How a fuel delivery business makes money: one truck, two trucks, three trucks

You buy fuel at a discount from a distributor. You put it on your truck. Your customers order it on an app with your name on it. You bring it to their car, their fleet yard, their job site, their boat or their farm. You keep the difference, plus a delivery fee, plus a monthly membership, plus add-ons.

That's the whole business. Blink Fuel runs the app, the driver's phone, the office and the website. You bring the truck, the fuel and the license. We bring everything your customer and your driver touch.

Blink handles every fuel: all grades of gas, on-road and off-road diesel, heating oil, propane, kerosene, aviation fuel and race fuel.

Most owners start with one pickup. Here is the setup our Outfitting Guide walks through, step by step.

Tip from the video above: used skids come up for sale. Look before you buy new.

How a day runs. A customer orders in your app and picks a time. The order lands on your dispatch screen. You send it to a driver. The driver's phone shows the stop and the route. He fills the tank, snaps the meter before and after, gets a signature and taps "done." The customer gets a text that the fuel is in. You watch the truck move on a map in your office dashboard the whole time.

Call the fuel distributors near you. Look for one that does not do on-demand delivery. That way you're a customer to them, not a rival.

Ask to buy as a volume customer. You get a discount off the posted price. You fill up at their rack or bulk plant, most days once in the morning and once at lunch.

Two questions to ask them on day one:

• What's my price break at 5,000, 10,000 and 20,000 gallons a month?
• How do taxes work on fuel I resell here? (Your accountant should hear the answer too.)

The video above makes the same point: buy wholesale, mark it up, deliver it. As your gallons grow, your price per gallon can drop. That grows your margin without raising a customer's price.

Both paths work. Many owners start with no CDL and add a CDL truck later.

Here is how it works in general. Under federal rules, a pickup with small tanks of diesel can often run with no CDL. Gas is stricter. About 100 gallons of gas stays under the weight that calls for hazmat signs on the truck. A second gas tank usually means signs, and signs mean a CDL with a hazmat add-on. A truck over 26,000 lbs means a CDL too. Propane bobtail drivers need a CDL with hazmat. Smaller propane cylinder trucks may not, depending on truck weight and load.

Tank size, truck weight and your state's rules decide it. Your state and your local fire marshal have their own rules too. Check with them and your insurance agent before you buy the truck. This is general information, not legal advice. The Blink regulations guide walks you through each step.

Line these up before your first delivery:

• A mobile fueling permit from your local fire marshal
• Commercial auto insurance with pollution coverage, plus general liability
• Your meter checked and sealed by your state's weights and measures office
• Hazmat safety training for every driver

The video above names three. We add a fourth.

1. 1
   Margin on the gallon. What you charge minus what you paid. Many operators land somewhere between 30 cents and $1.50 a gallon, depending on the fuel and the customer. Boat fuel and specialty fuels tend to run higher. You set every price in your Blink office.
2. 2
   Delivery fees. A fee per stop or per vehicle. Fleets often pay per vehicle filled.
3. 3
   Memberships. Customers pay you every month to stay topped off. The card stays on file, so that money comes in on its own.
4. 4
   Add-ons. Windshield wipers, tire pressure checks and more, sold right in your app.

Homes get your truck seen in the neighborhood. Fleets, job sites and farms buy the most gallons. Go after both.

Here are two examples. Same truck, same costs. One is an owner just starting. One is an established route with fleet accounts.

50¢ and 60¢ are the margin per gallon. 20 and 30 gallons are the average fill.

Both examples assume, per truck:

• 22 working days a month
• 30 fills a day (a car, a pickup, a machine; one fleet yard can be 10 fills in one stop)
• $7 average delivery fee per fill (members pay $0, so this is the average across all fills)
• 50 members at $25 a month
• 45 add-ons a month at $10 profit each
• Fuel sells at about $3.50 a gallon, and card fees run 2.5% of sales
• Truck and skid payment $1,600, insurance $800, truck fuel, tires and repairs $1,000, and permits, phone, supplies and ads $400 a month
• A hired driver earns $22 an hour, 10 hours a day, plus 15% for payroll taxes and workers' comp
• Blink Fuel at $1,100 a month, flat
• You drive truck 1 yourself

What's different:

• Just starting: 20 gallons per fill, so 600 gallons a day (one trip back to the rack at lunch), and 50 cents margin per gallon.
• Established route, with fleet accounts: more fleet stops, bigger average fill, a slightly better margin. That's 30 gallons per fill, so 900 gallons a day (two trips back to the rack), and 60 cents margin per gallon.

This does not count your one-time start-up costs (section 2 and the Blink setup).

What the tables tell you:

• Truck two is the surprise. Just starting, truck one leaves you about $6,700 because you drive it. A hired truck adds about $2,200, because the driver's pay comes out first. On the established route, truck one leaves about $11,400 and each hired truck adds about $6,900. That's three times as much. Fleet stops and bigger fills are how a hired truck earns its keep.
• The break-even points. Just starting, your own truck covers all its costs at about 10 fills a day. A hired truck covers its driver and costs at about 24. On the established route, it's about 7 and 16. Each fill after that adds about $15 just starting, or about $22 on the established route.
• Your software bill stays flat. Blink is $1,100 a month with one truck or three. At three trucks that's about $367 a truck, in both examples. No cut of your sales, ever.
• When you stop driving. At three trucks, many owners hand off their own route and go sell fleet accounts. In either example that means a third driver, about $5,566 more a month, so the new accounts need to cover it.
• Card fees are a real line. Ask us about Blink card processing on your demo. It costs less than most. It could save you hundreds a month, which can go a long way toward paying for the software.

• Your app, your name. Customers order, pick a time, pay and join a membership in an app with your brand on it.
• Coupons and push messages that come from you, the fuel guy.
• Your office dashboard. Set prices by fuel. See every order. Dispatch in one tap. Watch the truck on a map.
• The driver app. Stops, routes, meter photos, signatures. Works with no signal.
• Your website. Built for you, up in about a week.
• Safe, backed up. Runs on Amazon's cloud and is backed up to a second server in another region.

Your app and office are running a couple of weeks after the website. Most owners launch within months.

Our advice from the video above: put your website up first and start taking sign-ups before the truck rolls. You'll know your town wants it before you spend on the truck.

A fuel-delivery franchise costs about $60,000 to $80,000 to start. Blink costs about $10,000 to $11,000.

A franchise often gives you about a 15-mile circle. Most fuel-delivery companies need about 40 miles to make it. How's that going to turn out? Not well. With Blink there's no territory line at all.

A franchise takes a cut of your sales every month, even in a losing month. You can't sell without their OK.

Bill learned that one himself. He and his dad built a food-delivery franchise. The franchisor took a cut off the top, then a second cut for marketing. When they went to sell, they had to win over two parties: the franchisor, then the buyer. Bill's words: "We weren't building our business. We were building his."

With Blink you own your brand, your customer list and your business. Sell it whenever you want.

Bill Stomp has spent 25 years in fuel delivery, running 87 locations across 12 states. Today he helps propane and multi-fuel companies all over the country, more than 200 so far.

He's spent 16 years building this software. It has been field-tested for over a decade by well over 100 fuel companies and thousands of drivers, managers and owners. The driver handheld won the Virtual Propane Expo Technology Competition and the World LP Gas Technology Competition.