GSB-43: Does Gas Station Business Work as a Passive Income Model?

First, let's define what is passive income. Passive income a process where you earn money without being involved in the day to day business operation of the business. If any of you remember the free book, I send to everyone on my mailing list all about passive income than you know there any many ways to make money passively. It is really where you work hard at first to set something up and then sit back and watch that hard work make money for you over time.

For example, say you wrote a book two years ago, at the time of wiring the book you worked really hard, you did a lot of research, and then took months to finish the book. But once you are done writing and you publish it, you can just sit back and relax and watch that book earn money for you month after month and year after year.

But the same approach will not work when it comes to a gas station business. It will require a very different approach. It's not a book, not an affiliate income or commission that you will earn every month. It is a retail business with lots of moving parts.

One way I have seen people try this approach that can work as passive income model is if you hire good employees and managers to run the business while you just monitor their work and step in only when you need to. But to me that is not a good idea, it's not a good approach either, I have seen too many owners lose their business by depending on hired help.

Instead, my suggestion is to find a good partner or two who are willing to do the hard work for a salary and portion of the net profit, and you just stay on as a silent partner or investor and enjoy the income.

4 key points to having a successful partnership

 

1. Find a good hard working person or two that are willing to do the hard work
2. Draw up all the legal documents and partnership agreement(Clearly define the expectation of each partner and their role and responsibility)
3. Have a great bookkeeping system in place
4. Physically Check and verify the numbers

 

In order for you to take this approach, first and foremost you have to know and trust that individual fully, and then you have to install or put some safety measures in place, so there are checks and balances. It's like a having a lock on a door, as we all know locks are there to keep honest people honest. But in your case you are not installing a lock but a system of tracking sales vs. purchase and expenses.

The best approach is what I have done many times is by having a good bookkeeping system in place. I explain to my partners that they have to prepare and furnish a monthly report to all partners which should include a sales report, a P&L and or an income statement and a copy of the bank statement. This way every partner or investors know what took place the month before at the store. Each will have the detailed knowledge of the sales volume, expenses purchases and how much net profit the store has made.

In my opinion, you will still have to visit the store, meet your working partner at least once a week, just look around see what is going on and if they need your help on any issues. So even though it is more passive but you still be to around and supervise without intervening in the daily operation of the business.

I have taken this approach for many years, and so far it has worked well for me, and I am sure if you pick the right person it will work for you also. So yes as you can see gas station business can work as a passive income model if you take the right approach to it.

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The app I spoke about in this episode is call Road Spoke, and here is a link to their YouTube video.

https://www.youtube.com/watch?v=K6dZ3fpPad0&feature=youtu.be

 

Cheers!