Don’t Be Held Back By These Six Problems That Stall Petrol Station Business Growth.
What makes millionaires while others give up or become bankrupt in the same petrol station industry?
Why are investors building new petrol stations on every street corner in Tanzania? And why many petrol stations are being advertised for sale on the internet and in newspapers?
It breaks my heart to say that due to a lack of adequate information about investing in petrol stations in Tanzania and Africa, most potential investors take the plunge without sufficient due diligence and foreknowledge of the challenges of operating a petrol station business in the region.
Many potential investors are so blinded by perceived big money opportunities in the energy sector that they pay less attention to the industry’s challenges.
After the business commencement, they soon discover a totally different world from what they thought it would be.
Due to this reality, the research outcome has added value to the domain of much-needed investment information for decision-making.
If investors know from the independent source what challenges exist, they will embrace challenges and learn how to navigate them.
Based on my experience and research, here are six causes of most petrol station business disasters.
1. Poor site location
Location is a crucial factor that impacts the profitability of l your petrol station business.
Today, many investors spend substantial time and resources on executing their petrol station projects while they need to pay more attention to assessing the viability of their petrol station site location. This leads to investing in the wrong places or making a decision that may not help them win in this competitive market.
A good petrol station site location has better accessibility and visibility to customers. Another essential location factor that could affect the fuel demand is the number and type of vehicles passing in your site. Also, determine who your competitors are, their strengths and weakness, how much volume they sell per month, and their pricing strategies.
2. Lack of financial discipline
The petrol station is a cash business, so the temptation to misplay earning is high. Investors and operators must have a high financial discipline to survive in the industry.
3. Poor risk management
As I said earlier, the petrol station is a high cash business, and the potential for theft is high. Also, petrol stations operate nonstop, like hospitals or airports. Anybody can enter the petrol station and go scot-free, including criminals.
Thieves and criminals are the greatest enemies of your petrol station business. They ruin the profitability of the petrol station business. Another sad reality is that everyone wants to steal from you. They must be your employees or customers who drive away without paying for fuel that had just been refilled into their tank. To minimize risks, stop holding a lot of money in the office at all times.
Also, ensure you have a security mechanism that detects terrible incidents like this in your station, such as an alarm or CCTV.
Furthermore, the potential for fire outbreaks in the petrol station is high because fuel is highly flammable. To minimize this risk, ensure safe operate and have adequate insurance. Furthermore, you must employ smart operation strategies to avoid losing fuel during loading or dispensing fuel to motorists.
4. Low-profit margin.
Currently, there is a proliferation of petrol station development in Tanzania. Competition for the trade of motorists is higher. Also, there are challenges of low-profit margin.
If you are a petrol station owner dislikes incorporating complementary services like a car wash and garages, or even if you need more non-fuel products, your petrol station will suffer years of slow growth. You must also push high fuel sales at your petrol station to maximize profitability.
5. Lack of vision and plan
Many investors are fast in implementing their petrol station project, but they need the plan to make their effort successful. To survive or even excel in the petrol station business, you need to have a vision of where you want to be at a specific time. You need to know how to manage and plan and influence business direction,
6. Lack of understanding of the market dynamic
The significant challenges in petrol station operation are sales and purchase differences. Maybe you buy fuel when the price is high. Because of fuel price fluctuation, you have to sell for less due to market conditions. And it can be vice versa too.
So in the petrol station business, you must observe the market very minutely. You must determine the rate fluctuation ahead of time. It will help you buy and sell fuel. When you discover the fuel price will be high, you must have sufficient fuel stock. And you must finish the stock quickly when you realize that fuel price is going to drop.
To survive and excel in the petrol station industry, you need to focus on building profitability, financial discipline, risk management skills, and vision for the business. Don’t forget to have faith in God.
