Convenience Store Gas Station Business Plan
Allensburg is a small town with a population of 3,400. It is located on rural Highway 310, 30 miles south of Kent and 34 miles north of Willard. Highway 310 connects these two cities, both of which have universities and a combined population of 200,000 residents. This highway serves as the main road through town and is used daily by thousands of commuters. These commuters support various roadside businesses that sell flowers, produce, and bakery products.
Currently, commuters in the Allensburg area have to leave the highway and drive three miles into town to get gas. However, Robert Cole, the owner of Allensburg’s Food and Gas, has the opportunity to rent a plot of land just off the Allensburg exit of Highway 310.
Allensburg’s Food and Gas aims to offer commuters gas, organic produce, and a deli. Commuters can conveniently stop on their way to work for gas and a sandwich, and on their way home to pick up something for dinner.
The objective of this plan is to provide guidance for this start-up business, including researching and defining markets, strategies, mission, and financials. This will help prepare the owner to successfully run Allensburg’s Food and Gas.
1.1 Objectives:
– Capture an increasing share of commuter traffic passing through Allensburg.
– Offer customers superior products at an affordable price.
– Provide unparalleled customer service.
The mission of Allensburg’s Food and Gas is to offer competitive gas prices and great food to commuters on Highway 310. The company aims to generate a healthy profit for its owners and provide a rewarding work environment for its employees.
Keys to success:
– Good quality products at competitive prices.
– Excellent customer service to promote customer loyalty.
– A strategically located store that attracts commuters.
Allensburg’s Food and Gas is a new convenience store and gas station in Allensburg. The owner, Robert Cole, has seven years of experience in managing gas stations. The store will cater to the daily commuters in the town, offering the best gas prices and quality food products.
Company Ownership:
Allensburg’s Food and Gas is wholly owned by Robert Cole.
Start-up Summary:
Robert Cole will invest $60,000 in Allensburg’s Food and Gas. He aims to secure an SBA loan of $150,000 to cover the remaining start-up costs.
The chart and table below illustrate the projected initial start-up costs for Allensburg’s Food and Gas.
Start-up
Requirements
Start-up Expenses
Legal – $1,000
Insurance – $1,000
Rent – $1,500
State Permits – $3,000
Gas Station Setup – $70,000
Store Setup – $20,000
Promotional Sign – $5,000
Total Start-up Expenses – $101,500
Start-up Assets
Cash Required – $18,500
Start-up Inventory – $10,000
Other Current Assets – $0
Long-term Assets – $80,000
Total Assets – $108,500
Total Requirements – $210,000
Start-up Funding
Start-up Expenses to Fund – $101,500
Start-up Assets to Fund – $108,500
Total Funding Required – $210,000
Assets
Non-cash Assets from Start-up – $90,000
Cash Requirements from Start-up – $18,500
Additional Cash Raised – $0
Cash Balance on Starting Date – $18,500
Total Assets – $108,500
Liabilities and Capital
Liabilities
Current Borrowing – $0
Long-term Liabilities – $150,000
Accounts Payable (Outstanding Bills) – $0
Other Current Liabilities (interest-free) – $0
Total Liabilities – $150,000
Capital
Planned Investment
Robert Cole – $60,000
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $60,000
Loss at Start-up (Start-up Expenses) – ($101,500)
Total Capital – ($41,500)
Total Capital and Liabilities – $108,500
Total Funding – $210,000
Products
Allensburg’s Food and Gas sells:
– Gasoline and diesel fuel
– Oil, de-icer, car accessories, etc.
– Deli items
– Drinks
– Bakery goods
– Organic produce
Market Analysis Summary
Located on rural Highway 310, Allensburg is 30 miles south of Kent and 34 miles north of Willard. Highway 310 connects Kent and Willard, both with universities and a cumulative population of 200,000 residents. The highway is the main road through town and is used daily by thousands of commuters between the two cities. The closest gas station in either direction is over 20 miles away.
These commuters currently have no convenient shop to buy food on Highway 310; more importantly, 80% of Highway 310 commuters fit the demographic profile of customers of upscale organic/natural food stores:
– Age: 25 – 45 years
– Gender: 60% women
– Average income: $40,000+
– Education: college graduate
– Employment: professionals in business and education
4.1 Market Segmentation
The target customers of Allensburg’s Food and Gas are the commuters that use Highway 310.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Commuters 10% 5,500 6,050 6,655 7,321 8,053 10.00%
Other 0% 0 0 0 0 0 0.00%
Total 10.00% 5,500 6,050 6,655 7,321 8,053 10.00%
Strategy and Implementation Summary
Allensburg’s Food and Gas will focus on becoming a routine stop for commuter traffic on Highway 310, not just for those who need gas, but also for those who want a healthy, tasty snack or need to pick up some small grocery items. Allensburg’s Food and Gas aims to be more than a gas station to its customers; it will be a friendly place for tired commuters.
5.1 Competitive Edge
The competitive edge for Allensburg’s Food and Gas is as follows:
– Location: Allensburg’s Food and Gas is located on Highway 310. The closest competitor is three miles into the town of Allensburg.
– Quality Deli and Organic Produce: Commuters will be able to pick up lunch or buy something to take home while buying gas. Allensburg’s Food and Gas will be regarded as an invaluable time saver in their day.
5.2 Sales Strategy
Allensburg’s Food and Gas will keep gas prices competitive with other stations within a fifty-mile radius to attract commuters. Customers who purchase more than $10 worth of gas will receive a 15% coupon for purchases in the store during the first month of operation to encourage purchases and introduce them to the concept of buying quality organic foods at the gas station.
5.2.1 Sales Forecast
To maintain competitive gas prices, the cost to the consumer will never exceed 15% of wholesale cost. Allensburg’s Food and Gas will focus on increasing food sales to meet total sales forecast goals.
The following is the sales forecast for three years.
Sales Forecast:
Year 1 Year 2 Year 3
Sales:
Gasoline $623,000 $660,000 $700,000
Food, Drinks,
and Produce $185,000 $198,000 $210,000
Total Sales $808,000 $858,000 $910,000
Direct Cost of Sales:
Year 1 Year 2 Year 3
Gasoline $544,000 $570,000 $582,000
Food, Drinks,
and Produce $37,200 $41,000 $44,500
Subtotal Direct Cost of Sales $581,200 $611,000 $626,500
Management Summary:
Robert Cole, owner of Allensburg’s Food and Gas, has seven years of experience managing gas stations/convenience stores. From 1993 to 1996, Robert managed Higgins Texaco, one of the largest gas station/convenience stores in Willard, where he supervised a staff of seven. In 1997, he became manager of Barger Chevron, near Highway 310.
Personnel Plan:
The Allensburg Food and Gas will have a staff of five:
– Manager
– Store/deli staff (2)
– Gas attendants (2)
Year 1 Year 2 Year 3
Robert Cole $33,600 $37,000 $40,000
Store/Deli Staff $42,000 $44,000 $46,000
Gas Attendants $42,000 $44,000 $46,000
Total People 5 5 5
Total Payroll $117,600 $125,000 $132,000
The following is the financial plan for Allensburg’s Food and Gas.
Break-even Analysis:
The monthly break-even point is approximately $49,500.
Break-even Analysis
Monthly Revenue Break-even: $49,539
Assumptions:
– Average Percent Variable Cost: 72%
– Estimated Monthly Fixed Cost: $13,905
7.2 Projected Profit and Loss
The table and charts below show the projected profit and loss for three years.
Pro Forma Profit and Loss:
Sales:
Year 1: $808,000
Year 2: $858,000
Year 3: $910,000
Direct Cost of Sales:
Year 1: $581,200
Year 2: $611,000
Year 3: $626,500
Other Production Expenses:
Year 1: $0
Year 2: $0
Year 3: $0
Total Cost of Sales:
Year 1: $581,200
Year 2: $611,000
Year 3: $626,500
Gross Margin:
Year 1: $226,800
Year 2: $247,000
Year 3: $283,500
Gross Margin %:
Year 1: 28.07%
Year 2: 28.79%
Year 3: 31.15%
Expenses:
Payroll:
Year 1: $117,600
Year 2: $125,000
Year 3: $132,000
Sales and Marketing and Other Expenses:
Year 1: $0
Year 2: $0
Year 3: $0
Depreciation:
Year 1: $11,424
Year 2: $11,424
Year 3: $11,424
Leased Equipment:
Year 1: $0
Year 2: $0
Year 3: $0
Utilities:
Year 1: $3,600
Year 2: $3,600
Year 3: $3,600
Insurance:
Year 1: $3,600
Year 2: $3,600
Year 3: $3,600
Rent:
Year 1: $13,000
Year 2: $13,000
Year 3: $13,000
Payroll Taxes:
Year 1: $17,640
Year 2: $18,750
Year 3: $19,800
Other:
Year 1: $0
Year 2: $0
Year 3: $0
Total Operating Expenses:
Year 1: $166,864
Year 2: $175,374
Year 3: $183,424
Profit Before Interest and Taxes:
Year 1: $59,936
Year 2: $71,626
Year 3: $100,076
EBITDA:
Year 1: $71,360
Year 2: $83,050
Year 3: $111,500
Interest Expense:
Year 1: $13,375
Year 2: $10,500
Year 3: $7,500
Taxes Incurred:
Year 1: $13,968
Year 2: $18,338
Year 3: $27,773
Net Profit:
Year 1: $32,593
Year 2: $42,788
Year 3: $64,803
Net Profit/Sales:
Year 1: 4.03%
Year 2: 4.99%
Year 3: 7.12%
7.3 Projected Cash Flow:
The following table and chart highlight the projected cash flow for three years.
Pro Forma Cash Flow:
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $808,000 | $858,000 | $910,000 |
| Subtotal Cash from Operations | $808,000 | $858,000 | $910,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $808,000 | $858,000 | $910,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $117,600 | $125,000 | $132,000 |
| Bill Payments | $637,424 | $681,157 | $701,506 |
| Subtotal Spent on Operations | $755,024 | $806,157 | $833,506 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $30,000 | $30,000 | $30,000 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $785,024 | $836,157 | $863,506 |
| Net Cash Flow | $22,976 | $21,843 | $46,494 |
| Cash Balance | $41,476 | $63,319 | $109,813 |
Projected Balance Sheet:
7.4 Projected Balance Sheet
The following table and chart highlight the projected balance sheet for three years.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $41,476 | $63,319 | $109,813 |
| Inventory | $56,540 | $59,439 | $60,947 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $98,016 | $122,758 | $170,760 |
| Long-term Assets | |||
| Long-term Assets | $80,000 | $80,000 | $80,000 |
| Accumulated Depreciation | $11,424 | $22,848 | $34,272 |
| Total Long-term Assets | $68,576 | $57,152 | $45,728 |
| Total Assets | $166,592 | $179,910 | $216,488 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $55,500 | $56,029 | $57,804 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Plan Month: 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate: 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Long-term Interest Rate: 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Tax Rate: 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% Other: 0 0 0 0 0 0 0 0 0 0 0 0 0 Pro Forma Profit and Loss: Sales: $50,000 $52,000 $62,000 $70,000 $71,000 $71,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 Direct Cost of Sales: $37,000 $37,500 $44,900 $51,000 $51,200 $51,200 $51,400 $51,400 $51,400 $51,400 $51,400 $51,400 $51,400 Other Production Expenses: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cost of Sales: $37,000 $37,500 $44,900 $51,000 $51,200 $51,200 $51,400 $51,400 $51,400 $51,400 $51,400 $51,400 $51,400 Gross Margin: $13,000 $14,500 $17,100 $19,000 $19,800 $19,800 $20,600 $20,600 $20,600 $20,600 $20,600 $20,600 $20,600 Gross Margin %: 26.00% 27.88% 27.58% 27.14% 27.89% 27.89% 28.61% 28.61% 28.61% 28.61% 28.61% 28.61% 28.61% Expenses: Payroll: $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 $9,800 Sales and Marketing and Other Expenses: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Depreciation: $952 $952 $952 $952 $952 $952 $952 $952 $952 $952 $952 $952 $952 Leased Equipment: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Utilities: $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 Insurance: $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 Rent: $0 $0 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 Payroll Taxes: 15% $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 Other: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Operating Expenses: $12,822 $12,822 $14,122 $14,122 $14,122 $14,122 $14,122 $14,122 $14,122 $14, Pro Forma Cash Flow |
|||
| Pro Forma Cash Flow | ||||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |||
| Cash Received | ||||||||||||||
| Cash from Operations | ||||||||||||||
| Cash Sales | $50,000 | $52,000 | $62,000 | $70,000 | $71,000 | $71,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | ||
| Subtotal Cash from Operations | $50,000 | $52,000 | $62,000 | $70,000 | $71,000 | $71,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | ||
| Additional Cash Received | ||||||||||||||
| Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Subtotal Cash Received | $50,000 | $52,000 | $62,000 | $70,000 | $71,000 | $71,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | ||
| Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Expenditures from Operations | ||||||||||||||
| Cash Spending | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | $9,800 | ||
| Bill Payments | $2,356 | $69,710 | $42,025 | $58,309 | $63,158 | $57,288 | $57,082 | $57,698 | $57,471 | $57,457 | $57,442 | $57,427 | ||
| Subtotal Spent on Operations | $12,156 | $79,510 | $51,825 | $68,109 | $72,958 | $67,088 | $66,882 | $67,498 | $67,271 | $67,257 | $67,242 | $67,227 | ||
| Additional Cash Spent | ||||||||||||||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Long-term Liabilities Principal Repayment | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | ||
| Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
| Subtotal Cash Spent | $14,656 | $82,010 | $54,325 | $70,609 | $75,458 | $69,588 | $69,382 | $69,998 | $69,771 | $69,757 | $69,742 | $69,727 | ||
| Net Cash Flow | $35,344 | ($30,010) | $7,675 | ($609) | ($4,458) | $1,412 | $2,618 | $2,002 | $2,229 | $2,243 | $2,258 | $2,273 | ||
| Cash Balance | $53,844 | $23,834 | $31,509 | $30,900 | $26,442 | $27,855 | $30,472 | $32,474 | $34,703 | $36,946 | $39,204 | $41,476 | ||
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