I have recently spoken with several company owners that have or are looking into moving away from being a one product company and seeking diversification. They are looking for other products or service lines that can bring added growth and revenue to their company.
I’m sure that part of this motivation comes from that fact that banks that provide companies their financial support during these difficult economic times are looking more closely at the company’s equity, growth, account base, stability as well as its receivables. This is most likely the bank’s way of putting a company under the microscope in order to determine the loan’s value and repayment status should the worst happen.
For these and other reasons it is almost a must to search for other means of adding value to the company. Over the last couple of years, I have witnessed several companies enter into other services and fuel products. One being propane and the other is the biofuel as a way to bring diversity and added value often to second and third generation companies.
However, no new business comes without cost and risk or both. Ask anyone about the start up costs for going into the propane business and you may be floored when you hear the numbers that come from purchasing a different delivery truck, let alone tanks, regulators, etc. Let’s also not forget the often new extensive training required in order to be both successful and safe in this new business. Don’t get me wrong, my hat’s off to anyone that can bring added value to an existing company through diversification, and propane can, in fact, be a profitable business.
On the subject of new business ventures, I remember not long ago attending a National Association of Oil Heat Service Managers Board Meeting and the discussion led to a possible name change of this organization. The reason being, many members felt that more companies were diversifying from just oil and possibly this might be a way to increase NAOHSM membership, as well as expand trade knowledge. You bet this became a long drawn out discussion with many members expressing their own positive and negative, but mostly positive, viewpoints.
What struck me most during that meeting was watching a past NAOHSM president and long time oil dealer from Northern New England stand and without any hesitation announce that effective the Monday following this meeting his own family operated business would be known as XYZ OIL & PROPANE Co. I, being from the older oil industry fraternity, was somewhat surprised, but at the same time excited for this person who had the courage to step out of the box and diversify his company.
I know there are many ways to diversity, A/C, refrigeration, water filtration, and swimming pool service, to name a few. However, another area of business to give consideration is home energy auditing; this business is one that will have the lesser of a financial commitment to a company. There are some programs that allow the company to receive money from different sources for conducting the audits. I also know there are some Certified Energy Audit Training Programs being offered in several states. This special training is to make sure that certain specific procedures are followed so these energy audits are done correctly.
The Energy Auditing business will allow companies to go beyond their existing account base and gain added revenue. Keep in mind that it will not take long before states adopt a new ‘Energy Audit” licensing fee as another way for them to bring in added revenue of their own.