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Start your own…Gas station Hinton’s Esso, Burlington, Ont.

If you’d told Richard Hinton 15 years ago that one day he’d own a gas station where customers could pump their own fuel and buy a litre of milk, he’d have laughed in your face.
“Self-serve was a joke in those days,” says the 43-year-old. “We used to stock the windows with oil cans. Today we stock it with milk, pop and chips.” And Mr. Hinton should know how the business has changed: He started pumping gas in 1983, when he was just 15. At 18 he became Texaco’s youngest retailer when he leased a Toronto station from the gas company.
In 2002, nearly 20 years later, Mr. Hinton was still in the gas business. But he realized he was tired of operating a station that he didn’t own. So he decided to buy his own plot and build a new station from the ground up.
His first step was to find the perfect location. Instead of buying unoccupied land, Hinton’s strategy was to look for an existing station that hadn’t tapped into its full potential. After two years of searching across Greater Toronto he found a location in Burlington, Ont., along the Niagara Escarpment. “There was a good core business already there,” he says. But the station, with just two pumps, was small and didn’t include a store. “Customers expect to see a store in today’s stations,” says Mr. Hinton. But it was also important to include all of the other standard offerings of the day—such as pay-at-the-pump, a seeming contradiction considering it helps customers avoid the store altogether. “But people like to see the newest technologies,” he says. “They’ll pay at the pump and then walk in and buy something. They just love to know that they can do that.”
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Before he could build a state-of-the-art station that reflected the industry’s new safeguards (such as double-walled fibre-glass tanks—instead of the previous station’s steel tanks), Hinton had to tear down the existing site, a step that required $45,000 as well as a demolition permit. He quickly realized how many more regulatory hoops he’d have to jump through to get the job done. First there was the Ministry of Environment, which among other things, checked his property’s soil samples for contamination, before giving him the go-ahead. And then the City of Burlington and the Niagara Escarpment Commission had to have their say. “They were involved big time,” he says — on everything from the size of the septic tank, to the type of garbage disposal, to the outside look and design of the station.
How he did it

Like with any retail business, location is huge. Richard Hinton searched for a site with an older station that hadn’t kept up with the times. Building a brand new station complete with a convenience store, which includes a gourmet coffee kiosk, in this location was sure to grow on an already existing customer base. But because he was constructing on a provincial landform he had to have all of his plans approved by both the City of Burlington and the Niagara Escarpment Commission, and then decide who to buy his gas from.

Cost of land: $600,000 (2 acres)

Cost of tear down of existing station:
$45,000

Construction and equipment: $1,000, 000 (all building construction costs plus tanks, pumps, etc)

Start-up inventory: $100,000 for fuel, $50,000 for store

Total start-up costs: $1,795,000

Staffing: $9,000 a month (two full-time and six part-time employees)

Inventory: $600,000 a month

Other monthly expenses: $8,500 (taxes, maintenance and credit card charges)

Number of litres of gas he needs to sell a day to break even: 13,700

Fourteen weeks after hiring a builder to completely construct his site and complying with all of the required regulations, Mr. Hinton had has dream station — eight fueling stations and a 1,400-square foot store (but no car wash, the Niagara Escarpment wouldn’t allow it). Before he could open the station’s doors for business, though, Hinton had to decide where he was going to get his gasoline and if he was going to partner with one of the major companies — a step most new gas station retailers would have taken just after securing a location. But Mr. Hinton, who was already immersed in the business and had contacts throughout it, didn’t turn his attention to until after he’d built his site. And in the end, there wasn’t much debate. Mr. Hinton had a history with Imperial Oil (which bought Texaco and operates under the Esso brand) and liked that they were helping him set up his store. “I knew I wanted to have a brand name behind me,” he says. “Customers see the Esso sign and they pull in. They don’t know who I am, but they trust Esso.”
And there are other benefits to partnering with one of the major companies besides recognition. Banks are more likely to back up new stations that are opening under one of the major brands (and when you’re looking at start-up costs of more than $1-million dollars, funding is critical). And, depending on which company you choose, it can guide you through the rest of the start-up process.
In Mr. Hinton’s case with Imperial Oil, they branded his entire site — everything from store signage to the Esso name on his pumps. He also opted into their store management program — a tool that helps Esso dealer-owners more economically stock their stores and achieve chain uniformity. In exchange for all of that Hinton buys his gas from Imperial Oil under a multi-year contract.
Once Mr. Hinton’s gas tanks were full and his store inventory ordered, it was time to hire his staff — an essential order of business, especially in a 24-hour station. But equally as important, was establishing himself as the operator, not just the owner. “I believe that you can not be an absentee manager in retail and be successful,” he says.
But his true key to success, says Mr. Hinton is his ability to adapt to changing times. “I’ve gone from pumping gas, which was the norm, to selling milk.” He considers the constant evolution to be the most interesting part of the business. “Who knows what kind of industry changes are coming next.”