Category: News

Strategic Planning – Why is it important?

We just lost a 10,000 gallon commercial customer…Jeannie called in sick today, who is handling her job today?…Should I buy a physical prebuy or a paper hedge?….Is today the day to buy future gas, or is it going down more?….Bob’s handheld isn’t working, someone needs to fix it so he can get out and deliver propane….ABC Oil is now in the Propane business….

Most everyone in the propane industry can relate to most, if not all of these comments above.  Most owners/top management of propane companies hear these above mentioned items on a weekly basis.  We continue to put out fires and at the end of the week/month/year we can’t believe how fast the year went by.

This is why strategic planning is so important for an organization.  For those of you that have never been through a strategic planning session, here is what happens:

  1. Hire a facilitator to facilitate the two day planning session (Some larger companies might take a little longer).
  2. Determine the owners/management team you want to participate in this plan.
  3. The facilitator will send each member a SWOT Analysis.  Each member will list out the organization’s Strengths, Weaknesses, Opportunities, and Threats (SWOT).
  4. The facilitator now takes the organization down the road of talking about each and every item that was generated from these lists.
  5. You will have group breakout sessions listing what each group feels the “vision” of the organization is and also another breakout session listing the “mission” of the organization.
  6. After a voting process, the facilitator takes the SWOT items down to a manageable amount of items and then the group votes again on those items to determine what are the Strategic Objectives for this plan.
  7. From that process you now take the 5-7 Strategic Objective items and you create action plans, goals and initiatives, and lastly who will “champion” this objective.
  8. Once that is all completed, you have a strategic plan!

So why is this important?  Its important because most everyone running/owning a company doesn’t have time to sit down with their management team to truly look at the “big picture”.  Sure we have meetings and sure we accomplish projects, but normally those are the result of one person coming up with something and putting a team together to work on it.

The strategic planning session will allow your organization to:

  • Provide much needed focus and direction to your organization
  • Allows your organization to review its progress to date
  • Gives you an opportunity to take a step back and think strategically
  • Allows you to answer questions relating to your customer needs and expectations
  • Gives you a chance to consider or reconsider the future of your organization
  • Allows you to identify strategies, tactics and tasks
  • Provides you an opportunity to identify the resources needed to achieve optimal success
  • Allows you to consider unlikely, unexpected, or unplanned obstacles that may occur
  • And in my opinion the most important benefit of strategic planning is that it allows your organization to bring its “collective intelligence” together to identify the current and emerging challenges and opportunities likely to occur in the coming year.  If you management team is part of developing the plan, do you think the buy-in of the plan will go up?  It sure will, anytime someone is part of the plan, part of the solution, that employee feels they are part of the big picture and the likelihood of success goes up drastically.

Now that corporate tax season is over I will try to blog weekly and I am blogging on topics I am working on at Propane Strategies.  Strategic Planning is crucial for an organization and lucky for me, facilitating for companies on strategic planning is super rewarding work!

Take Care,

Joe Stariha, Propane Strategies, LLC

Budget Webinar Recording Available For Viewing

Just wrapped up the first of many informational webinars this morning.  This months webinar was called “Budgeting or Best Guessing – A Webinar Designed for Success”.  In this webinar Jeff Simpson, of Angus Finance, talks about the importance of budgeting and then I spend about 30 minutes showing you how business intelligence software can guide you in the right direction on a daily basis.

Organization’s that find out how far they are off of budget 15 days following the close of the previous month are too far behind the eight ball.  Understanding where you are on a daily/weekly basis allows you to course correct and make decisions today when it matters, not 45 days later when it is done….

Hope you like it!!

https://attendee.gotowebinar.com/recording/654159214587016707

Webinar – Wednesday 3/30/2016

I will be presenting in my first webinar since starting Propane Strategies, LLC.  The webinar starts at 10am CST and will focus on how fuel oil and propane companies should have an annual operating budget.  I will then take a half hour to show how business intelligence software can take that budget and allow you to make daily decisions with real data instead of “hoping” you hit your budget at the end of the month.   I will be blogging later in the week about budgeting in the propane industry.

If you are interested in the webinar, here is the link to register.  https://attendee.gotowebinar.com/register/5801518501619669763

 

K Factor and Heating Degree Days

I finished up some very rewarding work this week helping an organization really understand their automatic delivery system. What came to light is there are a lot of companies that just moved from days between delivery systems and are now on a k-factor/heating degree day (HDD) system.

So with that being said, my blog today is to show how to calculate a K Factor and what the definition of HDD is.

Lets start with HDD. HDD is calculated by simply averaging the high and the low temperature for the day in your market area and subtracting that number from 65. Why 65? Because it has been determined that a user of heat has the tendency to turn their heat off or would use no heat when the average temperature for the day is 65 and above.

Example
Low for today is 20 degrees
High for today is 30 degrees
Average = 25 degrees
HDD = 40 Heating Degree Days (65-25)

K-Factor

The K-Factor is simply how many degree days it takes for your customer to burn ONE gallon of fuel. So if I have a 500 gallon propane tank at my customers house and they have a 6.5 K-Factor, they are going to burn one gallon of propane for every 6.5 degree days. That being said, in the above example we have 40 degree day, that means a customer that has a K-Factor of 6.5 theoretically burned 6.15 gallons of fuel that day. To take it one step further, if your goal is to deliver 300 gallons into this customers account each time you go and they are a pretty consistent user, you will deliver them every 1,950 degree days that elapse (6.5 x 300 gallons).

Lastly, here is how you calculate the K-Factor on every delivery you make

Degree Days Elapsed Since Last Delivery / Gallons Delivered = K-Factor

So if 1,853 degree days elapsed since my last delivery and i delivered 287 gallons. I would divide 1,853 into 287 and my K-Factor for that delivery would be 6.46.

I wont get into all the details of making changes to this K-Factor and understanding how your organization can become more efficient as that can be a very long topic. But this is just a small example of the services Propane Strategies, LLC is offering their clients.

Welcome To Propane Strategies, LLC Blog

Hi Everyone!

I started Propane Strategies, LLC on December 21, 2015 as a source for organization’s needing financial services for their company. I also saw that propane companies needed an independent consultant to assist them with annual strategic planning sessions, business intelligence advancement within their organization, budgeting, software system selections, hedging strategies, valuations, and of course project management as most organizations employee’s have enough to do on a daily basis and major projects get pushed back because it’s “never the right time”.

I have 20 years of experience working in the petroleum industry, this experience has been in the Refined Fuel and  Propane Gas retail and wholesale markets. My career started with Como Oil & Propane in 1996 when I was hired to be an Accounting Manager. I spent the next 20 years quickly moving up the organizational chart and was Controller/Treasurer of the organization in 1999. In 2010 I became the Co-President and Chief Financial Officer of the organization, which in late 2015 sold all of their assets to ThompsonGas, LLC.

During the 20 years at Como Oil & Propane, I was instrumental in 17 acquisitions and selling Como Oil & Propane twice (2001 & 2015). Como Oil & Propane was very well known in the industry for being early adopters of technology.   During my tenure, I became very well known for my business intelligence vision,
giving my management team the tools to make daily decisions that effect the organization and not monthly decisions after the financial statements come out 15-20 days following month end.  My proactive reporting tools were paramount to Como’s success.

This blog will be used to highlight subjects within the propane industry. I plan on blogging areas that come up on a weekly basis with my clients that I feel others may be able to learn from. Some of the blogs might be elementary to some and some others not so.  I just plan on blogging about areas of the industry that are on my mind during that week!

Joe