Preliminary reports from fuel marketers show that 2018 was a very good year. For the most part, gallons were up, margins were strong and the new tax laws seem to be putting more after-tax dollars in owner’s pockets. With the new Section 179 accelerated depreciation rules in place, it’s lining up to be a very good year, especially to make capital investments.
Deciding where to spend your capital dollars is always a challenge. Understanding your needs and wants is a great first step. Funds spent on necessary repairs to stay in compliance may not be optional. Items like installing new tank bottoms in a fuel facility or adding bulk propane storage to handle capacity may be required investments. Replacing vehicles is always a capital expense item that needs to be addressed and we love our trucks in the delivered fuel industry.
Investing in technology to reduce operating expenses and provide a better customer experience is a trend of the more successful companies. Customers that invested ten years ago in GPS systems, delivery routing and modern back office systems have seen the benefits. Many of those systems may be antiquated now, however they likely had quick paybacks and they gave the customer a better buying experience, which has continued to pay dividends. New technologies continue to come on the market and companies who do their homework, invest in them, and properly implement the systems often see extremely positive results.
One of the fastest growing technologies in our industry are tank monitor systems. This is my personal favorite technology on the market. It was a great idea when the first systems came out 25-years ago, but there were many issues that prevented them from being successful and they never caught on big until the last few years. The cost of tank monitors has come down significantly in the last couple of years and the reliability has increased. At the last trade show I attended there were close to a dozen companies with booths showing tank monitor technology. These systems lower delivery costs by optimizing drop size and they help turn Will Call customers into We Call. Imagine sending an email (or text) to a customer letting them know that with the current weather forecast they will run out of fuel in six days and then ask if you can fill their tank. I would like to make a bold projection that 80% of fuel and propane delivered 10 years from now will be delivered to customers with tank monitors. Our acquisition business has seen the value variance between an automatic delivery account and a will call account narrow, and with tank monitors, I expect it to narrow further.
Back office software is never an easy item to upgrade or replace. This requires a lot of change and people don’t like change, however customers do like the advantages of a modern, interactive, paperless back office system. Your employees will eventually learn to love it also. Imagine a system where customers receive an email after they get a delivery and the payment is automatically charged to their credit card and the funds are transferred into your account the next day. That makes for a happy customer and a happy company. You don’t have to imagine it, you can shop for it.
It’s trade show season and I would encourage everyone reading this to take the time to attend one of the many industry events. It’s a great place to do your homework on what money saving and customer enhancing technologies are available. Take advantage of the tax breaks on depreciation and invest in your business. Good luck in finding the right capital improvements for your business!