Let’s see a show of hands if you’ve become a fan of American Pickers, the Cartoon Channel or even the NFL because the news has become so darn depressing.
In a few short weeks, the Biden Administration has reversed policies that led us to energy independence and fostered middle class economic wellbeing. Unfortunately, this is just the beginning of what will surely be some challenging times ahead.
Any business with a petroleum stake is now in an existential fight for survival against avowed zealots devoted to destroying our industry. The utopian desire to install a “green” future for America, coupled with other “feel good” measures like increasing the minimum wage, necessitates that petroleum marketers become lean, mean and proactive to help ensure this isn’t the swan song for the oil business.
Following are some fundamental actions that marketers should consider to best weather the storm.
Focus on the Profits
Conducting a comprehensive business assessment highlights where the money is made. Pragmatically assess each business segment to determine its net contribution to earnings. This will highlight the core competencies of the business and areas of divestment.
For example, some marketers run great stores with solid fuel margins and inside sales. After investigation, the ancillary dealer business may be discovered to be more of a low-profit afterthought. Decisively divesting this business segment will help the company become more competitive, while providing valuable growth capital. Others may determine that the dealer supply or commercial segments are preferred and that alleviating the preoccupation in running marginal stores will enhance overall business success.
Rationalize Your Business
The next step is to factor the competitive landscape and the implications of higher fuel prices. For store operators, this may highlight the divestiture of sites on the edge of profitability, volume viability or that will be most negatively impacted by current government policies and regulations.
On the commercial side, the cost to fund receivables rises along with fuel prices, necessitating the need for increased cash or credit availability, prompting a tightening of customer credit and a pragmatic assessment of the contributory value of each account. Dropping low margin, low volume accounts may mitigate company credit issues, while ultimately enhancing efficiency and profitability.
Consider a Customer Outreach Campaign
Much like the “Neighbors Serving Neighbors” campaign of the late ‘90s, c-store operators have the unique ability to directly reach and inform a wide cross section of the country. Through a formal outreach campaign, the motoring public can be reminded of the immense benefits that refined petroleum products deliver, while stressing the negative impacts that anti-petroleum policies have on the economic wellbeing of everyday Americans. Through a concerted effort, we can tangibly support a return to logical, pro-American values in the 2022 midterm elections.
Join Your State Petroleum Marketers Association
The Energy Marketers Association of America (formerly the PMAA) and the affiliated state associations are on the front line of defense against anti-petroleum policies.
Now is the time for all marketers to join and become actively engaged, as this is truly an existential fight for survival. Proactive commitment to improving efficiency will put a business in a better position to succeed. Feel free to contact me for a jumpstart on the process.
Mark Radosevich is a strong industry advocate, recognized petroleum veteran and president of PetroActive Services (www.petroactive.net). He can be reached at [email protected] or (423) 442-1327.
The views and opinions expressed in this piece are the author’s perspective.