"Petroleum's Perfect Storm?"
By Betsi Bixby

     What do you get when you mix supplier consolidation, sweeping technological change, multi-day fuel price changes accelerated by market speculators and foreign supply risk, new deep pockets competitors, skyrocketing insurance and equipment costs, and an already tight labor market with a brand new set of values that often defy traditional work ethics? You get the perfect storm. And that's exactly what's happened and where we are today.

     So the question becomes, "What's your strategy?" Will you get to the front and let the strong winds of change forge you ahead? Will you try to hunker down and hope that it blows over without too much damage? Will you change course in hopes of avoidance?

     First, let's face the facts. Let's begin with volume. Supplier consolidation increased supplier clout, and with that clout, like it or not, the emerging supplier giants got to change the petroleum distribution playing field and the rules. New rule number one -- volume pays. Plain and simple, big players win with lower prices, small volume marketers lose. Rule number two -- they get to change the price whenever they want which became multiple daily price changes. Here it is, so deal with it.

     Now on to technology. In this new big volume plus volatile price environment, best buy became critical as well as smart hedging and spot deal negotiation. And you absolutely need technological horsepower to pull it off smoothly. The company with fully integrated tank monitoring that streams untouched to best buy directly to dispatch is heads over any competitor still pricing and dispatching manually. How about electronic price boards linked to advertising billboards? If you've got the tech to secure the best price, you flaunt it!

     In the midst of all this, add on new players with very deep pockets who think pricing 8 cents below the market is a fun way to eliminate or prevent competition. Ouch. Then add on soaring health insurance costs, steel prices going through the roof and a dire shortage of qualified motivated employees.

     I believe you have the picture. So at this point, you have a major decision to make - Grow or go?

     If you decide to grow, you're going to need to be smart about technology, people and every business system you have from product procurement to getting it in the customer's hands, to getting paid. It's not simply "add on volume and we'll be fine." You can still go broke with those extra gallons if you don't get your systems and efficiency right.

     If you decide to go, it's time to get strategic. Don't wait until you are capsized and shipwrecked. You want to strategically position and posture your company to maximize the cash you put in your pocket when you go. And, in order to make that leap, to sell your company, you need to grapple with what "life after petroleum" looks like for you. So as you are diligently working on your EBITDA, you must also be diligently working on what you'll be doing with yourself once your company is sold.

     For some of our sellers, selling the company doesn't mean a divorce from petroleum. There are buyers who want owners to stick around, help with transition, and even help them become a better company. We've sold companies where the seller knew more about pricing, or dealer relationships, or dispatch efficiency than the buyer. And smart buyers know that if they tap into that expertise, they have enormous gain after the sale in their own EBITDA. Truly a win-win scenario.
On the other hand, some of our sellers are ready to exit. They've grappled with the "what's next" question with amazing diversity. Many have decided to spend more time with family they truly neglected during their working career. Of course the tough question there becomes, do you actually LIKE your family enough to want that time? Other owners have rekindled their entrepreneurial spirit into new hands on ventures. One of our sellers had already started another business and saw more potential and less headaches for his heir apparent sons than in his petroleum business.

     Whether the perfect storm has you thinking about selling fairly soon, positioning for a sale three to five years down the road, or intelligently and profitably growing your business, the time to take action is now. Explore your options and resources that get you more money from your business at by  Clicking Here.