Remember the store I helped some investors buy in 2015 that was losing money? I shared two updates so far and now here is the 3rd one about how that store is doing now. This is a long awaited episode, but here it is. Enjoy!
Welcome to Gas station business 101 podcast, I am Shabbir Hossain, and this is episode 61. This is the show where we discuss everything under the sun about the gas station and convenience store business, how to buy these businesses, how to operate them and how to grow them to be a million dollar success.
Now on to the show…..
On Episode 23, I brought you a real life store sales data and analysis, where I was helping a group of buyers decide if they should buy a location or not. If you recall, in that episode I published the real sales figures of the store and some projected ones as well. Based on their sales data I created some P&L’s of my own and it showed for the month of October the seller had lost about $2500. But despite the fact that the store was losing money, I did go ahead and recommended that they buy the store based on few factors which I discussed in that episode 23 as well. If you recall, in that episode (episode 23) I discussed few issues, and few opportunities of the store and we covered 9 points:
- The store and its location
- Age and brand
- Physical inspection of the store and the issues we noticed
- Recommended upgrades and how much those upgrades would cost
- Indoor Issues
- Outdoor Issues
- Sales and financials
- Projected P&L vs. Real P&L
If you have time, please go back and listen to Episode 23 and 29 this way you will know the whole story.
In episode 29 I shared some P&L for March 2016, in that episode, I did compare P&L’s from October 2015 which the sellers provided us to what the new owners did in March 2016, and if you recall there was a drastic difference between those two. The new owners increased the business and made it a very profitable one. But to get to that increase, the new owners implemented these nine strategies that I proposed.
Strategies we implemented:
- Address all maintenance issues
- Upgrade all lighting and put a fresh coat of paint
- Clean up the store
- Remerchandising the store based on its traffic flow
- Bringing in products that sell in the area
- Advertise heavily via reader board, pump toppers and on the front door
- Bringing in EBT and money order
- Implementation of new fuel and merchandise pricing strategy
- Full on marketing and promotional campaign
As you can see it was not one single strategy that made the business profitable but a combination of many factors. It was not an easy task, but the credit goes to the management team of the store who were able to follow directions and implement everything we suggested for the store.
Now let’s take a look what and how the store has done since March 2016 until December 2016, instead of showing you month by month P&L, I can tell you that the new owners have seen a gradual increase in business and enjoyed a positive growth each month. Let’s now take a look at the P&L from this last December.
But remind you in most areas, November through February are usually the slowest winter months. Business usually slows down quite a bit compare to the summer months. So I figured if we can see something positive even in December then we can be assured that the business will make more sales and show more profit during the summer months.
Here are the Sales summery and P&L for the month of December 2016
Let’s look at the Profit and Loss history of this store. If you remember in October 2015 right before the new owners took over the store lost $2574.51, then the new owners took over in December, and by March the store became profitable which I shared in episode 29, the P&L then showed a profit of $5193.33.
Now fast forward to December 2016, which is a slower month for most gas station business, and with less fuel sales, the store generated $6,875.46. It is important to share that in this past one year, their best month was August 2016, and for that month the net profit was $9,612.90., But I wanted to give you a full year’s snapshot so I brought December and not August in this calculation.
What have they done differently? Well, nothing other than keeping up with the proper inventory, making sure the pricing is right and superior customer service. That’s the secret sauce of success in this line of business.
If you have any question, feel free to send me an email at email@example.com, or you can post it on my Facebook group page by going to shabbirhossain.net
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Thank you once again for joining me in this episode; I will see you in the next one.