Cost of Gas – Current Trends and Impacts on Business

Strategy Plan One

April 28, 2012 

Cost of Gas

Current indicators are favoring lower prices in fuel, especially the cost of gas, over the next few months.  The recent downward trend in gas futures is most likely signally lower fuel prices at the pump in the short-term.  The following graph illustrates this decreasing trend, with a drop in gasoline futures of $0.21 per gallon over a month, a 6.4% decrease this month alone.

Graph courtesy of money.cnn.com

The potential downward trend, once it hits the pump is good news for the consumer, for business and industry, who rely on transportation of goods and feel the impact of the cost of gas associated.  If it translates across to the user, a rough 6.4% decrease in fuel costs will help businesses who are struggling to balance budgets with the recent, previous spike in fuel costs.  This should be noted as a potentially lasting on the short-term, as patterns change with summer months and supply and demand.

Oil Prices

The cost of Brent Crude Oil has slightly declined over the past month, mimicking the gas futures trend.  The following graph from oil-price.net illustrates the similar pattern, with a dip in crude oil  from a high of almost $125 a barrel to the current price of $119.

Graph courtesy of oil-price.net 

Speculation has now simmered from the fears of gas hitting $5 a gallon, but consumers and businesses should take this information with caution as the impacts may be short lived, with other global concerns and factors weighing into future gas and oil prices.

Strategy Plan One

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Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Contracting Out – 10 Reasons Your Company Should Contract Out Services

Strategy Plan One

April 20, 2012 

Contracting Out

Businesses encounter pressured operational scenarios requiring resource decisions.  In some cases, businesses do not have the quality and quantity of people to accomplish an operational task or goal.

Decisions need to be made by leaders on how to resource a particular circumstance, by either building up and accomplishing the goal with internal sources, or to acquire outside assistance to get the job done.

Contracting out is one solution to alleviating many operational pressures.  External contracting solutions can assist both in the short-term and long-term, depending on the scope and duration of work required, and operational needs.

There are several benefits to contracting out services…here are some of those advantages:

1. Contracting Out to Get the Work Done

As a leader managing projects, you can observe where things need to be accomplished according to your schedule.  The volume of work during a specified time frame may not be accomplished with existing staff levels.  Acquiring outside help in the form of contractors would help alleviate short term pressures until long term plans can be developed and implemented.

2. Contracting to Acquire Expertise

Acquiring contracted professionals would help where your existing staff compliment does not have the capacity to complete professional tasks.  An example would be to bring on a marketing contractor or IT professional or company where your business does not have this built-in capacity.  Many companies, corporations and Federal Government agencies have moved to contracting out specialized functional areas.may not have the required skill set or intelligence of an industry or function.  Bringing on external expertise would help build capacity in your organization. 

3. Save Money with Contracting Out

Contracting can be a cost-effective way to defining costs and to not entertain the internal costs to hiring and developing staff for the short-term or long-term.  Staffing processes, developmental processes, salary and wages in some cases would cost substantially more than short-term defined contracts.  Staffing also requires obligations (legal and otherwise) to employees that extend beyond a defined period for a project.  It is more often difficult, with costly process to staff up a short-term professional position for a defined deliverable, than to acquire an external company ready to go on a project.   The element of risk is also higher with employed resources than contracted staff, as employees can leave for other opportunities, quit or disagree with deliverables midstream on a project.

4. Focus on Core Business Activities

With contracted services for one element of operations, you as a manager or business owner can focus on other core business activities, such as business development, business planning or partnership building, or any other key function instead of managing an activity.  Also short-term contracts may give you the ability to “catch-up” in staffing for the long-term, strategic HR plan.

5. Results Achieved with Contracting Out

The contracts should be set up to be results-based or performance-based.  The contractor has an obligation to meet a certain target, goal or result.  As part of the terms and conditions of a legal contract agreement, the contractor has been acquired to meet those terms and conditions.  The schedule of payments could be based on hitting the milestone objectives, with a hold-back payment until the full job has been completed in a satisfactory manner (i.e.: the contractor has met the goals, objectives or deliverables in an acceptable manner).

6. Definition and Certainty

Everything in a contract can be defined, from scope of work, results, objectives, deliverables, time frame, contingencies and cost.  As an entrepreneur you can manage projects more efficiently with defined contracts.  You will know when you hit your objectives, and achieve them within a certain prescribed duration and budget.  Your financial budgeting exercises will become more defined and the estimates for the annual budgets for activities will become more precise with defined contracts.

7. No In-House HR issues with Contracting Out

The responsibility, for HR issues related to contracted employees working on a contract project, lies with that outside company.  The external company must deal with appropriate staff levels and issues to ensure their company meets the terms and conditions of the contracting agreement.   Some contracts will require their employees to work in-house or collaboratively with your own staff, and so those employees look and feel like your own employees without the responsibility.  The outside company is fully responsible for their salary and wages, benefits, working conditions, working arrangement, their budgets and their conduct in any work environment.

8. Request for Proposal (RFP) Processes applicable to other business functions

Setting up an RFP is a valuable process, and elements of this process can be replicated for other internal business functions.  For instance setting up objectives, goals, deliverables in a RFP could be replicated in the functions of setting up work plans for staff members.  The accountability measures in an RFP can be copies across and into the accountability accords of employees and managers.

9.  Contracting Out – More Control

In setting up contracts you have more control over a project, in that you will be assured that the scope of work can be accomplished by a party that has a legal obligation that you approved.  Through a solid Request for Proposal (RFP) process you will have chosen the right company to get the job done.

10.   Contracting Provides Business Partnerships

Contracting with companies that align with your objectives and mandate will open the door to building partnerships, not only with the external contracted company, but with other linkages this external company has.  The contractor may want to align your business with more subject expert companies or professionals.  Synergies and collaboration can occur between businesses in the same industry and lines of products and services.

As an entrepreneur in your planning stages, develop and weigh your resource options for meeting your goals, which may include staff resources, contracting out services, or a combination of both.  Always recognize the value of your internal staff, and where there is a need, contract external professionals and companies to get the job done.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Economic Efficiency – 5 Tips to Create Efficiencies in Your Business

Strategy Plan One

April 17, 2012 

Economic Efficiency

In tough economic times, the global economic environment is striving for economic efficiency.  As an entrepreneur you need to keep operations running smooth and cost-effective.  

Competitive environments require team solutions and creativity in developing and implementing efficiencies in your business.  Through economic efficiency and efficient operations your business will realize a higher earning potential and at the same time, experience reduced, cost-effective methods and procedures to earning that revenue.

Here are 5 tips to creating economic efficiency in your business.

Economic Efficiency – Eliminate Redundant Procedures in Your Business

Undertake an operational review to identify unnecessary repetitive methods and procedures.  Many approval processes go way over board in requiring multiple persons to review, analyze and either recommend approval or approve a project, cost, or contract.  Federal government processes in many cases highlight this problem, as procedures go over the top to ensure the highest accountability.  Maintain your accountability, but streamline your operations to the necessary reduced human resources to make decisions.  Rely on and empower your professional team to make great recommendations at each level.  With elimination of steps in procedures, your operation will be more cost-effective.

Implement Technology Wherever it Makes Sense for Economic Efficiency

Automate procedures when it makes sense from operational and budgetary perspectives.  Reduce laborious tasks if automation and technology can do the same task more efficiently and cost-effective over the long run.  The implementation of Kiva System robots in warehouse operations is one example of efficiencies gained through automation.  It would also be a shocker if businesses have still not adapted to computerized sales, accounting and inventory systems – a must in business operations to keep competitive and cost-effective.

Economic Efficiency – Make it Easier For Everyone to work together

In business operations today, being all physically located in one location is not as important as it was decades ago, due to improved technology and connectedness.

Through innovation and technology, staff can work at any location and be easily connected by phone, mobile device, web or cloud-based applications.  All current technology methods make communication and business functions more smooth and easy.  Businesses that can provide work-life balance flexibilities and mechanisms, can ensure the work can get easily done from any location.  Collaboration across units, teams and partners can happen seamlessly with the implementation and the availability of smart technology in your organization.

Business Efficiencies – Making the Customer Process Easier

Straight forward information and sales procedures for your products and services will make the overall experience with customers more effective and efficient.  Make the product or service information readily available to the customer, whether at a physical location or web-based.  When designing e-commerce sites, ensure the client can easily navigate through to the completion of the sales process.  Nail down a streamlined sales process both internally and externally and ensure that your have contingency CRM plans to deal with issues around customer complaints.  The more prepared you are, the less time per customer it will take to generate revenue or resolve an issue.  More time can then be spent on building the relationship aspect of customer service with more customers.

Business Efficiencies – Getting the work done without the Travel

If you want to quickly and effectively reduce costs in your organization, travel budgets can be significantly reduced, while getting the same scope of work (meetings) done by using technology.  Phone and video conferencing can easily replace face-to-face meetings and the costs associated.  Meeting in person may be the richest form of communication in cutting a deal or working collaboratively.  However utilizing video conferencing or using Skype or other forms is more the standard and acceptable these days.  As an entrepreneur you will have to make a careful decision on the appropriate forms of communication for the appropriate audience, while cognizant of the need for cost-effective methods.

Economic efficiency can be achieved in your business, however ensure you take adequate business planning steps to maximize benefits from reduced resources and methods.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One