{"id":3092,"date":"2022-10-04T16:40:24","date_gmt":"2022-10-04T20:40:24","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=3092"},"modified":"2022-10-04T16:40:26","modified_gmt":"2022-10-04T20:40:26","slug":"5-ways-small-businesses-can-offset-high-gas-prices","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/5-ways-small-businesses-can-offset-high-gas-prices\/","title":{"rendered":"5 Ways Small Businesses Can Offset High Gas Prices"},"content":{"rendered":"\n

Gas inflation has broken records at a dizzying pace: In June 2022, the national average gas price hit a high of more than $5 per gallon, according to data from the U.S. Energy Information Administration. Simultaneously, the Consumer Price Index, which measures how the cost of consumer goods and services changes over time, saw its highest 12-month increase in 40 years.<\/p>\n\n\n\n

As summer ended, those prices had started to recede, AAA data shows, but there\u2019s no promise that the trend will continue.<\/p>\n\n\n\n

Here are five ways small businesses can offset high gas prices<\/a> by saving money at the pump and elsewhere.<\/p>\n\n\n\n

1. Earn cash back at the pump<\/strong><\/p>\n\n\n\n

Small businesses that spend a considerable amount on fuel costs might consider applying for business gas credit cards that offer up to 3% cash back on fuel purchases. These cards can be used alongside gas apps<\/a> \u2014 which help consumers find the cheapest gas in their area \u2014 and station-specific membership accounts that award consumers points or discounts.<\/p>\n\n\n\n

2. Monitor how your cost of goods sold changes<\/strong><\/p>\n\n\n\n

A business\u2019s cost of goods sold<\/a>, or COGS, comprises all expenses directly related to the sale of products or services. It strongly influences a business\u2019s bottom line; a business\u2019s sales must be greater than its cost of goods sold to generate a profit.<\/p>\n\n\n\n

Julie Oldham, a certified public accountant and consultant at the Michigan Small Business Development Center, says small-business owners can\u2019t continue to operate as is when their cost of goods sold rises. Money spent on gas is often included in the cost of goods sold for service- and product-based businesses.<\/p>\n\n\n\n

\u201cIt goes back to the grindstone,\u201d she says. \u201cReally just being on top of your numbers.\u201d As your cost of goods sold increases, your consumer-facing prices should rise to ensure you\u2019re still making a profit.<\/p>\n\n\n\n

3. Know when to raise your prices<\/strong><\/p>\n\n\n\n

If small businesses don\u2019t raise their prices when they\u2019re being affected by inflation, Oldham warns, they risk going out of business. In service-based businesses, this price hike should be clearly stated in invoices so that customers understand why they\u2019re paying more. More specifically, Oldham says, business owners should create a sub-account under expenses for gas costs to isolate and monitor the exact amount spent on fuel.<\/p>\n\n\n\n

Oldham also suggests businesses review client contracts to ensure they include the right to raise prices.<\/p>\n\n\n\n

4. Invest time in financial forecasting<\/strong><\/p>\n\n\n\n

\u201cEven if you try to cut down on your expenses \u2026 you have competition,\u201d Oldham says. One of her clients, for example, recently tried purchasing an electric van to save money on fuel, but the competition had beaten her to it and none were available. Financial forecasting can put small businesses in a position to make these decisions before prices skyrocket by helping them set goals and estimate their future profit.<\/p>\n\n\n\n

If your accounting software doesn\u2019t include forecasting capabilities, the small-business coaching organization SCORE offers free templates on its website.<\/p>\n\n\n\n

5. Improve your business\u2019s efficiency<\/strong><\/p>\n\n\n\n

Switching to an electric vehicle<\/a> is one way to battle high gas prices, but small businesses can also offset the cost of fuel by making changes to other parts of their operations. For example, Oldham suggests reviewing packing and shipping processes. \u201cDo you have lighter-weight packing materials?\u201d she asks. \u201cHow about the smallest containers?\u201d<\/p>\n\n\n\n

On a different note, small-business owners might explore ways to make their buildings more efficient in the long run, says Joni Krolczyk, a senior business consultant at the Michigan Small Business Development Center.<\/p>\n\n\n\n

\u201cThere are a lot of entities and programs that are coming to light now, encouraging businesses to explore those options and incentivizing them to do so,\u201d Krolczyk says. \u201cSo they may not reap those benefits immediately, but over five, 10, 15 years, that\u2019s going to affect their bottom line.\u201d<\/p>\n\n\n\n

The Database of State Incentives for Renewables and Efficiency can help small-business owners find energy-related tax deductions, tax credits, grant programs and rebates in their state. Some local utility companies also have small-business energy efficiency programs that offer entrepreneurs additional incentives.<\/p>\n\n\n\n

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