Purchase or Re-Development?
Make a choice to either buy an existing gas station or build one from the ground up. Your decision should be based onseveral things.
Location should be considered. Is there a gas station for sale in a high-traffic area at a price you can handle? Perhaps you have the perfect location in mind but it is currently a vacant lot.
Cash Flows: Buying an existing property, gives more assurance about consistent cash flows (helps with financing)
License and Permits: Here are the permits you need to look into in the Gas Station Business
Business license is to ensure that the financial health of the young company is in good standing. Vendors, contractors and most importantly the state and local governments need to know that your business is legitimate. Additionally, if you avoid getting a business license there could be a fine from any of the forms of government that you may operate your business in.
Gas station requires several licenses and permits, in order to sell petroleum; you need register to Federal Identification Registry for Storage Tank Systems (FIRSTS) and get a permit from Technical Standards and Safety Authority (TSSA). Selling tobacco and alcohol requires special permit like registration from Alcohol and Gaming Commission of Ontario (AGCO).
Below are some of the permits you need to settle before you operate
- Tobacco ($277.00 annually)
- Lunch Counter ($174.00 annually)
- Commercial Building and Land Use Permit (Minimum $345.00 / one-time fee)
- Gas Natural Marketer $1,000.00
Use the permits and licenses search to find out which ones may apply to your business activity. You may also want to check with your municipal government about requirements for new businesses. Additionally, your business may need to comply with other regulations or obligations that do not involve permits and licenses.
Your Business Plan should contain everything about your proposed business such as the cost of the project, financial projections, risk sensitivity analysis, possible problems that might be encountered and how to deal with them, your management strategy, your marketing plan, executive summary, your personal profile, etc. It is a vital requirement for you to get a commercial loan and get financed; a concrete business plan is the first step to your success.
It is important for you to identify the projected investment and sales of the business you are running. Here are reports you want to look at:
- Projected Income Statement (5 years projection)
- Projected Cash flow – this will tell you how much you need to cover the operating cost
- The operational cost for the first 3 months (salaries of employees, monthly payables)
- The start-up cost of Inventory
- Projected Balance Sheet
Being ahead of the game is always a plus. Like what Sydney Bremer said “A man that is prepared has half won the battle”
SWAT Analysis – A Must have for Financing
High Demand of Petroleum Products
Gas station generate substantial gross margins from the sales of food products in an onsite convenience store
Predictable streams of revenue from the ongoing sales of gasoline and small food items
Petroleum prices are highly volatile.
Expensive inventories of fuel, this can cause dramatic shifts in the profits of a business
The best way to boost the income of a gas station is to maintain an onsite convenience store that can sell food and beverage products. The gross margin is substantially far more than selling gasoline and diesel fuels
Installing electric car charging stations
Owners can also benefit by having onsite car repair services.
The need for gasoline is expected to decline over the next 10 years because of electric cars that are being developed by many manufacturers.
Competition caused some operators to compete on price, hindering profitability.
Want to Start a Business without living in Canada?
If you’re a Canadian Citizen
Yes, starting a non-resident business in Canada is possible. All you need is a Canadian address (not a Post Office box, but a real Canadian address). If you personally have or establish a Canadian address and are a Canadian citizen or a landed immigrant, you can register your business as a sole proprietorship (or as any of the other permitted forms of business in Canada).
If you’re Not a Canadian Citizen
If you're not a Canadian citizen or landed immigrant, One of your options is to form a partnership with a Canadian living in Canada; then you can use his/her address for starting your business in Canada. Another approach is to start an incorporated business. You would still need a Canadian address to enjoy the tax benefits of having a Canadian Controlled Private Corporation.
The federal statute requires that 25 per cent of the directors be resident in Canada. In case there are fewer than four directors, then the CBCA (Canada Business Corporations Act) requires that one director be resident in Canada. Each province has different residency requirements and an investor wishing to incorporate in Canada should consider this issue.
Existing foreign corporations can register to operate in Canada by either
Opening a branch office - To do this the foreign corporation must make an application for registration as an Extra-Provincial or Foreign Corporation in each province where the business intends to operate.
Incorporating a Subsidiary - a subsidiary is a Canadian corporation whose shares are held by the foreign parent company. A subsidiary can be incorporated federally or provincially. Compared with a branch office, incorporating a subsidiary gives the parent company limited liability from the actions of the subsidiary.