Lessons from a Seasoned Dealer

In a recent conversation with an experienced service station dealer, several critical insights came to light—insights that highlight why many new owners struggle, despite securing funding and launching with enthusiasm.

1. Overpaying for a Site: A Common and Costly Mistake

One of the biggest pitfalls is overpaying for a service station, particularly when there is high gearing for the transaction, and especially in areas with a strong legacy of established businesses. Sites that were previously run by well-known operators may come with inflated price tags based on historical performance, not the current reality.

When these seasoned operators move on, they sometimes take their loyal customers with them. The new owner is then left trying to meet loan repayments without the projected volumes and / or turnover to support them.

Before purchasing, always investigate:

• The site category (CORO, DODO, or Company Leased)

• The relationship between the landlord and the oil company

• Who owns the property and the business rights – and the remaining tenure

CORO (Company-Owned, Retailer-Operated) sites, for instance, are fully controlled by the oil company. You’re only buying the right to operate—not the land or infrastructure—so your business decisions will be limited by strict agreements.

2. New Dealer? Get Dirty

Many new entrants believe they can run a service station remotely or passively. In reality, this industry demands active, day-to-day involvement. A hands-off or “remote control” approach often leads to operational inefficiencies, fraud / theft, and ultimately, business failure. You cannot delegate that which you do not understand.

3. Cash Flow Woes Are Often a Symptom, Not the Problem

The dealer emphasized that cash flow issues are rarely the root cause of business struggles. More often, they’re a symptom of deeper operational or financial missteps—such as poor margin control, excessive short-term obligations, overstaffing, theft, or neglected inventory management. In these cases, businesses often turn to quick, short-term loans that come with high costs, ultimately exacerbating the problem. The key is to address the root causes, not just the symptoms.

4. Due Diligence

In the context of a service station, due diligence refers to the comprehensive process of evaluating the operational, financial, and legal health of a site before proceeding with its acquisition. This is a critical step to ensure that the buyer fully understands the current state of the business and is not exposed to hidden risks or overpaying for a site.

The due diligence process typically involves:

1. Financial Review: Analysing financial statements, including profit and loss reports, balance sheets, and cash flow statements, to assess the station’s profitability and operational efficiency.
2. Operational Assessment: Reviewing the site’s day-to-day operations, including volumes and convenience sales performance, margins, RAS, staffing levels etc.
3. Legal Compliance: Ensuring that the business is compliant with all required regulations, including business licenses and HSSE compliance requirements. This review may also include verifying that there are no ongoing or pending legal disputes that could pose a risk.
4. Site Condition Evaluation: Assessing the physical condition of the site, including fuel infrastructure (tanks, pumps, and canopies) particularly for DODO / RORO, the convenience store, restrooms, and other facilities. The buyer needs to understand the costs involved in repairing or replacing aging infrastructure.

How PetroCONNECT Can Help

At PetroCONNECT, we know that a service station is more than just numbers—it’s about people, place, and potential. Our team supports you throughout the due diligence process, helping you evaluate sites based on:

Whether you’re entering the industry or expanding your footprint, we provide data-driven insights and expert guidance to help you choose the right site and build a sustainable business.

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