How Does Your Small Business Cut Energy Costs?

Small businesses have endless expenses, but one of the largest is the cost of energy.  Almost every small business must use energy in one way or another.  For small, local companies that are competing with larger conglomerates, fluctuating energy costs can be quite a hindrance, to plan for and to pay for.  Businesses are continuously looking for ways to cut back on the cost of energy.  Particularly in the wake of rising energy costs such as gas prices, most small businesses are forced to find new ways to ensure they are not losing too much money.  

Small companies that rely heavily on transportation and delivery can save money on energy costs by doing some simple planning ahead.  For trips that require numerous stops, companies should map out the most effective route that encompasses all needed destinations.  Some businesses tack on fuel surcharges when making deliveries at times when energy costs increase and then remove them when they decrease.  This trend began in 2008 when gas prices sky-rocketed.  

In the age of online communication, most meetings can be done via Skype, Google Chat, or in conference call.  Instead of using the money to pay for fuel to drive to meetings, small businesses are choosing to communicate via the internet, setting up meetings online or over the phone. Some businesses have chosen to eliminate their land line and do all of their telephone communication either by cell phone or VoIP.

Another crucial way to save money when energy costs fluctuate is maintaining your business vehicles.  Make sure, particularly after harsh winters, that engines are finely tuned, oil has been changed, and tire pressure is where it should be.  All of these can positively influence your car’s gas mileage.  When gas prices rise, the costs of shipped goods also increases. Small businesses especially must find ways to combat the expense of energy, so some choose to increase the price of their product or service.  Even a small increase can help balance the books.  

Gas prices fluctuate for several reasons.  Generally, the change in season from winter to spring brings more drivers out, which causes prices to rise.  The trend is that prices decrease after the initial spike in beginning of the summer, but after Memorial day will increase again with the amount of travelers on the roads.  Prices also follow the fluctuation of global oil costs; rising and falling when they do.  Another reason prices may rise is seasonal maintenance and upkeep of refineries.  

Small businesses have obvious budget adjustments to make when it comes to fluctuating energy costs.  There are some obvious ways companies cut energy costs such as regular vehicle maintenance.  But also underlying ways that may not be as apparent to the consumer eye but are in direct correlation to the increase in gas
prices, such as product cost inflation.  However small businesses choose to adjust; energy costs have a large impact on net income and in turn, on our local economy.

Small Businesses and Rising Gas Prices

Rising gas prices can be stifling for all of us, but the effects for small businesses can be much worse.  Numerous factors play into the negative outcome that spikes in gas prices can bring to small businesses.  Companies that rely on local transportation and delivery as a large part of their profit can be hit very hard.  

David Parsons, president and CEO of AAA Carolinas stated, “Spring is a difficult time for drivers, when gas prices typically rise due to refinery maintenance.  The tightened supply throughout the country results in higher gas prices.”  An increase in prices can also be correlated to the higher demand of drivers after the brutal winter most of the country experienced this year.  Seasonal maintenance at refineries is an additional factor for increasing gas prices.  

Small businesses that are already competing with large conglomerates have a more difficult time coping with the spike in gas prices that can come seasonally.  Delivery costs for businesses that base much of their profit on the transportation of their product suffer exponentially when gas prices increase.  They look for other ways to cut costs which can come as cutbacks, shorter business hours, even moving manufacturing out of the United States to countries such as Asia.  For some small businesses, an increase in gas prices may mean an increase in the cost of their product to make up the difference.  

Fuel usage is a major expense for small, local companies.  Especially businesses that focus on packing and delivery as the main source of their profits can be highly affected by soaring gas prices.  The arrival of spring can mean greater business and easier travel for small companies, particularly after this year's horrendous winter weather.  Increased gas prices work against this potential of growth for small companies.  

The trend that gas prices generally follow is to rise in the spring, come back down around Memorial Day, and then increase again through the summer. Businesses must find ways to work around the spikes and sustained rises.  By cutting costs, carpooling, organizing deliveries accordingly, and preparing ahead of time, local companies can generate as much profit as possible during the high-cost period.  Although they adjust, small businesses are one of the sectors of the economy most affected by gas spikes. And since much of business consists of small businesses, this problem affects all of us.