Small business owners are always on the prowl to streamline and improve their operations. Consolidating their payroll online is just one of those efficiencies.
However, there’s an elephant stomping over small business balance sheets that has no easy fix—high gas prices.
The Washington Post noted the widespread problem in a recent article. Does a business owner pass along the higher costs to customers and risk losing more business, or eat the expenses further eroding the bottom line?
The article reported on Baltimore plumbing franchise owner Jamie Smith facing that very dilemma. His trucks’ fuel needs were eating up profits as gas prices soared by 29 percent. His solution was to pass the cost directly to consumers via an $11 fuel surcharge per service call.
Gasoline prices have risen 20 percent since the start of the year and the national average currently sits at $3.76 a gallon. Analysts predict slightly higher prices this summer. In some parts of the country, like Illinois, prices far exceed $4 a gallon.
Gasoline is not a product you can bring online or reorganize for better efficiency. It is simply a commodity cost that businesses across the country have to absorb or pass on. There is little wiggle room for escaping its destructive path on profits.
“Many customers refuse to pay the charge,” Smith, who owns a Mr. Rooter plumbing franchise, said during a hearing before the House Small Business Committee recently, the Post reported. “In fact, some potential customers disapprove so vehemently of this practice that they refuse to consider Mr. Rooter of Greater Baltimore for their future plumbing and heating needs.”
Alternatively, absorbing the higher cost is not a great solution, either. The Post reported C. Cookie Driscoll, who owns a horse farm in Pennsylvania, also testified in Congress. She was forced to curtail some travel to showcase and breed her horses.
Driscoll says she hasn’t taken a paycheck in two and one-half years and has cut employee hours and laid off several workers. As a vice chair of the National Small Business Association, she describes her predicament as common across many industries.
With hard costs like gasoline posing these types of dilemmas, it makes economizing and streamlining where possible even a greater imperative for small business owners.
Some of those streamlining solutions might include:
- Cut overtime hours.
- Reorganize personnel and possibly eliminate positions.
- Bring payroll services online.
- Cut back on marketing efforts.
- Eliminate or reduce travel.
It’s clear that streamlining can have a long-term productive outcome if the changes made—like online payroll—give your company flexibility in other areas to provide vital services to customers.