There are a plethora of business brokers and valuation consultants who are eager to help you sell your fuel oil or propane business. (Full disclosure: Gray, Gray & Gray also assists energy companies in mergers and acquisitions through our FuelExchange program.) These companies are working with a cycle of dealers exiting the industry because they no longer have the energy or resources to continue the fight -— or because there is simply too much money on the table for them to resist.
But not everybody is ready to check out. For every dealer looking to sell, there is one (or more) business owner determined to keep moving forward by building value in the company. This article is for them. Here are six things you will need to do to maintain growth and profitability in the future.
1. Do More With What You Have
There are multiple ways to diversify your business. Start by looking at what you do best: keeping customers safe and comfortable. You have a customer base that is familiar with and trusts your company. What other products or services could you deliver to them?
The obvious ones are energy-related, such as a fuel oil dealer adding propane or a propane company taking on oil delivery. Look for complementary services, too, like air conditioning installation and repair, heat pump installation or plumbing. Consider other residential services like pest control, water delivery and anything else that augments the home experience.
2. Expand Your Reach
Despite a boom in residential building over the past several years, fewer new homes are being built with oil or propane heating systems. To continue to grow (and you must continue to grow!), you’ll need to look beyond your current service area.
Prepare your team — from sales and administration to delivery and service — to enter new geographic markets. This will require an investment in marketing to make inroads in “enemy” territory.
Target areas that make sense in terms of delivery efficiency, like contiguous towns or those with demographics like your present service area. Another approach is to become a buyer, acquiring an established customer base in one fell swoop. Not every acquisition needs to be a major one. Some of the most successful marketers grew through what we call “tuck-ins”— smaller operations that can mold right into your existing operation.
3. Watch Your Numbers
Things move fast in business today, so you need to be alert for any potential problems or opportunities. It is no longer enough to settle for “management by walking around.”
The way to stay on top of the situation is by monitoring the reams of data that technology makes accessible. There is truth in the numbers, and you must measure and track key performance indicators within your company to get at the truth of what is happening operationally and financially. You will be better prepared to make more informed decisions for the business when you know the facts.
4. Build Company Culture
The labor crunch we are still working through has opened many eyes to the essential and ever-present value of having the right people in the right jobs.
Labor markets are historically cyclical, with worker availability rising and falling with the economy. But this labor “bubble” may be more permanent, as an aging population and the younger generation’s preference for less labor-intensive jobs creates a dearth of qualified workers.
This makes it imperative that you take good care of the people you have. That means more than just attractive wages and benefits, but an effort to create a workplace where people feel welcome and appreciated.
5. Build Value
Always be working as if you were going to sell your company. Seek efficiencies to streamline operations, work to build your margins, invest in the equipment and systems that will keep you competitive, manage your finances carefully, keep your people happy and always — always — work to keep customers happy.
A well-run business with a clean and loyal customer list is attractive to buyers, but it also means you and your management team are more likely to be running a sustainably profitable company.
6. Be Profitable
Maintain the margins you need to run a profitable operation. Do not worry about what your competitors are doing. Every department needs to be its own profit center, with the emphasis on “profit.” Use budgets and monthly reporting to measure where you are at and to make sure you are on track to end the year with a profit.
Running a viable and thriving business in the propane and fuel oil industry has always been challenging. Today’s demands may be different and the road forward filled with new potholes and detours. But with help from a strong team of advisers — consultants, bankers, accountants, attorneys — and the right attitude, there is a future for those who want to continue to help their neighbors stay safe, warm and comfortable.