Updated: Jun 8
We haven't seen gas prices this high since 2010. That was over 12 years ago. If you are a small business struggling to reduce fuel expenses now, it’s quite possible that you may not even have been around to deal with it back in 2010.
Some of those that were around back then may know exactly what to do to combat the high fuel prices. But there is a solid chance that most fumbled their way through it instead of acting strategically.
This is likely the paramount item that is causing you stress on a daily basis, especially if you are a newer small business. Thankfully, there are a few things you can do to survive the fuel price increases as a small business!
We have put together several items that can empower you to start reducing your small business fuel costs!
Use Route Optimization to Minimize Your Driving
Not to be too cheeky here, but the easiest method is to simply drive less. We chose to start out here, in part, because this is something you should have been doing already. Doing whatever it takes to drive less has the obvious benefit of reducing the amount of your budget you are spending on fuel.
But we know it isn’t just that simple, is it? This is especially true for service-based businesses that must drive to their customers to survive. For them, fuel costs directly impact them day-to-day.
This leads us to our first recommendation: using Route Optimization.
What is it? Let’s start with an easy example: If you have five errands to make over town, Route Optimization helps you map it out in a way that makes the most economical sense.
In its most basic form Route Optimization will help you reduce the total amount of miles driven. Something that can be done manually in the office, albeit with a bit of effort. However, if you choose to implement a tool designed for optimization, that typically gives your business the ability to account for things like traffic, lights, and stop signs. All of which can impact your MPG.
The good news, again especially for service businesses, is that if you are using a scheduling tool for your work orders etc., then there is an exceptionally strong chance that they also offer optimization.
One last note on Route Optimization: As a general rule of thumb, you can estimate that using some variation of route optimization will reduce your fuel costs by around 10%. Make sure you take that into account when assessing costs for any tool. It’s worth it almost every time.
Save Up Your Stops for a Single Day
To ride the momentum of the *ahem* obvious first example, the next item to reducing your fuel costs are to begin to accumulate your stops for single, or small group, of days.
For service companies, if your capacity is somewhere in the range of 8-10 stops per day, then you should avoid scheduling any days / technicians with anything less than 8 stops. Since your revenue stream comes mostly from completed work orders, then you can still achieve roughly the same income from 3 10-stop days as you would with 5 6-stop days. Take this reasoning with a grain of salt that works best for your business, but generally the logic is sound.
For small businesses where customers come to you, consider scheduling your errands or other runs on a single day a week or month. If you continue to do one-off trips this handicaps your ability to optimize your routes. However, if you make a list of stops and manage your supplies etc. accordingly, then you can make all your stops on a single run and can minimize your mileage etc.
Use Gas Apps and Rewards Programs
Nowadays, there are as many gas apps out there that can help save you money on fuel as there are silly games.
Some of these apps simply show you the prices at different gas stations so you can choose the one that is the cheapest. While other apps give you cash back on gas if you go to gas stations that they partner with. Surprisingly, most of them are legitimate too. We have had first-hand experience with a few of them and have money in the bank as proof!
In addition to apps, there are also many reward programs that can help you gather points that you can redeem on items, save money on fuel, or give you other discounts. Many of these reward programs can be found at grocery stores, credit card companies, warehouse clubs, and more.
If your fleet is sufficiently large, it may also benefit you to investigate loyalty programs / credit cards with specific gas stations that offer fleet services and prices. However, this one may limit you in terms of stations for your service area, so make sure you do your research. Driving out of the way for a valid station can easily negate any savings.
Keep Up with Your Maintenance
Being a slacker with keeping your vehicles or fleet up to date with the maintenance that it needs is a surefire way to ensure you burn through fuel you wouldn’t otherwise. This shouldn’t come as a surprise, but it’s also an item that can easily be overlooked. Especially if you, as the business owner, are somewhat removed from the maintenance schedule of your work-related vehicles.
If you haven’t already, make sure that you have an official maintenance policy. Any policy should contain routine maintenance schedules (important: make sure to include mileage triggers as well so that you don’t accidentally wait too long for routine service), explicit roles and responsibilities, and a detailed process for how to handle anything more serious than routine. For example: a form for a technician to fill out (preferably online) when their vehicle is exhibiting anything out of norm. Empower and encourage your employees keep your fleet in the best shape it can be.
Don’t forget that it even comes down to the little things. Let’s say you have a semi-deflated tire, and your tire pressure light has been on for a few days, you are absolutely eating into that precious gas mileage. This means more money down the drain on gas that could otherwise be in your bottom line!
Since that's the last thing you need when gas prices are already so high, you want to make sure you are staying up to date with every part of your car's maintenance schedule to ensure you are getting the best gas mileage you can.
Bonus: From a reputation perspective, having a clean and efficient vehicle running around town with your logo slapped on it is going to garner a far more positive brand impact than one with black smoke kicking out the back.
Slow Down and Speed Up to Save
Let me start off a bit personal, both my parents will totally have a chuckle when they read this one. I was NOT the slowest car on the road in my younger days. Ironically enough, one of the few items that has slowed me down over the years is the wasted fuel exhibited during… shenanigans.
But perhaps at some point you’ve wondered what speed is the best for using the least amount of gas? Oddly enough, slow isn’t always the most efficient choice. I know no one is likely to have a fleet of jets who may be reading this, but it’s a great example: Did you know that a commercial jet flying at altitude is significantly more efficient than it is simply sitting at idle?
That same logic can sometimes apply to your fleet. By choosing routes that maximize a highway over a city road is a great example of where “speeding up” can save fuel. In this case it is not so much the speed of the vehicle, but rather the rate of idle at stop signs etc. that leads to the savings.
Buuut… there’s an obvious limit. Even if you do most of your driving on the highway, observing speed limits can help you save. The benefit “speeding up” of a highway is in its comparison to a city street. So, if you’re doing your own impression of cannonball run, you might want to slow down a bit and save yourself the added fuel costs.
Obligatory Statistic: Going the speed limit can help you save money on fuel by getting the best gas mileage. Typically, your car will see its best gas mileage around 55-65 miles per hour.
Consider Going Electric or at Least Updating Your Fleet
Sometimes you can still do everything right with your maintenance etc., but you still can’t beat the cold, brutal drum beat of age. If your vehicle was made over 10 years ago (or less based on mileage), it would be very wise to looking in to replacing it asap.
Total Honesty: I am not a big fan of going electric in general. From an environmental perspective, hybrids and electrics are far more damaging over the lifetime of the car than a traditional combustion engine. But also, from a business perspective, the lifetime of the batteries for these vehicles can significantly handicap you financially much faster than traditional vehicles.
That being said, in terms of this article we are experiencing an astronomical increase in fuel costs. So much so, that the short-term benefits of gas savings could wash out those deleterious issues. So, while electrics may be a higher cost at first, you might consider getting an electric or hybrid vehicle so that you are not refilling as much gas, if any. With hybrid / electric vehicles, you could save a ton of money since you get a much better mile per gallon in your tank.
Either way, an aging fleet can still be harmful. We recently had a service client go all in on the Ford Maverick. They currently went both routes, one hybrid one traditional. BOTH of them are producing a fuel savings as compared to the vehicles they replaced.
Oh! There is also a possibility that you could be eligible for a federal tax credit if you decide to go electric. There's no harm in figuring out if you're eligible for a nice tax break!
You Need to Lose Weight, Literally
If you are a small business that often is running around with heavy loads, this also hinders your gas mileage. The heavier your car or truck, the fewer miles per gallon you will get.
Unfortunately, this can become a balancing act. The best way to tackle determining how much load garners the best efficiency is to begin to experiment. You'll want to vary how much you carry at one time. While noting the overall gas mileage. With the other side of weight being the number of trips. It is highly unlikely that the savings from a large drop in load will counteract the added costs of a second trip.
This item has a lot to do with which vehicle you are using and if you are within normal operating parameters. Sounds silly, but how many of you have seen a local service truck drive by with its tail end a foot off the ground? Make sure that when you are shopping for your fleet (see above), you are aware of the specs needed to handle your load and stay efficient.
Outside the Obvious: Something that you might not have thought of in terms of reducing the in-service weight is to itemize each vehicles inventory. What we mean by this is to create a list of items that each vehicle has on board. You can go as refined as you’d like, but the more detailed the better.
Once you’ve completed your inventory, go through every item on the list and determine if you really need to be hauling that item around all day, every day. Remember that 20 lbs. specialized wrench that you use maybe once a year? Do you seriously need to be lugging that thing around the other 364 days?
Instead, house those items in a stationary inventory and then implement a check-out system. Not only will you reduce the everyday load of your vehicles, you’ll have stronger control over your assets.
Skip the In-Person and Focus on the Virtual
If there has been a singular thing every person, young or old, has become well acquainted with the past few years its easily the virtual meeting. We have all had to accommodate the craziness that COVID unleashed on our normal lives.
Capitalize on that normalization by transitioning meetings to virtual as much as possible. Each time you can go virtual is one less time you’re out there burning fuel.
Oh, and consider making all your positions remote capable as well. While this won’t have as much impact on your bottom line, it can save your employees their commute expenses. That alone is a boost to morale, but most of us (raises hand!) prefer to work outside in the “real” world as opposed to a cube farm. All around it’s a good move for any small business.
Speaking of Employees, Incentivize Them
If your business is of the sort that you must have employees on site (retail, food, etc.) then you might want to consider some incentives. This applies more to those businesses that choose (or are forced one way or another) to pay mileage to their employees.
You can develop an incentive that works for your business that attempts to persuade your employees to utilize alternative modes of transport. Just a spitball example here: perhaps you offer to pay every employee that bikes to work an extra $2 for that day. Before you react, know that that $2 represents a 3-mile commute by bike. There is a good chance that you’ll end up with a net savings depending on your commute situation.
Another example might be to incentivize public transport. Think about compensating them for the cost of the bus, train, etc. but a little on the top. If your average commute for your employees is anything over 5 miles, you’re highly likely to come out ahead.
One last idea. You could have rolling contests. Perhaps for the office staff you see who can drive the least every month, and then the winner gets a gift card or something. You’ll get the added benefit of the Public Relations you can milk out of that too. Or for your technicians, you can offer a similar contest for on-the-job travel. Reducing their use of company fuel while also potentially lowering the wear and tear on your company car.
Reducing Fuel Expenses is Crucial for a Small Business
As a small business, the fuel prices right now are extremely detrimental. However, there are ways to combat the high fuel costs to help with your small business budget! Some are clearly more obvious than others, but if you’re not out there advocating for even the obvious then you’re not pushing hard enough for cost savings to be successful long term.
If you are trying to figure out how to implement these or other cost savings for your business, don’t hesitate to reach out to us here at Out of the Box Advisors. Your success is our success!