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Sep 28, 2022

Set up your fuel station for success

You’ve found the perfect location for a fuel station, now what? It’s time to take a magnifying glass to that location, figure out your cash flow, and face some hard reality checks. The good news is: you’re not in it alone.

There is research to assist Dealers to make the best business decisions from the start, along with data on consumer behaviour. Cash flow projections and a business plan secure investment, and thereafter the complex journey of licensing and development. PetroCONNECT offers insight into pitfalls to avoid on the road from ideation to implementation.

Get real: cash flow

Keep the clearest and most realistic set of cash flow projections. Be sure to understand what is included in your cash flow calculations, and aim to save more than you spend.

When Dealers are going into business, they create a business plan which includes a cash flow projection for the coming five years. This cash flow is a roadmap of their business for the next five years. The business plan is usually presented to a potential investor for funding.

A Dealer will not want to show losses in the business plan, even when realistically there will be a time when the business will not be making a profit. Once the investment is finalised and the money is transferred to the entrepreneur, they quickly forget the reality of the cash flow: the inevitable period of no profit or just breaking even. Understand that there is a difference between net profit and cash flow.

Location, location, location

At PetroCONNECT, we are inundated with requests from people who have identified the perfect location for a service station. But what really qualifies the perfect location for a service station? Often because a prospective Dealer is eager to join the industry, they may overlook red flags in the valuation of a fuel station or overestimate their capability to increase sales and volumes.

Linda Reid, head of commercial property at Lightstone, offers some valuable insights into when and why consumers visit a fuel station, along with details of how these service stations are distributed between metropolitan, township, and non-metropolitan areas. This data was gathered by Tracker and encompasses over a million cars and over 4000 fuel stations. They found that the addition of a retailer in the forecourt boosted the success of service stations, due to the South African consumers’ preference for on-the-go convenience.

The development of a service station is also something a prospective Dealer may overlook when they have identified the perfect location. According to global energy, industrial and infrastructure developers EPCM, fuel station development includes an environmental impact assessment, town planning, legal requirements, licensing, and finance before the design process can begin. Each of these can be a stumbling block if the location isn’t quite as perfect from an environmental or town planning perspective.

Don’t choose passion over reality

Not every great idea needs to be implemented. Sometimes an entrepreneur needs to make the tough call to let their best ideas go. The truth is, the best-intentioned creative sparks may not be suited to the fuel station environment, resulting in a headache rather than profits.

“Family over everything” is a recipe for distress

Hiring family members at your fuel station is not a wise business decision. If your unemployed loved ones do not have the necessary training and skills, and you struggle to instruct them based on the complexity of the power dynamic, you may find yourself in a tricky situation.

While you may look at the various roles at a service station that may appear not to require skills or training, that’s an incorrect assumption. PetroCONNECT offers skills development programmes to enhance the abilities of cashiers, merchandisers, petrol attendants, Back Office, service station cleaners, and car wash attendants.

Our solution: Licensing and developing your fuel station

The prospective Dealer must consider key elements associated with developments. For example, the new service station’s proximity to nearby competition, how the development of a new service station will influence an existing business in the area and how many litres the business is projected to sell per month. Will the new business make the minimum service station litres as per RAS Benchmark Service Station?

The South African fuel retail industry is highly regulated with complex administrative processes that need to be completed before a Site and Retail License can be issued by the Department of Mineral Resources and Energy (DMRE) to the prospective service station owner and developer.

Let PetroCONNECT help you navigate developing your fuel station for success with our licensing and development services

Our solution: JobCONNECT

Through the skills development programme, we offer training courses to upskill individuals who are looking for employment and individuals who are looking to be certified in their positions. The candidates that successfully complete a training programme are then onboarded on the JobCONNECT portal to be connected with potential employers.

Let PetroCONNECT help you find your next employer https://petroconnect.co/jobconnect