What Do Rising Gas Prices Mean for Your Small Business?
Rising gas prices are putting the squeeze on small business owners in several ways. Here are some ideas for lowering your costs. The post What Do Rising Gas Prices Mean for Your Small Business? appeared first on The Bottom Line.
Rising gas prices over the past few months have been frustrating for everyone — but especially for small business owners who need fuel to keep their companies moving. While this price surge could be temporary, there’s also the chance of an extended stretch of pricier gas, which is why it’s important to prepare.
Keep reading for a few tips on how to cut costs in a small business to offset these increased gas expenses.
How Small Businesses Are Impacted
The most obvious direct impact of rising gas prices is that it costs more each time you need to fuel up your cars, delivery trucks, machinery or other equipment. Since your suppliers also pay for expensive gas, they might try to pass these costs along to you by raising their prices. This includes the cost of raw materials.
Besides these direct costs, there could also be indirect hits to your business. Customers paying more for gas may have less money to spend. And, those located further away from your business could come less frequently due to higher transportation costs.
Your employees will also face higher costs for commuting. They might ask for pay increases to keep up with the higher cost of living, and those who live farther away might reconsider their job — potentially increasing employee turnover.
The Effects on Different Industries
Gas is a cost for nearly every business, but some industries require more energy and naturally take a bigger hit than others, including:
- Shipping and delivery. Any businesses dealing with shipping, trucking or other types of delivery constantly spend money on gas, so rising prices put an immediate squeeze on their bottom lines.
- Landscaping. Landscapers need gas not only to get to their jobs but also to fuel up their equipment.
- Construction. Rising gas prices can drive up the price of energy-intensive materials like bricks, cement and concrete. Companies that already set fixed prices could find themselves impacted by an increase in their material costs.
- Farming. Farmers need fuel to power their equipment and transport their products to customers.
- Manufacturers. Manufacturers could see a rise in raw materials and their delivery charges.
How to Cut Costs in a Small Business
Looking for ways to save money in your transportation budget? Here are a few ideas to jump-start your thinking.
Keep Up With Vehicle Maintenance
Well-maintained vehicles and equipment use less gas. Keep up with repairs, make sure tires are inflated properly and consider replacing older vehicles/equipment with more energy-efficient models to lower your long-term energy spending. Equipment financing could help you make these upgrades now.
Search for Local Gas Deals
AAA offers an app that helps you find the lowest gas prices in your area. GasBuddy is another alternative. You could also join a gas rewards program through a credit card or gas station chain. These will help you save money each time you fuel up.
Review Shipping Practices
Given that shipping rates are also going up, see if there are ways to reduce those costs (and your gas costs simultaneously) by using smaller containers and lighter packaging materials to lower the total weight. If you handle your own shipping, make sure trucks are full before sending them out for fewer trips.
Pre-order Materials if Possible
Next time there’s a drop in the price of materials and gas, consider pre-ordering your materials, and then store them yourself or sign a contract with a vendor to lock in a set future price. This costs more money upfront but can help reduce your gas bill thanks to fewer supply deliveries.
Use Less Gas
This is the most obvious solution, right? Whether it’s combining errands and deliveries in one trip, driving at the speed limit or taking unnecessary items out of cars to reduce weight, these changes can help reduce the amount of gas you use — keeping you on the road, and open for business, as long as possible while we all ride out this surge together.
For more advice on how to manage rising gas prices, check out National Funding’s blog for tips like how to make a trucking business profitable in this tough environment.
The post What Do Rising Gas Prices Mean for Your Small Business? appeared first on The Bottom Line.