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Cost Cutters: Fighting Fuel Costs

By DIANA RANSOM
Filed Under: Business Auto Center, Small Business, Management, Business Resources
SmartMoney.com

WITH NATIONAL GASOLINE prices hovering just above $4 a gallon, keeping a fleet of cars or trucks fueled and ready for business is an expensive proposition.

Small-business owners that rely on vehicles for delivering goods, making service calls or meeting clients at offsite locations are feeling the pinch. Even large companies are going to great lengths to trim fuel costs. United Parcel Service (UPS), for example, recently added vehicles powered by compressed natural gas to its fleet of brown trucks, while FedEx (FDX) upgraded its air fleet to reduce fuel consumption.

While most small-business owners would ideally replace their gas guzzlers with more efficient rides, that's a luxury few can afford. Here are some fuel cost-cutting strategies, when hybrids aren't in the budget:

Locate cheaper gas stations. We may be talking pennies here, but when the difference between two gas stations looks like $4.39 and $4.42 and you're filling up seven or eight cars with 15-gallon tanks, even just once a day, those pennies add up fast, says Jeff Maltz and Susan Steiner Saal, co-founders of SilverRide, a San Francisco car service for seniors. To map out less-expensive gas stations in their zip code, Maltz and Saal use price-comparison web sites GasBuddy.com or GasPriceWatch.com. "We are really lucky," says Maltz, "because the station across the street, [often] has the cheapest gas in town."

Buy with business gas credit cards. Many cards deliver cash back or rebates that promise to knock about 2% to 5% off the price of gas, so "it makes sense to take advantage of those whenever possible," says James J. Holtzman, a financial planner at Legend Financial Advisors in Pittsburgh. To compare business cards, visit the business gas card sections at PumpAndSave.com and FindGasCards.com.

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    Hedge against oil-price hikes. Companies that rely on commodities have long used hedging strategies to offset rising prices. Your business can do the same by investing in companies that do well when, say, the price of oil rises, says Holtzman. To take advantage of this strategy, Holtzman suggests opening up an investment account and looking for an exchange-traded fund that tracks oil companies. Here's a story on how to use this strategy. Note, however, that as the price of oil comes down this may reflect in the ETF's performance, which would make this strategy more risky.

    Ship more efficiently. If you use UPS or FedEx, you're likely paying more in shipping costs because both companies have instituted fuel surcharges. How to cut costs? Think about drop shipping, which refers to the shipment of products directly to customers from wholesalers or manufacturers. However, if delivery is a mainstay in your business, take a look at shipping comparison sites such as ShipGooder.com, FreightQuote.com and RedRoller.com.

    Change your schedule. Don't drive during rush hour, suggests Diane MacEachern, founder of the Big Green Purse, an online retailer of eco-friendly products. Avoid scheduling 9 a.m. client meetings, and adjust the times that your sales force drives, too. "Anytime they are idling in traffic, they're wasting gas," she says. Also, conserve business trips as much as possible and carpool when you can.

    Don't get lost. Look up directions on MapQuest or Google Maps before venturing outside the office park in company cars. Or, consider outfitting your fleet with global-positioning satellite navigation systems. The cost of these systems can be substantial. However, with gas prices as they are, "it doesn't take long to get the payback on that," MacEachern says.

    Focus on technology. Do more business over the phone or via the Internet, suggests Ivana Taylor, a marketing strategist in Cleveland. She says business owners should ask themselves "how much of this do we have to do face to face and how much can we do over the phone?" While meeting in person is still a necessity, Mark Evans, co-founder of Quickcomm, a software company in New York, says he and his 55 employees reserve the big trips for serious business prospects and use technology such as audio-conferencing and desktop-sharing platforms as much as possible.

    Keep vehicles well-maintained. MacEachern of Big Green Purse stresses the importance of regular vehicular maintenance. Just giving your fleet a regular tune-up and keeping tires inflated can improve gas mileage by an average 4% and 3%, respectively. Beyond that, just driving slower can reduce your costs as well. For more on this, visit fueleconomy.gov.

    Tack on a surcharge. You could raise your prices in general, or start a tiered-pricing system, charging customers who live farther away a higher price. Regardless of how much you boost your rates, make sure you notify your customers well in advance, recommends Holtzman. "Just bumping up prices might burn you in the long run," says Holtzman. "Keeping customers informed is always a good idea."


    More on This Topic

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    3. The Hot Zone
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      virgokingtut 06:25:13 AM Aug 30 2008

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      plan your trips, during lunch time if i go out to eat, i stop at target or walmart and do shopping for like paper goods nothing that is going to melt in my trunk, drop the mail, stop at the bank, you just got to organize yourself and find a shopping area where they have everything right there and you will make more use of your lunch time, fuel also...recycle before buying something think if it has other uses...save your receipts and box incase you have to return something....know return policy before buying anything! The same with buying food see if your ingredients will allow you to make more than one meal by just adding something else...these are some tips that have helped us!

      neeleshneel 03:18:11 PM Aug 24 2008

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