08/ 18/ 2004
by Maggie Flynn
Anyone who owns a car has certainly felt the crunch of high gas costs this summer, with prices per gallon staying well above the $2 mark in most of the country. While the average consumer can certainly understand the inconvenience of high fuel costs, the problem is even more of a strain on small-business owners. In fact, energy costs other than electricity – including natural gas, propane, gasoline, diesel and oil fuel – ranked as the fourth-biggest problem facing small-business owners in the latest NFIB and Wells Fargo Small Business Problems and Priority report. To 26.1 percent of those surveyed, this is a "critical" problem.
Why are energy costs such a problem for small-business owners?
Unless your business consists of churning butter or dipping candles by sunlight, then you use some sort of energy fuel to allow your company to function. Unlike pay increases for your staff or the price of your goods and services, you have little say in energy costs. What's more, these are unpredictable expenses, difficult to budget correctly, as they can fluctuate wildly from month to month. The war in Iraq, tension in the Middle East and other factors will continue to keep these costs volatile for some time.
Whereas small businesses used to be able to pass on some of these energy costs to customers, many small companies today are facing increased pressure from the big-box stores and other large businesses, making it more important than ever to stay competitive. What is a small business to do about energy costs, then?
A few places to start
Because the energy costs and needs of any small business are going to differ vastly, there are no hard-and-fast rules for keeping these expenses down. But here are a few areas you can look into:
1.Make sure equipment is running efficiently
Whether you have a bakery with gas stoves or a manufacturing plant with massive, energy-hungry machines, make sure that all of your equipment is running correctly. Even a small malfunction could cost you big in wasted energy bills. Stick to the recommended maintenance schedule for all of your machinery.
2. Choose wisely
When it comes to servicing your energy needs, you probably have more choices than you realize. Compare the prices of natural gas versus electric heating and cooling. If you use a generator as your main power source or back up, compare the costs of propane, diesel and other such alternatives. Do your homework or assign an employee the task – you could be pleasantly surprised with the results.
Also, find out if your local utilities company has any "green power" incentives for making the switch to more eco-friendly energy sources.
3. Investigate alternative energy sources
While it might not be feasible to convert your whole office to solar energy, you might be able to keep heating costs down in the winter by simply installing more windows and leaving the blinds up. Carpeting also does wonders to keep heat inside.
4. Buy fuel-efficient vehicles and keep them properly maintained
If your business uses a fleet of company vehicles, make sure that you buy fuel-efficient models. Read up on consumer reports. Test drive a hybrid and see what you think. Keeping cars well-maintained – checking and changing air filters, keeping tires properly inflated and so on – will also help you get the most mileage for your gas costs.
Nationwide companies such as Flexcar also offer options to lease cars for as many hours a week as you need them. The price of gas and insurance is included.
5. Be vigilant
If your employees have access to company vehicles, make sure that you keep an eye on mileage. If they're using the vehicles for out-of-the-way personal errands, ask them to make up the difference in gas costs. If you reimburse employees for gas costs in their own vehicles, look over their logs and make sure the mileage estimates are reasonable.
