The impact of higher gas prices on small businesses can be significant. If your business is located in an area where people commute, higher gas prices can mean fewer customers. And, if you rely on deliveries or trucking to get your products to market, rising gas prices can mean higher shipping costs.
Prices went down a few months ago and gave a slight relief to the rate of inflation. However, the prices have started to rise once again as we enter August of 2023.
Why did prices go up yesterday? It’s all about Saudi Arabia making output cuts to tighten the global supply.
These soaring costs can have a ripple effect throughout the economy. Furthermore, if the people who purchase from your business are hurt by the higher costs they will not be able to buy from you.
It can be a domino effect on small businesses. (as well as household budgets!)
According to Triple-A:
$4 GAS IS THE TIPPING POINT FOR MOST AMERICANS
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Too Expensive
New survey data from AAA finds that two-thirds of Americans felt gas prices were too expensive just a few weeks ago at $3.53 per gallon. Now with the national average at an all-time high of over $4, Americans may have reached a tipping point.
Over half (59%) said they would make changes to their driving habits or lifestyle if the cost of gas rose to $4 per gallon. If gas were to reach $5.00, which it has in the Western part of the country, three-quarters said they would need to adjust their lifestyle to offset the spike at the pump.
Fortunately, there are ways to help your small business survive these higher prices.
Here Are Some Tips For Dealing With Higher Fuel Prices:
Your Vehicle
Make sure your tire pressure is correct on your tires. The U.S. Department of Energy says that for every 1 psi missing from your car’s set of 4 tires, you lose 0.1 percent of your gas mileage. (Every psi lost also means that tires wear 10 percent faster.)
By properly inflating your vehicle’s tires, you can improve your gas mileage by 3.3 percent. That can save you money with the higher gas prices at the pump.
Furthermore, drive at the speed limit to have your vehicle run more efficiently. Mileage decreases quite rapidly over 50 mph in most cases. To save gas, stay at or under the speed limit, and drive at a consistent rate of speed. Of course, use cruise control on long trips to save more on fuel costs.
Travel
Cut back on non-essential travel. If you have to travel for business, make everything on the same day. That way you can drive just one day a week vs. every day.
If you don’t have to travel for work, try to find another way to get the job done.
Teleconference, video conference, and email are all great ways to communicate with team members and clients without having to leave the office.
Carpooling
Consider carpooling. If you do have to travel for work, see if you can carpool with a colleague. Not only will you save money on gas, but you’ll also save on wear and tear on your vehicle.
The prices for repairs can make a huge difference in your automotive expenses.
Not only that but you may be able to save on your automobile insurance. Now, that’s worth a phone call to your insurance company!
Reduce Shipping Costs
Look for ways to reduce shipping costs. If you rely on deliveries or trucking to get your products to market, explore different shipping options.
Compare prices from multiple carriers, and consider using a less expensive shipping method (such as ground delivery instead of air).
Can you make the packages smaller? I’ve seen Hello Fresh shrink their boxes recently with their food delivery service.
Cut Inventory
Cut back on inventory. Higher prices can mean higher shipping costs, so it’s important to keep your inventory levels in check.
Don’t order more products than you need, and consider scaling back on seasonal items.
The only problem you may have with this is the shortages in the supply chains. You will have to stay informed of your industry’s supply chain situation before cutting inventory.
Automate More with Higher Gas Prices
Automate as much as possible. If you can automate tasks such as ordering supplies or shipping products, you’ll save time and money.
Automation tools can help you save on labor costs, and they can also help you reduce errors.
Pricing Strategy Adjustments
Evaluate your pricing strategy. Higher gas prices can cause inflation, so it’s important to make sure your prices are still in line with the market.
Make sure you’re charging enough to cover your costs but don’t price yourself out of the market.
Therefore, look around at your competition’s prices. They may have raised their prices since you last did an analysis.
Funding Opportunities
Seek out funding opportunities. If higher gas prices are putting a strain on your business, consider seeking out funding opportunities.
There are a number of government programs and private lenders that offer to finance small businesses.
You want to be careful not to cut your advertising budget when things get tough. You may even want to advertise more to gain new business as you lose some business due to inflationary conditions.
“Stopping advertising to save money is like stopping your watch to save time.”
Check Gas Prices Nearby
Use an app like GasBuddy, Gas Guru, or AAA’s app to help you find the lowest gas prices around. However, you don’t want to spend more gas and time driving around to find it for a few cents less.
How does the Gas Buddy app work?
- Saves 5x as much as its app and more than either a debit or gas credit card.
- Fill-ups are effortlessly deducted from your linked debit card.
- No credit check is required.
Surviving Business With Higher Gas Prices
By following these tips, you can help your small business survive higher gas prices. And, who knows, higher gas prices may even lead to increased sales as people look for ways to save money.
So stay positive, have no fear, and keep your head up – Let’s not let higher gas costs kill your small business!
Has your small business been affected by the recent spikes in gas prices? What other tips would you offer here? Please leave them in a comment below and share them on social media.
FAQS
Why is the price of fuel going up at the pump?
According to CNBC, oil is now on track for the biggest monthly gains in over a year. It is because Saudi Arabia will extend voluntary output cuts into September which will tighten global supply.
What can you do to save money on the price of gas?
You can start thinking about how you can cut back on driving and be aware of where you can get the best prices for your fuel tank.
What can you do with your vehicles?
Make sure your vehicles are in tip-top shape so they are efficient in driving and thus not costing you more to run.
What else can your small business do?
Prepare to make other budget cuts if the prices of gas continue to go up.