Tuesday, March 13, 2012

Rising fuel prices don't have have to raise your blood pressure

Fred Haskett

Fred's Take

As I was sitting in our Friday Staff meeting the past few weeks I realized the discussions while seemingly normal for the time of year – Spring Start-Up Operations – were all happening several weeks earlier than normal. Due to the current reality of 2012 we are facing some different challenges this year, and some normal ones that are more exacerbated than normal.

Nationwide we have had a very mild winter St. Louis where I operate is no different.

The spring of 2012 promises to present us with several challenges:

  • Rising fuel costs
  • Low cash flow due to lack of snow / or if you are not in a snow region lack of cash flow due to no real seasonal slow-down this winter.
  • Horticultural challenges

What is the true impact of rising fuel costs?
  • Emotional – You are writing a much larger check for your fuel costs than you were a year ago.
  • Practical – Fuel has risen 33%. And is still rising.
  • The Geo Political and Domestic Political situation is such that our leaders appear poised to do what they do best  - NOTHING!!

So how do we deal with it? Let me share with you some of the things that we are brainstorming about.

We have talked about several practical ways to address this situation.
  • Verify all vehicles and equipment are properly tuned and maintained.
  • Assign trucks with the best fuel mileage to the longest routes
  • Check tire inflations daily
  • Assign newer equipment that burns fuel more efficiently to large jobs
  • Lighten the load on the truck by not carrying extra/unused equipment
  • Use GPS tracking to monitor speeds, idling time, and unnecessary travel
  • Work 10-hr days when practical
  • When you have time ask your elected officials to do their job.

Another key is to speak with your customers about changes to their program to help offset rising fuel costs that are outside of your control. Do not act without talking to your customer.

Do NOT assess fuel charges to your invoice. 
Your customer works with set budgets and raising your price may force them to take bids.  If you do opt to use fuel charges, do not add them to your invoice without speaking to your customer first.  Remember, their business is also being impacted somehow by rising fuel costs.

Do NOT send out a form letter announcing your intentions to adjust service levels or add fuel surcharges.
Any action should be discussed with your customer one on one.

Many of us either did not produce the anticipated snow revenue this winter or in the year round markets you experienced a warmer than normal winter and were not able to reduce service intervals as significantly as you usually do.  In either case, you possibly have not been able to save enough cash to fund spring operations.

What are our options?
  • Sell enhancements and request down payments to ease cash flow requirements
  • Offer a discount for early payment to spur cash flow
  • Discuss an adjustment to payment terms from your supplier
  • Take advantage of trade credit and Early Order terms
  • Begin and complete spring clean-ups and mulching operations early to reduce overtime when the season starts
  • Investigate lines of credit BEFORE you need it
  • Reduce overheads where possible

Horticultural Challenges
Spring has definitely come early to most of the country.  Agronomic applications such as pre & post emergent weed control are driven by soil temperatures, not by a calendar or air temperatures.

Do you know the history of soil temperatures in your market?
Are you monitoring soil temperatures in your area to stay on top of the situation?
Are you checking in with your extension service to get their thoughts and advice of the current reality.

Be sure you understand your customers’ expectations
·       Are you on a performance based specification?
You may have to start servicing early.
·       Is the service period clearly defined?
Can you start servicing early?
·       If your customer is on set frequencies or pre-determined season start dates, is there an opportunity for additional income for extra services?

*  Insect activity will also be high this year. In most markets, cold weather reduces spring and summer insects.  The same is true for most weeds as well.

*  In markets that did not receive normal snowfall – drought conditions can also be expected.


So the best message I can leave you with and what we are doing is:

* Be aware of the current reality!

* Make sure you are dealing with the current reality!!

* Communicate with your customers and be prepared for an early start!!!


4 comments:

Anonymous said...

Excellent!
Written by a professional with the customer in mind.
Well done.

Jeffrey Scott said...

Well said, Fred!

Cory Bettinghouse said...

I think it is important to really remember NOT to increase your prices on your invoice or a mass announcement of raising charges because of fuel cost. Thank you for your tips to help reduce your fuel cost, I have also been reading about mowers that are starting to use propane which is half the cost of gasoline. Something to think about if the cost of fuel gets out of hand.

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