Four Ways To Exploit Your Cost Of Energy And Grow Your Business
With gas prices sure to hit $6.00 a gallon, nearly every small business is feeling the impact in one way and it is mostly bad news, but does it have to be only bad? Many small businesses can and are taking advantage of this sudden change in how we do business. My favorite example is my client Vacationland Federal Credit Union who is giving away $100 gas cards to its employees in return for their advertising the business on their cars!
So what can you do in your small business to exploit the cost of energy?
- Rethink your target market and customer profiles.
If travel, freight and service make some customers less profitable and others more lucrative, raise prices on the less profitable ones until they become profitable or until those customers leave. Sell more to the ones who are profitable, especially if your competitors are further away and cannot match your energy advantage. The old sales hook, “I am going to be in the neighborhood, may I stop by?” will become true and attractive to sellers and buyers alike.
- Identify which of your customers are most susceptible to energy costs and offer them price protection in return for larger contracts.
They might well pay you for bringing some sense of stability and predictability to their disrupted businesses. The increased sensitivities and awareness that all costs are rising will make some substitutes more competitive with your offering and some less. Be aware of how your value proposition is changing for good and for bad. Distributors and sales channels that are not adding value will be most vulnerable to more efficient channels and the Internet.
- Trade more information for less energy.
Before our current energy penalty, we enjoyed a decade-long windfall from information technology. Might your customers pay you even for more information in the place of visits, products or shipments? Put an energy calculator on your website, your proposals and your daily practices. Now that we are more aware, it is becoming clear how much energy can be saved through knowledge and understanding.
- Partner with your vendors to save money.
The more dependent a company is on oil and its derivative products like plastics, the less flexibility and more dependent they will be on both vendors and customers. What practices, posturing or “nice to haves” can you renegotiate to reduce energy costs? Face-to-face services in the age of web cams, webinars and online polling and forums may not be essential after all. Tell your vendors when and what you really need to see them. Renegotiate as you both may be better off.
Let’s face it. We have been expecting oil prices to rise for so long it almost seems surprising now that it is real. Look critically at how you, your customers and your vendors really consume energy in order to make money. I’m betting you will find new opportunities to exploit this energy crisis and grow your small business.
In conclusion, what the Internet giveth, the price of oil taketh away. Be on the right side of this power shift.