Earth Energy Alliance CEO

Increasing Revenue Streams Starts With Five Ps

Published in Oil & Energy Magazine, April 2010

Money pouring out of a faucetWhen I was a boy and experienced failure as most young boys do, my father used to preach the five Ps to me–“proper planning prevents poor performance.” As the years went by, these constant, frequently quoted axioms began to grate on me while at the same time they became ingrained in me.

Consequently, before I undertake any significant project, I begin with an evaluation and a subsequent plan. I also find that this initial process is critical before any business begins to consider expanding product lines or looking for ways to improve revenue streams. Once the evaluation is complete, the pathway for success becomes more attainable.

Whenever I have the opportunity to speak to heating oil dealers about Bioheat® and discuss how best to integrate it into their business plan, I ask the heating oil dealer if they have a current business plan. I am not surprised when I am told that it may not be up to date or in fact many don’t have a plan at all.

There are many templates online that one can follow, but there is no tried and true, onesize-fits-all formula. When creating a business plan or re-creating one, a company should look out five to 10 years and envision the place where they’d like to see their company and all the necessary steps required to get there.

Next is the human element—does your company have the right people in place today to be able to carry out the new initiatives? Will you have to hire new people to expand revenue streams or can you train your current staff to help expand your business? Does the company require system upgrades, capital investments into equipment, additional office or warehouse space for new products and equipment? Does your company require additional financing to meet these investments? I don’t have to tell anyone who runs a business today that the banking environment is far different than it was a few years ago.

Finally, is there some low-hanging fruit in the marketplace that can make a difference to your organization without making significant capital investments?

The exercise of creating business and strategic plans does not account for changes in the marketplace. Five years ago, if a heating oil dealer were creating a strategic plan for their company, integrating Bioheat probably would not have found its way on the document. This living, breathing document requires modifications on a regular basis. Today, if I were planning to expand my heating oil company’s revenue streams, Bioheat would be my launching point.

Re-creating the business model from an Oilheat company to a Bioheat company gives the heating oil marketer the ability to re-brand the company and the products and services that it provides. Bioheat is a culture change; you set in motion a mindset that resonates through your entire organization and your communications to the marketplace.

A Bioheat marketer is innovative and is perceived by the marketplace as unique—a company that cares about the fuel that it is providing to the community and viewed as industry leader. It is certainly not a common occurrence that the marketplace provides this type of opportunity for a change of culture.

If we look out five years from now, many states will have changed the heating oil based stock to a 15 ppm ultra-low sulfur diesel blended with an inclusion of 5 percent biodiesel. This low-hanging fruit is ripe for the picking as a low-investment, high-value re-branding opportunity.

In 10 years, we may be looking at a heating oil industry that has provided the Oilheat marketer the ability to sell ultra-low sulfur diesel fuel blended with 20 percent biodiesel.A B20 percent heating oil blend would produce lower CO2 emissions then natural gas, giving the fuel oil dealer a marketing opportunity that does much more then simply distinguishdifferences from other fuel dealers.

The Bioheat marketer can engage in an intelligent, conscientious conversation with consumers who might want to compare it to natural gas, propane, electric heat pump or wood pellets. By virtue of becoming a Bioheat marketer these future conversations can incorporate the kind of talking points that will allow the Bioheat marketer the upper hand moving forward in the marketplace.

Bioheat is today’s best launching point for increasing revenue streams.

Once the transition from a heating oil dealer to Bioheat dealer is complete, the company will find it easier to integrate other opportunities into their business plan to expand revenue streams such as solar thermal applications for domestic hot water, home energy audits or even providing electricity as a retailer.

These types of directions will require investments of capital and personnel. The service department will require retraining or investments in new personnel to be able to successfully make these transitions. There are many directions that a Bioheat dealer can consider along the way that will make sense in their respective marketplace, each being a little different and unique. Don’t ever dismiss your own ingenuity and creativity; there are market opportunities that arise everyday that you may see before anyone else does.

If the light bulb goes on in your head and your heart begins to pound fast then you may be on to something. Just remember, “proper planning prevents poor performance.”

The heating oil industry is gearing up for a significant change in its fuel. This change will provide many opportunities for the independent fuel oil dealer to recreate the business plan and formulate a strategic pathway for increasing revenue streams and profitability. The key is finding the pathway that is right for you and your business. My father was an oilman for more than 50 years; I only wish that he could see the future opportunities that lay ahead for our industry.

Please feel free to contact me with questions or comment s regarding thi s article at (203) 221-3044 or mike@earthenergyalliance.com or Paul Nazzaro at (978) 664-5923 or email paulsr@yourfuelsolution.com. For information on biodiesel or Bioheat, visit www.biodiesel.org or www.bioheatonline.com

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