Energy & Petroleum Articles
Spring Training for Your Oil Business
By Paul J. Gerry, Jr., CPA
Gray, Gray & Gray, LLP
We are coming to the end of another winter heating season (although let’s hope for cold weather right up through mid-April!). But, just because your deliveries and emergency service calls are slowing down, don’t think that your work is over. The end of the season is the time to start your “off season training” to strengthen and prepare your company for next year.
Here are four steps to take in the next several weeks to help ensure a smooth and successful transition into the next heating season.
Evaluate your equipment needs. Now is the time to look at repairing, replacing or upgrading the equipment you need to conduct business. Be sure to consult with your tax advisor about the timing of purchases, so as to take full advantage of tax incentives being offered on equipment purchases.
- Can you get one more year out of that aging delivery truck? Or will high maintenance costs make a new truck a better option?
- Were your service vans sufficient to cover your needs this year? Can you afford to take one or more off the road, thus saving insurance and maintenance costs?
- Is your company’s computer system up to the task? Frequent crashes or slow processing are signs that you may need to invest in newer, faster computer hardware.
- Now is also the time to investigate new software for dispatching and routing, bookkeeping and marketing. Don’t wait until the middle of the heating season to make such important changes.
- Is your physical plant in need of repair? Do a thorough inspection of your bulk plant to make sure it is secure and safe. Assess your office HVAC and electrical systems and schedule any routine maintenance for the summer months.
Train your people. The off season is the right time to prepare your employees as well.
- Send your service technicians to classes that will help make them more efficient, or to learn new skills that can be marketed to customers.
- Bring your administrative staff up-to-date with the latest software systems to make their jobs easier and more effective for customers.
- Do some learning yourself. Are there areas of management in which you need improvement? Contact a business coach or management advisor to tutor you over the summer. Or take classes in business management or marketing at a local college.
Shape up your marketing. The secret to growing your company is twofold: retaining your existing customers and gaining new ones. Both require you to be a savvy marketer. The time to start a marketing program is not mid-January, but mid-July.
- Audit your customer communications, which is any and every piece of paper, electronic message or spoken word that “touches” a customer. You’ll be surprised how many “points of contact” exist between your company and your customers. Each one influences what a customer thinks about you. Make sure each experience is a positive one.
- Plan an assault on new customers. It is not enough to sit back and hope people see your Yellow Pages ad. Whether it is hiring a sales person, developing a local advertising campaign, scheduling a series of direct mail postcards, or a combination of actions, it is time to get busy and attract new customers before the next heating season rolls around.
- Update your web site. Keeping it fresh and up-to-date not only attracts additional visitors, but it tells them that you are a well-organized company. Don’t have a web site? It has become the number one source of information for consumers, so you’d better get one soon.
- Have an eye open for an oilheat business to acquire. “Organic” growth can be slow, and the fastest way to add new clients is by purchasing a competitor. There may be several on the market after this difficult heating season.
Get your finances in order. Don’t go into next year still working on collections and payments from last season. Work hard during the summer to clean the slate.
- Collect money that is owed to you. Given the current state of the economy, this could be a huge problem this year. Don’t let it sink your ship. The longer you let an overdue bill linger, the less likely it becomes that you will be able to collect it without going to court.
- Pay money that you owe. No matter when your actual fiscal year ends, it is important to “close the books” on one heating season before the next one begins. Carrying debt into the fall will limit your ability to obtain credit for pre-season contract purchases, and will eat away at any profits you hope to make.
- Talk to your bank. Ask about increasing your line of credit, or at least negotiating more favorable terms. Many banks, especially local and regional institutions, have money to lend and may be willing to work with you.
- Protect yourself. Work with your suppliers now to set up a sensible plan for contract purchases and hedging vehicles. We have (hopefully) learned to strike a balance between contract and rack purchases to help protect both customers and your company. Don’t take on more risk than is absolutely necessary.
- Review your service contracts to be sure that they are truly profitable. Once you factor in all of your actual costs (including overhead), you may be surprised to find that your service contract price is too low.
Does this sound like a busy summer? If you get a jump on these activities early, you should still be able to squeeze in some time at the beach, on the lake or chasing a golf ball. And you will be better prepared as you enter the next heating season.
Paul J. Gerry, Jr., CPA is a partner in the accounting firm of Gray, Gray & Gray, LLP, Westwood and Framingham, MA. Paul can be contacted at (781) 407-0300, or via email at: pgerry@gggcpas.com.