How To Conduct Due Diligence When Buying A Gas Station
In many cases, a gas station for sale can be an amazing business opportunity for a hard working entrepreneur
. Not surprisingly, more than ever before in this particular sort of business, location makes "all the difference in the world." It's entirely possible that you may have come across what you genuinely consider to be a "gold mind," between two huge highways or along side a bustling intersection, but you should always make a point of never "jumping in" until you've performed an extensive process of due diligence.One of the biggest mistakes that someone can make, especially if they have never operated, owned or purchased a business before, is to let their enthusiasm get the better of them. Even if you cannot believe the amount of vehicular traffic that passes the particular location you have in mind, or are worried that other purchasers could jump in before you, never be tempted to shortcut your discovery process. Most ideally you should spend at least four weeks getting a real feel for what you're letting yourself in for, before you act.
If you've made up your mind about purchasing a gas station convenience store business and you're for the most part satisfied with the basics presented to you by the seller - and you don't notice anything obvious which would cause red flags to surface, then you should have a conversation with the seller immediately and tell them that you'd like an observation period before you decide on whether or not to buy.
During your observation period, you will be able to analyze the actual operation of the gas station and convenience store and get a very good idea whether the financials that you have been given represent an actual or a contrived position. If you are inheriting employees you will be able to see how they operate and how effective they are at making you money. This is infinitely preferable to just sitting down with them for thirty minutes and asking them questions. Above all, this observation time will allow you to come up with a number of ideas that you can ideally implement following purchase to increase revenues and profits.
Get ready to check all the following items during your due diligence work:
- The financial records, profit and loss statements, balance sheets, tax returns, and registers.
- The inventory records, being on the lookout for discrepancies.
- The employee records - watch to see that they are well-maintained, all legal elements are covered and the liabilities are unearthed.
- All equipment should be inventoried and maintenance records checked. Is a process of regular maintenance scheduled?
- Review all supplier contracts and attempt to contact the major suppliers. Are there any clauses which cause renegotiation following a sale - if so, you will need to be sure that you are covered before you proceed any further.
- A business such as this can be heavily regulated. You do not want to purchase gas station business problems caused by their failure to keep up with inspections or any citations issued due to irregularities.
Important: Get environmental reports and be certain the business is in full compliance. Have your attorney check for any prior infractions. Make sure all tanks meet the latest standards, and proposed ones. If not you may face an enormous expense soon after taking over, not to mention the lost business from closing down to make these adjustments.
If you are generally happy with the paperwork, use your observation period to do just that - observe. Keep your eyes and ears open at all times and see what makes this business "tick." Make a note of anything, however small, that you think might have grounds for improvement and while you should not live and breathe at the location for the entire period of time, you should nevertheless aim to be there during strategic moments - during opening, during major deliveries, during rush periods, during slow periods, during closing.
It isn't advisable to cut short your observation period, as time spent now could represent a wise investment in your time.
by: Richard K Parker Food Business In Africa Full Color Business Cards Make Money With Ebay Store Eco Tourism Entrepreneur Where To Search Reverse Lookup Businesses Business Brokers And Geographic Market What Does A Construction Estimator Job Do? Notable Problems Involved In Commercial Franchise Procedures And Timing For Trademark Transfer Wealthy Internet Marketers Are Kicking Your Butt! How To Buy Jockstraps And Athletic Supporters For Men How To Find Auto Parts Of Rare Or Luxury Cars An Online Guide To Hypnosis