Written on: January 9, 2013 by Phillip J. Baratz
Though we still have another couple of months of winter ahead of us, in today’s “reality” there is no room for complacency for the owners or managers of heating oil companies. The notion of sitting back once the season ends, and then just waiting for the next season to show up, is part of the reason why many dealers struggle.
Reflecting on the past year (or years), and using those assessments to plan for the future is key. Did your expected (or budgeted) performance match against your actual performance? There are many metrics that need to be examined in order to answer that question. Did your Service Departments have too many “return visits” (non-billable)? Did your sales department reach their sales, quality of sales, and/or retention goals?* How did your dispatchers and drivers do—deliveries per hour, gallons per hour, stops per hour…whatever you use to gauge satisfactory results? All of these operational items must be tracked, checked and managed in order for your company to have anything close to peak performance. Many people simply look at the bottom line, or the margin per gallon, but often these numbers are either known too late in the year to do anything about them, or are important indicators that ignore the “other” important indications.
With data in hand, the late spring and the summer are the time to start to fix things. Decisions about whether or not to extend service contracts to customers who have way too many service calls shouldn’t be taken too lightly. Personnel training, so difficult during the winter, also needs to be a focal point of the “off-season”. Since you should know who the “problem customers” and the “underperforming employees” are, the panic that hits all too many dealers during the first cold snap of the fall should be nothing other than exactly what you have prepared and staffed for.
On the financial side of things—operations aside, if you aren’t making money, there are more enjoyable ways to spend your days than in the retail heating oil space—the “off-season” is, too, the time to assess and to, when necessary, make changes.
There are three key places where time should be spent; the first is Accounts Receivable—collection efforts, decisions about “firing” customers for chronic problems, and possibly revamping credit and collections policies. The second important summer-time exercise should be to be sure that your working capital position is where it should be, and that your access to receivables financing (credit line) is in place. The third key item has to do with the program offerings that you make to your customers. You need to price both competitively and appropriately. You need to know the true cost to back up (hedge) the offering, as well.
These items will go a long way towards the real key for any and all companies who want to compete and thrive—the development of a clear, credible and trackable budget. Without the budget, you really won’t be able to answer the “How am I doing?” question. You also won’t be able to answer the “What did I learn?” question.
The important “takeaway” from this should be that “planning” should not be a hollow word. There are so many things that can CLEARLY be planned, and so many tools to track, learn, manage and modify. Think of all the hours that you spend DOING in the course of a year. Now, think of the hours you spend PLANNING over the course of the year. The ratio between the two is probably very wrong. Make the planning changes, and the results will follow naturally.
*I guess at some point, I should recognize that if goals were never set, most of these questions would be answered by, “Heck if I know!”