because they're
stupid.] And forever keep in
mind that this is a business you're
starting and a business is to turn
a profit. It doesn't turn a
profit and it's just an expensive
hobby of yours. Your goal should
be for the business to work for you
and not you work for it. If
you only ever work for it, the only
thing you've made is a job for yourself.
If that's all you want, don't
start a business (and all the headaches
it entails) and just go work for someone
else. As for how much time to
invest into your business plan, studies
have shown that those that work less
than six months on their business
plan have a 90% failure rate. Those
that work six months or more on their
business plan have a 90% success rate.
And to start off, get a copy
of Michael Gerber's "The E-Myth".
It's real value is helping you
determine if you're a Technician,
Manager, or Entrepreneur. Be
honest with yourself and you'll save
yourself a lot of grief."
Also
"The lifeblood of capitalism
is communication between businesses
and their customers/clients. Yes,
this means advertising, but that's
just one aspect of the communication
I'm talking about. There's also
public relations (such as appearing
on local radio talk shows), business
image (everything your customers see),
and, most important of all, word-of-mouth.
Approach all expenditures on
such communications as simply an investment.
Track how much you spend and
what profits it generates for you.
Be always willing to experiment
with new approaches but discontinue
unprofitable ones once they've shown
themselves to be this. If you
employ a marketing firm, hold them
accountable. Ditch them if they
don't produce profits for you after
six months. Don't let emotion
decide their fate. Let's the
cold hard facts of accounting be the
heavy. And nothing gets a marketing
firm to work hard for you more than
them knowing you expect results and
will ditch them if they don't produce.
As for what gets you the best bang
for your advertising buck, that would
be postcard advertising. The
key to postcard advertising is the
mailing list. You want to target those
who will most likely become your customers/clients.
Spend a lot of time thinking over
who this might be. Once you're
in business,
find out the demographics and psychographics
of your customers and market to those.
As for the postcard itself,
EVERY single word on it should be
carefully chosen. The goal of
the postcard is to get its recipient
to take some form of action. That
action could be calling and/or visiting
your business
or visiting your business'
website. The best way to get
them to visit your physical location
is to make the postcard a meaningful
coupon they can use. Use color,
bold, and all caps in the text of
the postcard sparingly and to just
give impact to key words. ALWAYS
send out two differently designed
postcards. One to one half of
the mailing list and the other to
the other half. Design them
so you can track results, such as
giving different telephone numbers
to call. If one pulls in more
than the other, try to figure out
why that happened and test that theory
in your next mailing. Advertising
should always be considered to be
fluid and not etched in stone. Adjust
with the times, be topical, and always
be willing to work hard.
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