Expert Strategies to Navigate Volatility in the Oil and Gas Industries

The Importance of Collaboration and Strategic Planning

The energy industry presents a multitude of challenges for fuel dealers, wholesalers, and service contractors. These challenges range from seasonal fluctuations, inflation, and political factors to their customers’ reliance on their business. These external forces can make it challenging for dealers to maintain a steady revenue stream. To prosper and expand, fuel dealers must carefully devise a strategic plan.

Identifying Strengths, Opportunities, and Business Expansion

Collaboration among owners, key management, and outside advisers is crucial in the strategic planning process. This process encourages conversations to establish and agree on the organization’s vision and mission and the resources necessary to accomplish objectives. The outcome of this process is an extensive action plan that outlines short- and long-term goals, operational strategies, personnel recruitment, a suitable business model, and clear communication. This plan will serve as the guiding light to steer the business toward future success. Engaging in strategic planning and discussing weaknesses with your team can help you identify strengths and opportunities. You can then assess which outside business lines could fit within your existing setups, such as HVAC, home energy audits, concrete, pest control, or landscaping. By doing this, you can better safeguard your business against unforeseen changes. Additionally, developing strategies and identifying resources can assist in addressing performance issues.

The Significance of Operational Budgeting and Performance Metrics

An operational budget is crucial for any business to gauge and compare its performance over time. Unfortunately, many businesses struggle in this area and lack a proper budget, which prevents them from identifying issues or deficits. A prime example is dealers who may find themselves in the third week of the month, down by 20% on degree days, with no plan to address the situation. Dealers may have a budget but often miss important performance metrics like the number of drivers required to support the business. Many dealers are unaware of how to calculate this metric, including delivery efficiency, the number of service calls per day, and the number of installations.

Manpower is a significant expense for this business, trailing only product costs. Despite this, there seems to be little recognition or appreciation for the effort required to create a budget that maximizes opportunities.

Utilizing Break-Even Analysis for Budgeting and Profitability

A breakeven analysis is a highly effective tool for fuel dealers to manage their budgeting and profitability. This analysis provides crucial insights into the number of gallons required to break even and the necessary margins to generate a profit. With this information, dealers can make proactive adjustments to their margins during periods of lower-than-anticipated sales and maximize their profitability. By leveraging the power of a break-even analysis, fuel dealers can maintain greater control over their financial outcomes.

Diversification Strategies for Seasonal Fluctuations and Business Resilience

One way dealers can protect themselves from seasonal fluctuations in their business is to implement a diversification strategy. This involves exploring and integrating other products and services into their offerings during non-winter months, which can generate extra revenue streams to balance out the fluctuations in winter revenue. Diversification can also help lessen the impact of external factors such as politics, inflation, and technological changes that can significantly affect the energy industry. By embracing diversification, dealers can attain a more stable income and improve their financial resilience amid a rapidly changing business environment.

Building Efficient Workflows and Systems for Long-Term Success

To attain enduring revenue growth and accomplishments, it’s crucial to have skilled personnel, collaborative teamwork, and dependable systems that employees can follow, with established task processes. The absence of this may result in personnel utilizing their own approaches to work, resulting in irregularities and ineffectiveness within the company. Setting up an efficient workflow that saves time and resources is essential to achieving profitability and generating profits.

Empowering Your Business: Consulting Professionals and Embracing Proactive Solutions

By consulting with professionals and investing time into improving your business, you empower yourself to shape your desired outcome. Being proactive in tackling challenges opens many solutions you can utilize.

Contact Us, and we can help you with insights and other resources and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business immediately.

The article was originally published on LP Gas Magazine: How to manage volatility in the energy industry

Strategic Planning

The only constant one can plan for is change.  Strategic planning positions the business to address the probable, possible, and potential contingencies impacting business success. 

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Want to have control over the future of your business?  The best way to do just that is by having a plan.  Our approach in considering the 10 key areas of the Succession Matrix simplifies a complex planning environment.  Click the following link for more drill down resources on The Succession Matrix

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We can help you with insights, other resources, and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business right away.