September 2013 • 25
Business Tip
Plan Ahead …
or Fall Behind
By Joe Ciccarello, CPA, MST,
Gray, Gray & Gray, LLP
WITH THE PACE OF THE WORLD TODAY,
the owner or manager of an oilheat or
propane company is faced with a seemingly
unending string of crises, challenges and
decisions. It may seem that most days are
spent putting out one fire after another. But
this kind of “right here, right now” focus
can be costly down the road, as it leaves
little time for strategic, long-term planning.
One of your duties as a leader is to pre-
pare your business for the future. Strategic
planning cannot be done effectively “on
the fly” or on an “I’ll get to that someday”
basis. You need to carve out the time from
a busy schedule to allow you to give your
full attention to examining where your
company stands, what is happening in the
industry, and determining where you want
to take your company in the future.
MYRIAD CHALLENGES
In looking at Gray, Gray & Gray’s 2013
Oil Survey Results, we can see that the average
oil company is no longer growing by selling
more gallons or through buying competitors’
businesses. Today’s oilheat businesses also
face devaluation due to decreased gallons
and margins. The cost of product is high
and (with the exception of the most recent
winter) the weather patterns have been
uncooperative. All of these challenges affect
the payout for a lifetime of hard work for an
oil dealer, making it essential to ask yourself
how you plan to replace lost revenue.
It all starts with a “where are we now”
assessment. At Gray, Gray & Gray we urge
our clients to create a detailed profile of their
business through financial data – the ultimate
measuring stick. By examining the numbers
we can identify “SWOT” – strengths, weak-
nesses, opportunities and threats.
Which products and services are most
profitable? Which departments are using
more than their share of overhead? Is your
payroll in line with industry standards?
Analyze each department or business unit
individually to determine if they are achieving
the expected results and making a positive
contribution to the overall profitability of the
business.
SELF EVALUATION
Then we go beyond the numbers to
look at the company’s position in the
market. Would selling off an unprofitable
division improve the bottom line? Is there
an acquisition that would open up a new
market area? Which products and services
are going to be growing, and which have
matured? This analysis is the basis of a stra-
tegic plan that will maximize the strengths
of your company, while shoring up areas
that may be deficient. This includes finding
ways to make up for revenue that has been
lost due to declining oil sales.
For example, if your oilheat company is
losing customers to gas conversion, it may
be time to beef up your service department,
add a certified gasfitter, and start servicing
gas equipment. You can even offer service
contracts for gas-heated homes. But you
must also consider other sources of new
revenue. Right now, many of our clients are
adding new profit centers such as propane
sales, plumbing services, A/C installations,
solar, generators and even selling elec-
tricity. The key is to determine what is right
for your business and which products and
services are needed in your marketplace.
The process of self-examination and
evaluation gives us an indication of the path
which leads to a stronger, more stable and
profitable business in the future. Our rec-
ommendation is to establish a solid plan at
least five years out, with additional planning
that is a little more flexible looking 10 years
ahead. The five-year plan should be updated
on a rolling basis every five years to adjust for
changes in the industry and marketplace.
PERSONAL PLANNING IS ESSENTIAL
If you are the owner of a family owned
or closely held business, strategic planning
should not be limited to corporate needs
alone. You must make plans for your own
future in parallel with the preparations
you put in place for the business. What
good will it do to work for the next 10 or
20 years to solidify the company if, when
the time comes, you have ignored your own
financial and retirement needs?
That’s why we create a personal strategic
plan for the business owner at the same time
we develop the corporate plan. Our goal is
to make sure you will have an exit strategy
that not only works for the company, but
also provides you, as an individual, the
financial security you need to enjoy your
retirement years.
Certainly everybody working in oilheat
and propane is very busy. We don’t even
have the benefit of an off-season anymore!
Yet it is critical to step back, assess, look
ahead and develop a plan that will take you
where you want to go.
As the energy industry’s
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