August 2008

Extra

Gas Prices Pinch Business Profits

Three dollars, $4- and $5-a-gallon gas prices have surfaced throughout the country. And the hefty cost of filling up the tank has distributors, many of whom rely heavily on their cars to make sales calls, feeling the pinch. “My area is very spread out,” says Leta Roberts, president of Sales & Marketing Strategies (asi/317105). “If I had an area in downtown Chicago, I could do okay, but I’m in a dispersed area. I’ve got to head 50 miles north and 50 miles west. … You have to make sales calls, but I make them on the minimum.”

Roberts is not alone. In fact, 86% of business owners recently surveyed by Discover Small Business Watch said that gas prices have had a negative impact on their businesses. Three-quarters said petroleum costs were hurting their profitability. Further, more than half of survey respondents (55%) rated the economy as poor, and 44% said they experienced cash flow issues in March. “Gas is a significant operating cost. It’s also difficult to pass along the expense to customers,” says Sastry Rachakonda, director of Discover’s business credit card division. “If gas prices continue to climb, businesses may have to be more creative about how they use fuel and what alternatives they have.”

One way distributors are conserving gas is by planning a circuit of in-person sales calls. “I plan several meetings in the same region in one day,” says Marcus Cohen, salesperson for The Sunshine Group (asi/339525). “I combine errands and meetings and try to do things that don’t waste as much gas.” Cohen also says that he thinks the high cost of gas is beginning to affect the buying habits of promotional products clients. “People are buying less because they are concerned about gas prices,” he says.

To mitigate the cost of travel these days, some distributors are increasingly turning to technology for their sales calls. Face-to-face may be ideal, but not all successful sales start and end there. Online demonstrations offer an innovative way to reach out. The efficiency of operating online cannot be discounted, especially for owners like Sharie Stewart of Abacus Enterprises (asi/101830). “All my customers are very busy,” says Stewart, who has worked with some clients for 15 years without ever meeting them. “For them to have to sit down and meet with me, most of them don’t want to do that. They say, ‘Send me a link. Let me go look at that product.’ ”