Oil Closes at $200 A Barrel, Is Your Business Ready?

May 15th, 2008 Posted in Management, Planning

Oil closed at USD$120 today for the first time. Also for the first time, I heard these talking head prognosticators projecting USD$200 a barrel oil.

I was thinking about the impact this might have on my clients when my usual airline passed rising fuel prices on to passengers, yet again.

What can you do if your business involves travel – getting yourself, your message, your goods and services from Point A to Point B?

Is Your Business Ready for Higher Costs?

Raw material prices will rise as the cost of transporting these goods rises. So, even if you don’t maintain a fleet of delivery vans, your business is going to feel the pinch one way or another.

So what can you do to survive in a climate of rising fuel costs that are fueling inflation of all goods and services?

Seven Tips to Help Your Business Survive a Big Oil Crunch

1. If your business employs a number of people, organize a carpool to defray the costs of getting to and from the office.

2. Allow employees to tele-commute. Security encryption software ensures even sensitive data moves seamlessly from home work station to office network.

3. Order early. Whatever your office needs, order early and use the lowest shipping priority available. This is also true of shipping items. Offer clients or customers a slower but lower-cost means of shipment.

4. Use the back office of your company web site to create a Project Board – a page listing all current projects, to whom they’re assigned, uploaded research, message boards – a virtual office. This content management software enables you to track progress on projects from anywhere.

5. Outsource. It’s an ugly word to many small business owners but these are desperate times. And small businesses are going to take the hit first. You can outsource any task – legal, administrative, clerical – whatever the task, someone will do it for less than you’re paying now. If this sounds cruel, consider the alternative.

6. Expand your margins – slowly. Avoid creating “sticker shock” among clients and customers by expanding margins gradually rather than in one big price jump. Increase cost of goods and services slowly – below the level of inflation to create a more stable and accepting client base.

7. Open a VoIP account. Skype, for example, enables you to talk to clients around the world free. It doesn’t replace face time but it’s always good to stay in touch with your regulars, regardless of where they’re located.

The price of fuel may be hurting your business now. Chances are, it’s only going to get worse in the months and years ahead. Now’s the time to reconfigure your business to manage higher fuel prices, higher salaries, insurance, rents, airline tickets and lunch.