Posted by: timi_mero_sathi October 11, 2012
How to Start a new Business?
Login in to Rate this Post:     0       ?        
 Vhootee,
Sub leasing 

Subleasing ( possiibility of, in lease contract): subleasing is popular in some places . But this type of provision must be allowed by lease contract. Suppose you leased one gas station from the owner. You have to sign a lease contract.( this will be prepared by the lawyer). If this lease contract says you are allowed to sublease then you can. If the lease says you can not then offcouurse you can not. If there is no mention of subleasing and you sublease , owner may creat trouble for you.
Sub leasing (possibility of, financially); In order to sub lease, the business must also be genrrating good /attractive revenue Because anyone who will sublease from you will also do  DD of his own. And during DD if he finds the business wont generate after subleasing he wont take it.
for example if you lease gas station from original owner for 10,000 dollars permonth, when you sublease you must be asking somewhere 12000-15000 dollars a month. So new guy who subleases the business from you must be able to make at lease 15000 to 18000 permonth if he finds he will be unable to make that much money he wont take it. 
Another situation of subleasing (this type is usually for old couple/new immigrants and house wife/house husband) : If the person is doing nothing  it is better to make 1000 per month rather than sitting ideal at home. If you can find such people they will be able to sublease from you because they are happy even if they are making 1000$ a month. which is better than working ass off in others restaurent.
But these type of people wont sign long term contract, they will be on month to month basis. How to handle them? it is up to you 

So, subleasing up to second client is common but after that everything is situation dependant. depends mainly on revenue generated by the business and persons available to work on nomonal profit.

Supplier:
If you have brand name business. everything is supplied by the franchise (although some franchise allow pesonal supplier in some case, but those are not so  famouse franchise). You are not allowed to stuff the store with your "goods" Franchise makes loads of money from this. But as this world is not ideal and people are always willing to make some more money there are ways to defy this. After running a brand for a while you will come to know their behavior regarding stuffing goods. you will know what type of merchandise  that gives better profit, when they sell more etc.
After knowing all this you can trick the franchise by stuffing your "goods" from time to time. By doing this you wont be able to make that much money say only arround 5000$ a year. Again, lots of these things depends upon how smart you are and location. Beware that franchise also have their way of verifying things. You must be aware of this before attpting any of those things. If the franchise finds it you are playing some game and if they find it out they will fine you, they may cancel the contract  etc.

But if you are independet, you will not have any problem choosing the supplier. 

Gas price: If you are a brand name gas station you have almost no freedom, If you have good logic you might do once a while but that is very rare. you need to cooperate with the gas station of your brand name in your area otherwise they will complain to the Brand name Franchise.
But if you are independent then you can set the gas price . Usually indepentd gas station or not so wel known gas Franchise  set gas price one cent lower than the big name franchise just to attarct the customer. if you volume is high that will  generate lots of money.

When you have independt gas station, your gas supplier will give you price for next day or next few days.Depending upon the international gas price. In independent gas station if you are creative you can make some extra money 

For example:


If you gas sattion have 50K gallon capacity and you know from you supplier that tomorrow price going to be high but if you buy today price is low. But you can not refill you underground tank because they already have enough gas. In that situation you do your math

What you can do is you lower the price, feed lower price  to the internet put it in google map) so their will be lots of traffic in you gas station. You may be able to empty your underground tank in 3-5 hrs. Then asked the supplier to fill you gas tank . Next day you  know that price will be high and your underground tank will be full. 
So, today you lost say one cent per gallon, but next day every gas station will have price hiked including yours, you may be making 5 extra  cents per gallon.

Second: When you are running your business you have to be creative and carefull. say in your area during valentines day, new year and christmus, You can put flowers . and during those three events you will be making loads of money.

Third:
sample products, sometime you may contact with manufacturrer of some goods and handover free sample of new products. It will be free advertisemnt for the other guy and for you a way to attract the customer.
Any way, you need to be creative and work hard. 

Paying the employee: Again depends how much money you are making. If you are making not that much, then you dont need to cook book for the tax purpose. If you are not hiding your income why you want to hide your expenses? Unless you are making money by hiding expeses. for example you can hire  illigals and student who do not have work permits then you cant  show them in paper. and those people are willing to work for less.
So you can always hire those people to work duing the  time unfavourable to you.
What peopel usually do is use household and personal expenses in the name of the company ( but beware you can not show purchase of rice for your houshold as for the gas station if there is a check, they wont accept it. Whereas if you have grocery store , all your household grocery neeeds can be shwon as expenses of the company.
If you have a independent gas station selling milk then you can use houshold milk as on gasstation expenses.

Can you find a gas station for less than 200K? Yes you will be able to find. Decision making in business have long term effect ( unleass you are a rich guy) say you are comitted to gas station Return of your investment may take 5-10 years you are locked for that period. You may be able to sell that gas station after 5 years and make some money but that may not be the case. You may not like the location after a while. To avoid this either you have to buy the gas staion in city. If you buy gas station outside the city you have to make yourself sure that you are ready to spend few years in that area.
Profit :?? Very difficult to answer: mostly depends on how much home work you did before buying it. Some income also depends on your creativity while running the business and off course main thing is location. You have to answer few question that I asked in my first posting.For an average running gas sattion 20% profit is common.

Franchise vs independent: A franchise already has a established name, decoration is attractice, because they spent lots of money while establishing it. Most of the time branded gas station are in the corner ( easy access from two roads, high traffic)  Independent gas station are personal establishemnt so you can imagine they dont have lots of money to invest. People usually like to shop in nice place, that is for sure.
Independet gas station are usually not in the corner ( one side road access). But in Branded gas station you are handcuffed in profit, there will be not that much room for your creativity.
But these things does not matters that much if you are buying a small gas station. 
Yes because of the brand name franchise gas station are usually expensive than independent.






Last edited: 11-Oct-12 09:33 AM
Read Full Discussion Thread for this article