Fuel Oil News

Fuel Oil News June 2014

The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding

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34 June 2014 | FueL OIL neWS | www.fueloilnews.com Your Business is Under Siege? In Today's Business Environment Success Goes to the Fighters A recent CnBC report has historically low natural gas prices here to stay for a long time. Record numbers of customers are converting to not only natural gas but propane as well. Discounters continue to take business from full service deal- ers. Consumption per customer continues to fall as high heating oil prices drive equipment upgrades and conserva- tion. As a heating oil dealer, what are you doing about it? My experience puts dealers into 3 categories: 1.) Denial—just keep doing the same old thing, the same old way and prices will come back down. 2.) Sellers—valuations are down significantly and those selling are in for a big shock with the offers they will receive. 3.) Fighters— those dealers are that are trying to be nibble and quick – and jumping over the candle stick. Let's focus on the fighters and what they are doing to protect and grow their businesses and family legacy. First, they are constantly striving to improve their core business— they are evolving their delivery processes to be more efficient. They are running their businesses more safely to reduce insur- ance claims and expense. They are running profitable service departments—yes you can (and have to) run a profitable service department. Most importantly they are expanding the products and services they offer. Service departments must be stand-alone profitable. The old paradigm of service as a loss leader no longer works. Do you know your cost per call? Take your entire service department expenses—and divide by the number of calls you run. Industry norms run from $120 - $175 depending on your size and productivity. Now look at what you charge for a service plan that covers parts—if it's under $300 you are losing money on all those plans (you average two calls per customer, per year). Look at your billable work—you have to flat rate—period. Too many dealers are still using time and material and woefully under charging for what they do. Look at frequency of billable calls, vs. non-billable. Most of what you are doing you are not billing for. Look at productive vs. non-productive time. Over half your time is non-productive and generates no revenue. Some 3%-5% of your customer base is buying replacement equipment every year—if you are not selling it to them, someone else is and probably convert- ing them in the process. Diversification is critical. Start selling other products and services to your current customers, and find new customers and products. The fighters are diversifying into propane, HVAC and plumbing. They are selling more services to their existing customers to fight gas attrition and discounter pres- sure. They are selling more replacement equipment to their customer base, replacing tanks (not ignoring them) and if the customer is going to convert they convert them and sell them a service plan to cover the new equipment. They are running a smarter, more profitable business so they can de-leverage fuel margins and be more completive. Get some Help. Just like you need to diversify your product and service offering, you should consider diversifying your approach to planning and change. Many times "outside" expe- rience can bring a fresh look at business processes and historic ways of doing things. In today's market you need to be nimble and quick—start jumping over the candle stick. Tim Quinn has 20+ years' experi- ence in the propane and heating oil Industries as a general manager, sales manager and regional man- ager. He has been responsible for 80,000 customers and $25 million in annual service and equipment sales. He took dozens of service depart- ments from loss leaders to profitabil- ity. He has assessed over 150 heating oil and propane companies for sale and participated in 45 acquisitions ranging from $500,000 to $65,000,000.Quinn is a graduate of Franklin & Marshall College and a member of the collegiate Phi Alpha Theta National History Honor Society. He is a distinguished graduate of the Unites States Air Force Officer Training School and a past chairman of the Better Home Heat Council of Maryland and past board member of the Mid-Atlantic Petroleum Dealers Association. He is currently a regional vice president for Boston Environmental and the TankSure, Service Edge and P3 companies. The fighters are diversifying into propane, HVAC and plumbing. They are selling more services to their existing customers to fight gas attrition and discounter pressure. They are selling more replacement equipment to their customer base, replacing tanks (not ignoring them) and if the customer is going to convert they convert them and sell them a service plan to cover the new equipment l F O N BUSINESS OPERATIONS By TimoThY QUinn, vice preSidenT, BoSTon environmenTal

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