While a business loan can offer your venture a steady strain of capital, opening a petrol pump business requires a lot of consideration. However, once set up in a good location, it can be a profitable investment!
Looking to launch a petrol pump business but don’t know where to start? Here’s a guide.
Tips for planning a petrol pump business
#1 Study the market
To start petrol pump business, firstly determine which types are doing well, whether they are turbo, fuel or mechanical pumps, and the current demand for each.
While studying the market, understand government regulations regarding carbon emissions from automobiles and the standards you must follow to reduce them. You should also know about the industry’s various growth drivers, including easing engine startup, high-speed fuel injection technologies adoption, fuel efficiency, and reduced maintenance costs.
#2 Check your eligibility
In the plan petrol pump businessmanual, the next step is to check if you are eligible to start a pump. Currently, the criteria are:
- You should be an Indian citizen living in the country for over 182 days.
- You must be between 21 and 55 years of age to qualify for ownership.
- SC/ST/OBC category candidates should have passed 12th grade, and open category candidates completed graduation. Freedom fighters are exempt from these rules.
Additional Read: How to Plan Your Future Business Strategy Smartly for FY21-22?
#3 Plan the initial investment required
After understanding the market, your next step should be funding. Outline all areas that require funding, such as:
- The cost of buying the land/leased land
- Building the station
- Getting the necessary equipment
- Costs of procuring fuel
- Managing employees’ salaries and payments to suppliers
- Utility bills
- Commissions (if you are partnering with a dealer)
Also, when chalking out your business’ financial requirements, account for slow days initially and losses you may incur. The initial investment can reach up to Rs. 15 lakhs-20 lakhs and getting a business orMSME loan is ideal for ushering in quick funds.
#4 Check for land availability
A profitable location has minimum competition, like a busy junction with no pump nearby or a remote place, whether rural or urban. You must ensure that the land is levelled, developed, and easily accessible via road. Rules require the plot to also be a minimum of 800 square metres.
You can get a business loan for petrol pump business’s land purchase or lease it after an agreement with the oil dealership.
#5 Apply for the license
Petroleum companies run advertisements online or in newspapers to set up stations. To apply, you must buy a form and file your personal ID, land details, and mark sheets. You must also submit documents for land lease or ownership, funding sources and investments, bank details, income tax returns, and GST registration papers. Post submission, pay a license fee.
The government issues a license for running a petrol pump.
Additional Read: Can you get a business loan for opening up a franchise in India?
Over to you
With your petrol pump business plan ready, bring your vision to life with Tata Capital’s bespoke business financing solutions. Get competitive business loan interest rates, easy-to-fulfil eligibility, and flexible repayment plans. Connect today!