By Jeff Foley, CPA, Partner, Gray, Gray & Gray, LLP
The 2013-2014 heating season was one of the longest and coldest – and consequently one of the most successful – in recent memory. As I write this in late May there are still nights when my home heating system clicks on to fight off the late spring chill. Sales of both heating oil and propane were significantly stronger this year, and margins for most dealers remained steady.
Good for us! But this is not the time to sit back and rest on laurels. There is no telling what Mother Nature has in store for New England next winter, and the assault by pipeline gas continues unabated. Now is the time to build on the momentum built up during the heating season and use it to carry your company into next year in a strong position. Here are six steps to take.
- Get your financial house in order. Pay down old bills to suppliers and vendors so that you can start next season with a clean slate. Put a full court press on collections from late-paying customers so that you are not carrying outstanding invoices into the fall. Reassess overhead expenses such as insurance, health care, rent, utilities, etc. to make sure you are getting the best deal.
- Evaluate equipment needs with a very critical eye. Don’t rush out to purchase a shiny new delivery truck if you can still get a year or two out of the one you have now. It might be more prudent to invest a few dollars in repairing an older vehicle than to take on the financial burden of replacing it with a new one. The same applies to service vans, bulk plant equipment, computers, etc.
- Invest in mobile technology. If you have been putting off upgrading your invoicing, inventory and dispatching system, make it a priority. The efficiencies you’ll realize will create a return your investment in improved collections, better scheduling, and happier customers. Put smart phones or tablets in the hands of your service technicians and delivery drivers as soon as possible, along with the intelligent back office system to support them.
- Make some tough personnel decisions. A more efficient business management system may make some of the people on your payroll superfluous. It is difficult to part ways with a staff member who may have been managing your paper filing system since the 1960s. But an extra person on the payroll is among the most expensive of all business costs once you factor in benefits. Trim your staff where you can and use technology to maximize the efficiency of those who remain.
- Market yourself to retain your customers. Retail oilheat and propane dealers can be frugal when it comes to spending money on marketing. But you often must spend money to make money, especially when it comes to the most important audience of all: your existing customers. With the gas company and other dealers pitching them furiously, it is an absolute necessity that you stay connected with customers to reassure them and “build a fence” around them to help prevent poaching or defections. Newsletters, statement stuffers, e-mails, and even personal phone calls can all go a long way toward strengthening loyalty.
- Plan for the future. With a little breathing room provided by a profitable heating season, it is a good time to evaluate plans for the future. Spend some time this summer reviewing and updating your “exit strategy,” whether it is a succession plan for the next generation or selling your company. It may even make sense to sell the business now, while the market is relatively open and buyers are available. Above all, make sure you have a plan in place that extends beyond the next crisis.
We can all hope that the next heating season brings an early frost and extended cold temperatures deep into spring. But, just in case, take steps now to make your business as efficient as possible so that you’ll be able to weather any storm.