If you’re brainstorming in order to find a perfect business idea in Tanzania, investing your cash in the petrol filling station business is a wise decision.
This business ensures steady profit in a reasonable time from setting up. You might feel the market is already flooded, but you can come in and have at it.
Petrol stations are in every street corner because they make insane profit
Don’t get me wrong. I am not saying this to brag. Instead, I am telling you this because I have carried out solid research.
So, I can confidently tell you that this is one of the right business opportunities to pursue.
Tanzania is expected to consume around 112,400 barrels per day (b/d) of refined fuel by 2025. This means that no matter how much petroleum
products are imported, still, extra will be needed to support the day-to-day economic activities in the country.
It seems that there is high entry barriers as the new entrants will have to invest heavily in the initials capital requirements.
But with proper, Petrol station business plan, you can get a loan from bank to start this business and you will be able to pay back the money and the interest in about 8 months.
Banks and investors are aware of the potential of petrol station business in emerging country like Tanzania and hence are willing to give out loans.
Now let’s see the profit margin of a petrol station business. It is very hard to determine how much you can make from the petrol station, because it depends on the following factors:
Location: The location of a station is incredibly important to ensure the success of this businesses.A petrol station located in a high traffic area earns more income than if located in a low traffic region.
Oil prices: Location is crucial for Profit margin tends to increase when oil price moves lower. Of course, the opposite can be true.
Number of employees: The number of employees affect profit margin, too. And it differs from one petrol station to the other.
Supplier: It depends on the supplier whom you source fuel from. Some suppliers leave a room for negotiating competitive prices.
Products and services you offer: A petrol station that depends on income solely from fuel will earn little money than the one offering a variety of goods, such as fast foods, etc.
But an average petrol station’s sales is about 5,000 to 25,000 liters per day, based on the factor above, but the profit margin made by petrol station is TZS 100 to TZS 310 a liter.
So, if you sell 5000 liters a day will make you TZS 100 × 5000 = TZS 500,000. In a month, you will have a profit margin of TZS 30 × 500,000 = TZS 15,000,000. That figure can vary widely, depending on where petrol station is located. For example, the petrol stations that are placed in high traffic areas have an average fuel sales of more than 25,000 liters a day. So for that rates, the profit margin per day will be TZS 100 × 25,000 = TZS 2,500,000 Again, in a month, that will make you 30 × TZS 2,500,000 = TZS 75,000,000. So, this is why petrol stations are on every street corner, because they make good money. So, everyone wants to jump into this business.
I hope this helps.