Rising Gas Prices Means Businesses Must Be More Efficient

Many small businesses say that as much as skyrocketing gas prices are cutting the bottom line, they’re doing everything they can not to raise prices. Instead, businesses are realizing they can no longer overlook opportunities to reduce costs and increase efficiency.

Small-business owners with fuel as a major expense are being forced these days to become more efficient. Most would argue that’s not such a bad thing. Cost savings initiatives include routing optimization, using more fuel efficient cars and trucks, considering other fuel alternatives, investing in fleet tracking technology and, in at least one case, using hedges to offset rising costs.

It’s not just companies that make deliveries or use a lot of gas directly that are affected. Adelaine Construction told the Street that the company had start reconsidering the jobs they accepted.

Fuel prices hit the company’s bottom line quickly, since trucks are used to deliver materials and workers to the sites. Escalating gas prices makes it difficult to project overhead and expenses. Last year, the company spent about $15,000 in annual gas expenses. This year, if prices remain relatively unchanged, projected gas expenses could total $18,000, an increase of 20%.

“Our trucks are constantly moving. When fuel prices change it hits us in the pocketbook right away,” Adelaine says. “We can’t go back to customers [and say] ‘Oh, by the way, fuel went up. I’d like to charge you more.'”

Businesses across the US are in the same position as Adelaine Construction, trying to balance the challenge of trying to be fuel efficient, but at the same time having to tow and carry large cargo and materials.Adelaine says, “It takes more coordination on our side. I have to plan ahead” to order materials, which in the end just makes the company operate more efficiently”.


Considering rising fuel costs, what’s a business to do?

According to Business Planning Expert, Rhonda Abrams, here are some suggestions:

1. Drive less. Make a driving plan.

It is important to pre-plan your day, especially if you make a lot deliveries or have a lot of appointments. Try to cluster these deliveries and appointments so you’re not backtracking or going on different days.

Attach routine errands to other trips. Go to the office supply store on your way back from a sales call. If possible, use public transportation or park in a central location and walk to your meetings.

Invest in a GPS navigation system. A commercial fleet tracking system can help drivers get to their destinations quicker, safer and burn less fuel.

2. Reduce shipping expenses. Sit down and seriously evaluate your packing and shipping practices.

Do you need to be shipping everything you now mail? Look for lighter-weight packing materials. Consolidate shipments whenever possible. Use appropriate-sized containers.

3. Go digital. What can you do digitally rather than physically sending paper, products or people?

In my business, we found a way to use electronic review copies of books for professors instead of shipping physical books. It’s not only cheaper, it’s immediate.

4. Change working hours. Sitting in rush hour traffic uses up extra fuel. When you schedule meetings, consider traffic conditions for those traveling to get there. If you or your employees commute — or have appointments across town — try to avoid peak traffic times if possible.

5. Create a company kitchen. Get a microwave, refrigerator, some tables and chairs.

If you’ve got the space, create a sink. Make it easy for you and your employees to have lunch without getting in a car. They’ll save gas and money on food.

6. Buy a hybrid or electric vehicle. If you’re in the market for a new car, van, or truck — or will be soon — check out hybrid or electric vehicles.