As veterans of the propane industry, we know what it takes to succeed! And we want to pay it forward to those who are finding their way as a start-up business in the retail propane industry. This is where we share our “been there and done that” experience, general business advice and tips, answers to common questions, helpful tool recommendations, and other information that can help you survive and thrive as a start-up in a challenging industry.
So take a look at the start-up tips on this page, but if you are a propane marketer in a start-up business and need specific advice, please don’t hesitate to give us a call! Our toll free number is 800-632-2038 and we’d be happy to hear from you.
StartUp TIP#1 – Learn Codes & Standards
Codes and standards are created for a reason. For the propane industry, the National Fire Protection Assocation has established the Liquified Petroleum Gas Code (NFPA 58)
to provide industry guidelines for safe LP-Gas storage, handling, transportation, and use, NFPA 58 mitigates risks and ensures safe installations, to prevent failures, leaks, and tampering that could lead to fires and explosions. It is the responsibility of all propane retailers to know the code and follow the standards and procedures provided. Prior to beginning operations, all start-up owners, managers and employees must be well-versed to NFPA 58.
StartUp TIP#2 – Good Business Practices
From early on it is absolutely critical that you establish good business practices and standard operating procedures that provide clear guidelines to all employees regarding safety, equipment operation and maintenance, training, and processes including bulk loading, cylinder filling and customer delivery. As the business owner, it is your responsbility to minimize risks to the community and your employees and ensure product is safely delivered to customers. Equally important, all processes need to be carried out with honest intentions, thorough preparation, careful execution and good follow up. Your personal reputation, the credibility and reputation of the business, and the industry reputation are all at stake. The World LPG Gas Association (WLPGA) has developed Guidelines for Good Practices in the LPG Gas Industry
. This free and informative document is an excellent resource for establishing your business practices.
StartUp TIP#3 – Develop Relationships
What’s your plan to develop strong relationships with new and potential customers? Sometimes old proven marketing methods still work, especially in small rural communities. For example, you could host a picnic barbecue in June to promote summer fill. Make sure there’s plenty of fun things for the kids to do like pony rides, games and races. Have someone else do the cooking so you and your employees can spend time socializing, shaking hands, and making new friends. Don’t forget to have a drawing or sign up sheet that helps you collect names and contact information. You can take a good-feeling event like this and turn it into a major sales event.
StartUp TIP#4 – Gifts and Thank You’s
Gift giving is a lost art in the world of marketing, but one that is greatly appreciated especially in the rural communities often served by propane marketers. Through a gift you generate goodwill and, if done correctly, can also keep your name in front of people for a long period of time. When you stop at a potential new customer’s home, consider giving a gift like a pot holder that has your company contact information on it. Make sure the gift is useful so it will be frequently seen and appreciated. Similarly, sending a thank you card to show appreciation is rarely done in business today. A thank you card is a great way to show your gratitude and build loyalty. Don’t forget to throw in a coupon for a discount on another one of your products or services.
StartUp TIP#5 – Get the Word Out / Shows & Markets
Many communities have annual Home & Garden Shows. Take advantage! Set up a booth and spend a weekend talking to attendees and handing out flyers, coupons and other marketing materials. Let people know who you are, what you’re doing and where you’re located. Include a special offer in your marketing materials such as “Discounted Bottle Fill prior to (Holiday Name) Weekend!”. Farmer’s Markets are growing in popularity as people seek out healthy, fresh, locally grown produce and are another great venue to meet people while showing your support for the community. For starters, speak to the market manager and see if you can rent a space for a weekend or two. You may be surprised at the results you get! For new propane companies the primary objective is to meet people and get the word out. Home & Garden Shows and Farmer’s Markets are prime opportunities to do just that.
StartUp TIP#6 – Degree Days
Start using a Degree Days system right away. In brief, heating degree days are a measure of how much (in degrees), and for how long (in days), the outside air temperature was below a certain level. They are commonly used in calculating the energy consumption required to heat buildings. Plug local temperatures into your DD system and begin to get a clearer picture of your customers energy needs. Now here’s the real benefit – with that information you’ll be able get more of your customers on a keep-full basis enabling more pre-defined delivery routes and lower delivery costs. It typically takes 18-24 months (a couple winters) of monitoring to get accurate consumption patterns so start right away and a couple years from now, you’ll be glad you did.
StartUp TIP#7 – Bobtail Purchase Strategy
Many startup retail propane businesses look for a used bobtail for their first and primary means of propane delivery. For some, this low cost strategy is the only option due to budget or other restrictions. If that’s your situation, then be sure to do your homework and try to find one in the best shape possible. Relying on a used bobtail to handle all of your delivery needs is a risky proposition. If it breaks down or is wrecked during the winter, the impact on profits and customer service might spell disaster for your new business. Another consideration when buying used is financing. Most banks and finance companies will not offer financing on anything older than five years. If the truck you want is older than that, be prepared to pay cash. Alternatively, if your credit is strong and the business plan supports it, consider leasing a new bobtail. You can get into a lease with only one payment down so out-of-pocket costs are minimal. Whichever way you go, your goal should be to have two delivery trucks at your disposal as soon as possible in order to minimize the risks associated with the loss of one.
StartUp TIP#8 – Rent/Lease Equipment
Many start-up propane companies don’t have the cash to make a bulk storage purchase. One smart option is renting or leasing. Renting equipment eliminates the need for up front cash and allows access to new equipment for only two monthly payments down. A rental agreement can also include a rent-to-own option which gives the renter an option to purchase the equipment after some point in time. A start-up company could enter a rent-to-own agreement, rent for a couple years while building the business, and then exercise the purchase option after cash reserves are in place. If your credit is strong, you could be into a new tank, skid, bobtail or transport trailer sooner than you think! Take advantage of the monthly expense write-off while renting and be the proud owner at the end of the term.