Avoiding Gas Pain
"Where’s the pain?"
This is the newest question to get to the point of what’s preventing a business from accomplishing its goals. It’s an important question, because when pain occurs, like when expenses get out of control, it’s essential to quickly identify and reduce that pain.
There are two kinds of out-of-control expense pain: 1) The kind that happens because you aren’t managing your business properly; and 2) The kind over which you have limited control. Today, we’re going to talk about the latter – specifically, the painful cost of petroleum.
For several years, one of the areas of pain for all marketplace participants, from consumers to conglomerates, has been the breathtaking price of petroleum.
If, when you were planning your budget last year, you didn’t see the price spike coming, don’t feel bad; many economists were surprised, too. But you’ve visited a painful pox on your business plan if you didn’t increase your fuel budget for this year and the foreseeable future.
As you may know, part of the increase is associated with the dynamics of supply and demand for both crude oil and refined products. But here’s the rest of the story: Many economists and industry experts say the greatest part of the increase in oil prices today is due to market speculation.
If this is true, it’s kind of good news, because speculation is a means to an end, not a way of life. Put another way, one of the things we know about marketplace speculation of anything is that it’s particularly susceptible to Newton’s Law of Gravity – what goes up will eventually come down.
So, what can small business owners do to cut their fuel bills?
Since oil prices are expected to remain high, you must dial those values into your operating expenses and adjust your prices upward wherever you can to cover the increase. Even if you have fixed-price contracts, I promise you won’t be the only vendor who asks a customer for an incremental fuel surcharge.
Another idea would be to make sure that, when a company vehicle goes out, there was no other option. Find out how often you go to a customer’s location in any given week, and see if prior planning by both parties could eliminate at least one trip. Also, look into creating delivery sectors, where you deliver to certain areas on certain days.
Talk with your customers like a partner and ask them for ideas that would help you hold down fuel expenses. And don’t be surprised when you find out that they’re dealing with the same issues and are talking to their customers, too.
Write this on a rock… Avoid gas pain with planning and communication with customers.
Jim Blasingame
Small Business Expert and host of The Small Business Advocate Show
©2008 All Rights Reserved
