Five Biggest Mistakes Entrepreneurs Make When Starting Petrol Station Business and How to avoid them.
The petrol station business has already been proven a success in Tanzania. knowing some pitfalls before you start your own fuel station can help you avoid them. This article is a clear guide to getting started in a fuel station the right way and avoiding expensive mistakes most entrepreneurs make.
Mistake one-Poor selection of location.
People make the biggest mistake: They purchase land and rush into building petrol stations without conducting a feasibility assessment of their sites.
They spend a lot of money, time, and effort building a petrol station only to find that the station is selling a little volume from the market in the trading area.
For your petrol station business to be profitable you need set up in the best location in your target city.
When you are looking at a potential location for building a fuel station ask yourself this question. Will this location sell? To reduce risks, it is advisable to hire a specialist petroleum industry consultant to conduct a viability assessment of your location and identify cost and infrastructure requirements at your locations as well as identify whether the desired return on investment can be achieved in your proposed petrol station sites.
The best part is that this viability assessment will help you avoid investing in the wrong places or make decisions that may not help you win the competitive market.
Mistake 2-Insufficient planning and investigation.
Improper project planning has been found as one of the reasons for the subsequent failure of many petrol station businesses in the country.
Very often entrepreneurs select to start a fuel station by considering only a few factors influencing the viability of the fuel station business. Many people spend substantial time and resources in project execution while they pay little attention to project planning and project investigation. This leads to making decisions that may not help them win in the competitive industry.
Proper project planning and investigation can save thousands and truckload of stress and frustration later on. So seek out all materials available, including online resources and as many books and other materials you can lay your hands on.
Seek the opinion of filling stations business owners and consultants about the petrol station business.
Mistake 3- Failure to seek professional advice.
It’s amazing to see many entrepreneurs jump into the fuel station business without consulting industry experts or other petrol stations business owners.
How do you know the technical and commercial requirements of the petrol station projects before you consult with experts who have experience in the fuel station industry? Imagine, how you would even make better decisions?
A better consultant makes you more knowledgeable about the project, enabling you to make better decisions and enhance your capabilities. The primary objective of consultants is to help you avoid expensive mistakes and enable you to get better outcomes.
I can’t stress enough the importance of having experts or consultants as part of your team.
One of the main tenets of having a successful fuel station business is getting good advice. And the first time petrol station business owners should look for all the help you can get.
When you are hiring an experienced industry consultant you are not just paying him for his opinion and expertise. But also you pay him for experiences and research.
You will learn in two hours what took him ten years to discover. The right advice will save you big bucks.
Mistake 4-Inadequate Start-Up Capital.
The petrol station is capital intensive business. And many petrol station businesses begin without enough money in reserves. Building a modern fuel station and purchasing sufficient fuel to ensure you have enough fuel in sock requires substantial money.
If you have done your research and have a solid business plan, I promise you the money is out there. Start looking for contacts and potential investors.
Mistake 5-Lack of knowledge about attracting customers
It’s unpleasant to see that many fuel filing stations being set up
in the country all the time, and far too few of the petrol station business owners who have ever bothered to try to work out what they can offer that their competitors can’t do.
What you need to do is to identify the competitive advantages of your petrol station business.
Your competitive advantage refers to those special points that only you can offer and will spur on customers to use your fuel stations and nobody else.
You must have a plan to get the customer to use your petrol stations. You can simply sell your fuel and services at a lower price than your competitor and expect to be successful.
By Hussein Boffu
I am a Petroleum industry consultant with a mission to help entrepreneurs know more, help them make better decisions, and enhance their business capabilities. I believe better decisions lead to better outcomes. Reach out to me via +255(0)655376543 or hussein.boffu@tanzaniapetroleum.com
