The higher cost of petrol is likely to put small & medium businesses in South Africa under further pressure in a tight economic environment of rising inflation, says Viresh Harduth, VP at business software developer Sage Africa & Middle East.
From September, the price of all grades of petrol has increased by 67c/litre, adding to the steep petrol price and fuel levy increases we have seen over the course of the year.
“Depending on your business, the petrol price could have a significant impact on your profitability,” said Harduth. “If you run a fleet of vehicles for deliveries and collections, you’ll feel the direct cost straightaway. If you outsource to a logistics company, you’ll know that a price increase looms in the future.”
There are also the indirect knock-on effects of the fuel price on your suppliers’ operating expenses, your customers’ disposable income and your team’s living expenses, said Harduth.
Sage warned that the knee-jerk reaction may be to pass higher costs on to customers and clients. “In tough economic times, cheaper alternatives weaken loyalty and you could drive customers away,” it said.
But smart thinking about fuel efficiency can help you contain costs, while achieving other goals such as improving overall business efficiencies, Sage said.
The accounting software specialist provides seven ways businesses can counter petrol price increases:
1. Reassess your travel requirements
- Adjust delivery and travel schedules to avoid traffic peak times.
- Use a navigation app, such as Google Maps or Waze to find the fastest route.
- Combine deliveries and errands into one trip. You’ll deliver more products, faster.
2. Consider tele- and flexi-time
- Host meetings via Skype. You’ll buy time and, therefore, productivity.
- If your business model allows, consider flexi-time and remote working arrangements for teams – if you use their time efficiently and respectfully, they’ll be happier and more productive in their jobs.
3. Plan ahead
- Use data to your advantage. An app like Fuelio tracks fuel-related expenses, helping you to know where to optimise and save costs.
4. Consider outsourcing
- Partner with a company that already has the benefit of scale and resources to handle your deliveries.
- Bonus: You’ll save on vehicle maintenance costs and insurance. If outsourcing is not an option, negotiate better rates with suppliers.
5. Prioritise vehicle maintenance
- Dirty air filters, underinflated and misaligned tyres, and irregularly serviced engines contribute to vehicle wear-and-tear and, therefore, higher fuel consumption. Maintained vehicles are also safer.
6. Adopt conscious driving habits
- Fast acceleration, driving in low gears, heavy breaking, speeding and revving all increase fuel consumption.
- Educate drivers and reward them for good driving behaviour.
7. Keep your tax affairs in order
- As a small business, you can claim a tax deduction for all business-related travel expenses. However, SARS won’t remind you about this. Consider keeping a logbook to note all your expenses. This will make the tax return process easier.