New here, general advice on idea

Discussion in 'Growing and Managing a Business' started by Shaunmac, Feb 8, 2012.

  1. Shaunmac

    Shaunmac
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    Hello all. New to the forum, first post, not new to forums at all though. Im a college student, 20, and always considered myself somewhat of an entrepreneur but never had the guts to take any big chances. I've been through many little money making schemes for lack of a better word. Things I saw an opportunity to make a few bucks off of or talents I realized I could use to make a few bucks on the side of my normal jobs/school. I've had this idea for awhile, years, but never got any solid advice on it.

    The basic idea is opening a gas station. A private gas station not a chain. And place it strategically off the highway and specialize in diesel for truckers and whoever else. However the twist is making and selling my own biodiesel. Biodiesel is equivilant to regular diesel as I'm sure many of you know but is made basically from used frier oil from say McDonald's or any other restaurant. It can be made for under a dollar per gallon. Normal diesel in RI sells for around or over $4 per gallon. Now I know the start up costs would be large but I was wondering about the conversion process. Does anyone know if I could buy a facility and process, create, and sell my own biodiesel at the gas station? Obviously it would have to be regulated somehow so I'm wondering how I would go about doing this and what I'll need to do to make this biodiesel legal for sale. Even if I can sell it for 3.00 a gallon, high end, if the oil is free and it costs under a dollar a gallon to make I imagine I could open a successful station that truckers would definitely make it a point to stop and fill up at. So since this is a business advice forum I was just looking for comments, concerns, advice or any general help. Obviously being a college student this is just an idea and I know it's a massive undertaking but I still feel as though it could be successful. Thank you
     
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  2. jcworlditsme

    jcworlditsme
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    Welcome to the forums, sounds like an interesting idea you've got there.
     
  3. rjd1265

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    Umm, errrr, ahhhhh way over my head. Sounds like a great profit model but where to start gets me. Maybe bring the idea to Shark Tank!
     
  4. moveon

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    My thoughts:

    1) I think Biodiesel is made of ethanol (derived from sugarcane, soya etc and then mixed with diesel at a certain ratio.) You can always look it up.

    2) Would the trucks have to be retro fitted somehow to run on bio.

    3) Brazil is the biggest maker and user of biofuels. You should look up whats happening over there.

    You've already mentioned regulations so be sure of those.

    I do think there is one gentleman in US trying to set up a chain of these in US. Forget his name. This was from a documentary on TV I watched some years ago.

    Other than that, anything in alternative energy is always a good idea.
     
  5. Sahil

    Sahil
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    Hi,

    Firstly, welcome to Business Advice Forum. One thing I'd like to say to you in starting is Believe in yourself when you're starting any new venture. If you're confident about your new venture since starting only then all the ways will be setup-ed itself only.

    Your idea is surely very good. The production of Bio-diesel is less capital intensive compared to production of other fuels but still it is huge. So, you'll surely require help of Government in starting your business. As Bio-diesel is environment friendly so there are chances Government may provide some kind of subsides which'll help you in starting. There are two resources I think which can help you - http://www.usda.gov/wps/portal/usda/usdahome & http://www.sba.gov/. Also, have you thought of any other ways in your mind about getting fund for this project? Do share that with us, if we can help in that as well.

    Another thing is you'll also require some sort of permissions from the authorities in your area for starting up this gas station plant. And, have you considered any specific location for starting up this project?

    Your idea is surely unique and I'm sure if it'll be implemented well then it can get success. Have you thought of any marketing strategies for starting this project? Just a general advice from my side would be to start making a business plan from now only so once the perfect time comes for this you can start out instantly. And also if you start making plans from now it'll help you in improvising your skills of entrepreneurship since beginning of your career.

    Good Luck!
    Sahil
     
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  6. cesspadilla

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    Welcome to BAF! I think it's a really good idea and yet you're just 20yrs old. First, try to figure out what are the requirements needed for a Gas Station. Where do you plan to build it? What does the state laws say about Gas Stations? Does it need an ISO certification? What papers are required it to operate?
     
  7. MrPolarZero

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    Hey Shaunmac, welcome to the forums.. Glad to have you here.
     
  8. firstchoicecar

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    HI nice introduction, Glad to have you here in this forum, Welcome most to BAF.
     
  9. ArcSine

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    Greetings, Shaunmac; welcome to the BAF clubhouse!

    Interesting idea you have. With energy costs and sources always being such volatile question marks, and having major impacts on all economies, it's an area where innovative ideas can be extremely valuable. I hope your ideas come to fruition in some form.

    One initial question I might suggest exploring a bit---if you haven't already---is the matter of economies of scale. Certainly the processing of cast-off frying oil into viable biodiesel requires a significant investment in fixed capital costs. As such, it'd be hard to recover your costs by processing only enough output to sell through a single truckstop facility.

    Put another way, once you've created the facilities and equipment for the processing, you could probably produce much more that your single retail outlet could sell, with fairly minimal incremental costs. That is, once the facilities are in place, it shouldn't cost much more to process 300K gals than to produce 25K gals; the only real incremental cost is that of the input itself, i.e., the fryer oil.

    If so, then that extends your business model into the realm of selling your output into the market, rather than just producing for your one (or two, or three, ...) company-owned truckstops, as the latter would likely be very cost-inefficient in terms of getting maximum value from your facilities.

    Similarly, unless you're purchasing the same large volumes of the input fryer oil as the large biodiesel processors, I doubt you could buy the oil for the same low price as the big buyers.

    Coming at it from the other direction, if it would be possible to set up a processing facility on a very small scale (i.e., one whose max output is just sufficient for your own truckstop), then could you still produce it for a lower cost than what you could buy it for, from large biodiesel producers (after taking into account the fixed capital costs of the facility itself)?

    Just a couple of musings coming from someone who's never looked at that particular market, so I might be off base. Best of success to ya, and keep posting on further thoughts!
     
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  10. Shaunmac

    Shaunmac
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    Thank you for all the responses. Great forum you have here.

    I like to consider myself remotely automotively inclined. When I was 16 I almost had my father convinced to buy one of the home biodiesel conversion kits for around $2,000 and switch have him and my mother switch to diesel cars, this was when gas prices peaked.

    The cars do not need any special modifications, you can put biodiesel in any diesel car.

    The process doesn't involved mixing it with other diesel, it involved lye and methanol (racing fuel). Lye is very cheap and I believe it is an 80/20 mix of oil and methanol.

    My main concern is having worked in the restaurant industry for many years I know that Newport biodiesel is a company already in my area who is doing the same thing. They collect from many restaurants and are doing the same thing but they don't have direct gas stations I think they just distribute.

    To that concern I was also considering expanding beyond my gas station and distributing to other areas but something about being the only gas station in my state to offer sub $4.00 diesel was very attractive. Especially if it could be placed strategically right of I-95 in RI or CT, where there is heavy traffic and and many truckers. The gas prices are so jacked up on 95 running through CT by a few gas stations that are in rest stops in CT where all the truckers stop.

    Even if I am not the one to do it I think biodiesel is a completely underutilized technology. We have millions of gallons of this fried oil left over. I know there are companies out there doing it but not on a large enough scale as we could be. A by product of the process is glycerin which can be sold to soap making companies. I have always been interested in automotive technology and alternative fuel sources.
     
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  11. BusinessStories

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    This is a good idea, but remember that any type of gas station will have a linear profit model - you'll never get a "big break" and instantly become a millionaire. However, if successful, they are a very stable source of income and will pan out well for you.
     
  12. ArcSine

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    As I mentioned in my previous post, it's an intriguing idea you have, Shaunmac. I do hope your pursuit of the idea leads to some lucrative opportunities.

    On the scale economies and production-capacity issue I wondered about earlier, I had a look at the NBB's website. Over on their Member Plant report, they had 149 members showing in the database. Of those, 99 members were reporting some nonzero amount of annual production capacity (I assume the others simply declined to report capacity data). While the overwhelming majority of those (56) were reporting annual capacity of <= 5M gals, there was another 9 reporting capacity of between 5M and 10M, 11 showing capacity in the (10M, 20M) interval, and another 10 in the (20M, 30M) range. As an aside, Newport Biodiesel---the one you mentioned as being a player in your locale---is reporting annual prod'n capacity of 500K.

    Breaking down the lower range further, you've got 15 members reporting capacity of less than 1M.

    Of course, the distribution might not be representative, if there are a lot of smaller (or larger) producers who aren't NBB members. It's also possible that the smaller producers are multi-product manufacturers (cranking out things other than bio-d fuel) and can economically produce bio-d in smaller quantities by leveraging off of existing, multi-use facilities. Still, just based on the face of the NBB data, it looks as though production capacities of 1M or so is economically viable. What kind of capacity are you contemplating?
     
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  13. AshleyWhiteBusin

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    This is a creative business idea of your but who says it will never work. You just have the right business plan, man power and determination to succeed.
     

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