Entrepreneurial South Africans have many different unique business ideas to consider. One such option is a gas refill business. You see these businesses everywhere around the country – and for good reason.
Gas refill businesses in South Africa could present a lucrative opportunity. Many South Africans rely on gas for cooking, and these businesses can fulfil both domestic and commercial needs. Gas refill doesn’t require much in terms of special skills and knowledge. You really just need a solid business plan and enough startup capital.
So, how exactly do you start a gas business in South Africa? And is it a worthwhile business opportunity?
We’ll break this all down in our guide below.
How Much Does it Cost to Start a Gas Refill Business in South Africa?
There are various factors involved in starting a gas refill business in South Africa. This means the initial startup cost for the business can vary quite a bit.
Generally, a startup investment of around R250 000 is required to start a gas refill business. This depends on the LPG marketer, the storage capacity of the business, your equipment agreement, your working stock, cylinder deposits, and your business plan.
There are other ongoing costs to consider, such as rent, insurance, and staffing costs. These costs can all vary considerably depending on the location and scale of the gas refill business.
Is a Gas Business Profitable in South Africa?
Starting a gas refill business can be a profitable venture in South Africa. Many South Africans rely on LPG gas for cooking, so there is always a demand for refill businesses. Wholesale gas prices also provide sufficient room for adding a decent profit.
The profitability of the business depends on various factors. As long as you are able to run a gas refill business in an area where there is enough demand, and you are able to fulfil large enough quantities of gas, then the business has the opportunity to be highly profitable.
It’s also important to note that gas refill businesses can be targeted toward residential or commercial customers. Commercial gas refill businesses require larger units of gas to be fulfilled, but they also have the potential for greater profits.
Once the gas refill business is up and running, the day-to-day costs of operating such a business are relatively low – especially compared to other business models like a bakery or a shisanyama business.
With a strong business plan and a location where there is enough demand, gas refill businesses can be highly profitable.
How Do I Start a Gas Business?
In order to become an LPG gas distributor in South Africa, you will need to hold the right wholesale license. A DMRE 38 wholesale license is required. The application for this will need to be done through your regional office of the Department of Mineral Resources and Energy.
To apply for this, you will need to publish a notice of application in four newspapers. To become an LPG distributor in South Africa, you will also need to pay a R500 annual license fee.
Once the license has been granted, you will need to submit annual business information to the department. This is done through the wholesale license annual information submission form, DMRE 30.
Beyond the necessary licenses and applications, you will also need to have a reliable wholesale LPG gas supplier. This is one of the most essential steps to starting a gas business.
Other important steps to starting a gas refill business include finding the right location to operate the business from, investing in enough gas cylinders to match the refill requirements of your business, and coming up with an operations plan for refilling and revolving empty cylinders.
Other considerations include whether your gas business will do deliveries (in which case you will need the right type of transport), and how you will market the business and find customers.
If you have an itch to start a business, it’s important to consider the many different options available. Low-cost business opportunities, like starting a sneaker cleaning business, do exist. Or, if you’re looking for something with greater profit potential, then a business like gas refill could be an excellent idea.
Gas refill businesses exist all over South Africa and the demand for these businesses doesn’t seem to be slowing down. Compared to many other business opportunities starting a gas refill business has a relatively low barrier to entry. When done properly, it could be hugely successful.