Last Updated on 20 May 2022 by Gertrude
In April of 2022 fuel became a challenge.
Long queues were witnessed at every filling station in major towns in Kenya.
How can you start a profitable petrol filling station in Kenya?
Does a filling station cost lots of money to start?
How do filling stations make money?
Fuel is combustible energy that we need to survive.
A lot of people use vehicles today and fuel is the only source of energy that can get their engines running.
Without fuel, you won’t be able to get to work on time, go on a road trip or even catch your next flight.
Fuel is in high demand as the number of automobiles keeps on rising.
Oftentimes when people hear about a fuel station business, they instantly think about the large scale fuel station business and how difficult it is going to be to build a fuel station like that.
In this article, I will show you how you can start a fuel station business with little capital.
Fuel station businesses are growing in number and with good reason.
There is no barrier to entry in this market as anyone can start a fuel station.
The fuel industry faces high competition, so you have to start this business with an outstanding product and effective strategies that will propel your fuel station business towards success.
I will go over everything you need to know about how to start a fuel station business today.
What’s a Fuel Station?
A fuel station is a place that sells fuels and lubricants to run vehicles.
Fuel sold includes petrol or diesel fuel.
There are other fuel stations that have kerosene, biodiesel and even natural gas.
A fuel station business is a business you start to sell fuel to customers at a price.
Vehicle owners will stop by your fuel station and ask you to refill their tanks with fuel.
They will then pay you for your services.
This is how a fuel station business works.
Large scale fuel stations can also offer other services apart from providing fuel.
There are fuel stations that have mechanic repairs, car washes or retail shops for clients.
How to Start a Fuel Station
Starting a fuel station business today is quite easy. Take these steps and start a successful fuel station business.
- Do your research and analysis
Before you start a fuel station business, you need to do research and analyse the market. Who are your competitors and what are your strengths and weaknesses getting into this business?
When it comes to your competitors, ask yourself:
Who are they and where are they located?
What fuel station services do they offer?
What makes them reputable?
What are their fuel prices?
What makes them tick with customers?
Now, assess your target market.
Who are they and where are they located?
What types of vehicles do they have?
What fuel station services do they need?
How much are they ready and willing to pay for fuel?
Answering all these questions will give you a thorough assessment of your competitors and customers.
Understanding your competitors and your market needs is very important if you want to undercut your competitors in a heartbeat and serve your customers better.
You can also do a SWOT analysis and find out some of the pros and cons of starting a fuel station business.
i) Pros of starting a fuel station business
High fuel demand
You make high profits
You can sell more than fuel; hence high income earning potential through diverse streams
A fuel station business doesn’t need skilled labour
You can get funding to start a fuel station business
ii) Cons of starting a fuel station business
A fuel station business may need a large capital outlay; which is expensive
There is high competition
You will need to work long hours
It is a dangerous business as fuel is inflammable
There are high levels of profit fluctuations, especially during changing economic times.
Going through your competitors and the market and knowing your strengths and weaknesses is essential for any thorough research.
Tip: You can hold interviews or use surveys and questionnaires to gather this data about the fuel business industry.
- Choose a business strategy
How do you plan on starting your fuel station business?
Do you intend to buy or rent the property?
If you prefer to rent a facility, it is important to know that it is going to be costlier for you in the long run.
Building a petrol station is the most recommended route for any person who wishes to start their own fuel station business.
You will need to buy a plot of land and start thinking about constructing your fuel station business.
So many things go into the building and renovation of a fuel station business.
You have to have a shelter, fuel tanks and also an office or a shop, depending on how you want to scale your business and what services you want to offer.
- Have a fuel station business plan
A business plan is a guide.
This is a necessary requirement for starting a fuel station business.
With a business plan, you have an overall view of what your fuel station business is about.
When you are thinking about the business plan, ask yourself:
What products and services will I be offering?
How much staff do I need?
What is my market strategy?
What are the expenses for starting a fuel station business?
What is the capital outlay for a fuel station business?
What is the company description?
How long will I be working in the fuel station business?
A basic business plan must include the following components:
Products and services
Employee and staffing needs
Write a detailed business plan, especially if you want to get funding.
This is the first requirement from investors and money lenders before they can contribute funds to start a fuel station business.
- Have a financial plan
What is your financial plan for a fuel station business?
Do you know the expenses you will incur when starting this business?
Have you done a cost analysis? What is your budget?
i) Expenses for starting a fuel station business
Cost of buying land
Cost of fuel equipment
Inventory costs e.g if you are selling food supplies
Have an estimate of the amount of money this list will cost you and plan your finances better.
You cannot afford not to know what your expenses are because that will mean that your fuel station business may not run successfully.
- Source for funds
Like I said, starting a fuel station business can be an expensive venture.
You will need to get funds to start a fuel station business.
There are a lot of funding options available.
You just need to find one that suits your preferences and financial needs. Some of these sources of funds include:
Your own savings
Borrowing from friends and family
Having a partner
Always do a thorough assessment of your financial needs before you seek out funds so that you do not start a business strapped in debt.
- Meet the necessary legal requirements
There are certain legal requirements that you must meet before you can start a fuel station business.
It is always important that you start a business in full compliance with the law so that you can avoid heavy penalties such as fines or having your business shut down.
The first legal requirement you must accomplish is to register your fuel station business.
Choose an entity you wish to operate under (either a sole proprietorship or an LLC) and register your business so that it can operate legally. Do not skip this step.
Next, obtain the necessary permits and licenses for a fuel station business.
i) Licensing requirements for a fuel station business
Fire and safety certificate
Zoning is also an important legal factor that you need to look at before you start a fuel station business in any place.
Tip: If you do not know the legal requirements and procedure for starting a fuel station business, you can enquire from the local authorities and they will give you all the help you need.
Any wise person will want to start their business on the right side of the law.
- Find a good location
Location matters when starting a fuel station business.
You need to do your due diligence here because location can make or break your business.
For starters, there are things you must consider before you choose a place to start a fuel station business.
i) Things to consider when choosing a location for a fuel station business
- Accessibility; you should start a fuel station business in a place that is passed by rides and motorways so that vehicle owners can get access to your fuel station business fast.
- Visibility; start a fuel station business in a place that can be seen and is within a driver’s viewpoint
- Parking access; a fuel station business should be big enough to give space for parking vehicles awaiting a refill
- Legalities; check out zoning so that you don’t start a fuel station business on government property.
- Crime rate; start a fuel station business in a crime-free zone so that you can easily operate round the clock and avoid any cases of theft and vandalism.
Most fuel station businesses are situated near roads in town centres, so that should be a good place to start a fuel station business.
- Get the necessary fuel station equipment and supplies
You need to find the necessary equipment and supplies for business operations and for construction and renovation needs.
This includes fuel pumps, fuel dispensers, cement, bricks etc.
Write a list and get quality equipment and supplies to enable you to start a solid business.
Always be sure that you have all you need before you start a fuel station business.
You do not want to start business operations and find out you are missing out on one thing or the other.
- Find reliable suppliers
Do you want to start a fuel station business and sell fuel?
You need to find reliable suppliers.
Your suppliers will restock your fuel.
Now, you have to do your due diligence here because I’ve heard cases where there are suppliers who mix or reduce the fuel quantity.
This in turn leads to poor quality fuel offered to customers.
Your business will operate at a loss because no one wants to buy your fuel.
You need to find the most reputable suppliers who will give you high-quality fuel at good prices so that your business can run at a profit.
If you are selling other supplies like snacks in your shop, you will have to find a supplier for that.
- Hire staff
Sometimes it is not easy to work alone in a fuel station business.
The good thing about this business is that it doesn’t require any skilled labour.
This makes it very simple during the hiring process.
You can train your employees in basic customer service skills so that your customers can get the best experience and satisfaction from your fuel station business.
- Promote your fuel station business
With a fuel station business, you need to target both the online and offline market when you want to promote your business.
There are effective marketing strategies that you need to put in place to help you find clients and expand your customer base.
i) How to attract customers to a fuel station business
Use proper signage
Use social media e.g Facebook or Twitter
Have a website
Use Google search
ii) How to promote a fuel station business
Have a loyalty programme
Use a website
Give deals and discounts
Get business reviews
Excellent customer service
Equipment Needed to Start a Fuel Station Business
This is what you need to start a fuel station business:
Fuel pump machine: duo, single and twin nozzles
Service station equipment
Business management software
Legal Requirements for a Fuel Station Business
These are the legal requirements you need to start a fuel station business:
A registered business
Fire and safety certificate
FAQs on Starting a Fuel Station
Q. Is a fuel station business profitable?
Yes. A fuel station business is very profitable.
Q. How much does it cost to start a fuel station business?
The amount of money it costs to start a fuel station business depends on how you want to scale this business.
Large-sized fuel stations will require more capital outlay and will definitely cost more than small-sized fuel stations.
List all your expenses and have an estimate of how much money you need to meet these costs.
Q. How do I make money with a fuel station business?
With a fuel station business, you will be making money from selling fuel to clients with vehicles.
You can also render mechanic shop services or start a car wash on the side and make money in this way.
It is also ubiquitous to see fuel stations having retail shops as another income stream.
You can sell food and drinks in these shops and then get paid.
Q. How much should I charge my customers?
How much you charge your customers and the price of your fuel is going to depend on the competition in the area.
Know the standard price for fuel in an area and charge your customers that.
You can also evaluate business expenses and charge your clients a markup of the set price.
Always keep your charges fair to customers, yet competitive and profitable.
Q. How much money can I make with a fuel station business?
A fuel station business can make you a lot of money.
This however depends on how much fuel you can sell.
Strategic positioning and marketing are important if you want to sell more fuel and make more money.
Q. How do I make a fuel station business profitable?
To make a fuel station business profitable, consider starting a retail shop, offering mechanic repair services or starting a car wash.
There are good business variations that will make a fuel station business make more profits.
Q. How do I start a petrol filling station?
Have land/acquire land
Supply of fuel
Starting a fuel station today is a wise decision to make.
The fuel industry keeps growing and there are lots of profits made that you can be a part of.
As you start a fuel station business, remember to keep the safety regulations so that you do not cause any accidents.
Check for any leakage and avoid having flammable materials near your fuel station business.
Also, pick a good location so that vehicles can easily park and get a refill in your fuel station.
Have good signage with a good fuel station business name to increase visibility.
Don’t forget to market your business so that you can grow your customer base.
You can start a fuel station business as a full-time job or have it as a side hustle.
Having the right team will help you manage a fuel station business as you attend your normal job.
Make sure that your supplier gives quality fuel so that you do not have an incident of customers complaining about having water added to their fuel.
Get everything ticked off in your list before you start a fuel station business if you want to achieve success.
Do you want to start a fuel station business in Kenya?
Or are you a fuel attendant reading this article? What did you learn as a fuel attendant?
What can you teach other fuel attendants or investors that want to invest in the fuel station business in Kenya?