Power Plan; The Wrong One Can Cost Big Money
4 Ways the Wrong Power Plan Can Cost Your Business Big Money
In our business you learn some interesting things. For instance, you find out that choosing a piece of equipment always has a carry-on effect. Choosing a certain model of diesel generator, for example, doesn’t just come down to decisions about horsepower – there are also cost, compatibility, and consistency issues to address.
For that reason, much of what we do for our customers could be thought of as financial as well as operational. What we do affects the bottom line in the same way that it impacts day-to-day functionality. In fact, that might be the most important and significant contribution we make to our customers’ businesses.
Business owners and executives don’t always appreciate the degree to which our work affects their profitability until we have dealt with each other for months or years. And so, in order to help new or potential customers comprehend the longer-term impacts of the choices they make in 2022, today we want to highlight some of the risks.
Below you can find four big ways that the wrong power plan can cost your business tons of money. We should begin with the most obvious.
#1 Big Energy-Related Bills
All power comes with a cost. That isn’t a philosophical statement or even a comment about physics. It’s just a simple business reality. When you need torque, electricity, or just spinning wheels that haul heavy loads, you’re going to have to put a certain number of dollars into the project.
Obviously, the vast majority of engines and generators in use today run on some sort of fuel. That can be gasoline, diesel, or even natural gas. Each of these has their own benefits and limitations, but they all cost money to run. Those direct costs tend to be the first things business owners and executives think about when evaluating choices on a dollar-to-dollar basis.
That’s both important and understandable, because those costs can add up very quickly. Trucks and generators require a lot of fuel to keep going. Choose the wrong ones and your business can lose valuable cash every time someone turns a key.
But your analysis shouldn’t begin and end there. Look just a little bit deeper and you’ll find that even beyond the inputs, you have to account for maintenance, replacement costs, and sometimes even attachments, modifications, or storage related to a certain fuel choice.
For an easy example, just consider what it might take to get continual deliveries of liquefied natural gas each week, along with the costs and safety concerns involved with storing it. These can be substantial, especially as you scale your operations up. Even solar- and renewable-based motors, which would theoretically be free of “fueling costs,” could be subject to heavy operating expenses. Additionally, there can be taxes associated with certain types of fuels or tax offsets for others. These need to be accounted for in the present and should be considered when making future projections.
Certainly, if you are in a business that requires transportation or electricity generation, then you are already accustomed to thinking in these terms. However, it’s always good to remember that energy-related bills can fluctuate. They might go up or down based on your usage, but as we are seeing in 2022, market forces can affect supply in the same way.
It can be difficult to maintain that sort of perspective when you have one eye on today’s balance sheet. However, with the help of a professional who knows your business and the current market for engines and generators, you can get better insights. In other words, the team at Valley Power can help you meet your operational needs without stretching your monthly fuel budgets beyond the breaking point.
#2 Bloated Operating Costs
As important as direct fuel and maintenance costs are to your bottom line, you probably have many transportation and energy-related expenses that aren’t tied to inputs like diesel. They probably won’t be as significant in terms of the amounts they add up to, but at the same time they are hard to measure and track.
For examples, you could have “extra” expenses related to engines or generators that you don’t think about very often. These might include storage, staff training, necessary safety measures, or even cleanup to deal with spills and waste. It’s possible you could incur additional insurance charges or be forced to pay for disposal fees. In California and many of the states where we do business, there are concerns that pollution taxes might be implemented.
Along the same lines, it’s possible to have a portfolio of equipment that seems cost-effective but is very inefficient. In other words, each unit runs at a low operating expense, but the whole doesn’t perform well because you need extra machinery or can’t perform important tasks on schedule. These kinds of problems drag you down without incurring a single invoice or creating a large payment that is easy to spot during an audit.
That’s why these types of expenses can easily be missed on a spreadsheet or balance statement. They tend to be small, or at least they seem so when compared to fuel bills. Because they add up so quickly and effortlessly, however, it’s all the more reason that they be accurately tracked.
With the right team of consultants working for you, it’s possible to not only evaluate these expenses but to look forward and find savings. In fact, it can be surprisingly easy for us to help our customers meet their transportation and energy needs while reducing their costs over time. That’s because we have a wider knowledge of the products on the market and aren’t tied to any single supplier or sales channel. We can do what’s best for the companies we work with without having to worry about meeting quotas or pushing a specific agenda.
It goes without saying that anyone who has been in business for long enough will understand the importance of taming operating costs from one month, quarter, and year to the next. Still, it can be difficult to stay on top of these expenses if you don’t know what to look for or the best ways to cut them back. This is another area where your Valley Power representative can be a huge help.
#3 Massive Power Plan Upgrade Expenses
One of the enduring rules in business, and life, is that you can either pay for quality upfront or spend a small fortune servicing and replacing low-cost equipment later. We help our customers find the balance between price, reliability, and good capital management.
To put this another way: we can help you put off the massive equipment upgrade and replacement costs you might be worried about. Big diesel engines and generators are never cheap; you want them to last as long as possible. And when you do have to upgrade equipment, you want the new model to deliver even more without doing damage to your bottom line.
While thinking about engines and other pieces of capital equipment in this way, it’s good to remember that replacements and upgrades don’t always occur on regular schedules. Neither do they necessarily follow linear paths. You could have one generator last longer than expected while another could need extra parts or servicing sooner than anticipated. For this reason it isn’t only about making a good purchasing decision, but also planning ahead for the future.
The last thing most of our customers want is to suddenly replace an entire garage’s worth of engines or generators outside of their normal buying schedule. Many don’t have the financial flexibility to do so even if it were required. And yet, these are among the biggest expenses we see in our industry.
Correcting this problem is once again a matter of planning ahead and reducing waste. We never expect the business owners and executives we work with to be experts in horsepower, combustion, or the latest engineering standards. It’s our role to help them find and use the best equipment for their operational needs. Part of that means looking at what works today, but also making sure they aren’t in for any nasty surprises down the road.
You certainly will have to plan for upgrades and repairs if you’re going to use diesel engines or generators. Those expenses and requirements just go hand-in-hand. However, you shouldn’t have to worry that you don’t have a realistic strategy for dealing with them, or that your company is wasting tens of thousands of dollars by spending on the wrong replacements or repairs. A Valley Power representative can work with you to ensure that you’re covered as you use your equipment for years to come.
#4 Daily Productivity Losses
We have saved what might be the biggest and most severe issue for last. That’s because the loss of productivity you get from having the wrong equipment can slowly bankrupt your business – or at least hinder its growth – without you even noticing.
Imagine for a moment that you have a fleet of boats with the wrong marine engines. Not only might your fuel costs be high, or your maintenance budget bigger than it needs to be, but you could also be delaying shipments or deliveries. You might have staff who are sitting around and waiting when they should be working, or passengers who show up late and leave poor reviews for your company.
These are just simple examples, but they point to the kinds of things that happen when you don’t have reliable power and transportation. Those sorts of problems are likely to affect every part of your business, slowly sucking money out of your sales figures and operating expenses each month. You might not be able to put a finger on exactly what’s going wrong, but you’ll know that your team isn’t moving forward with the sharpness required to compete.
The same dynamic holds true when you suffer breakdowns and shortages, just on a larger scale. As the latest supply chain crisis has shown, it only takes one spoke of a wheel to fail before entire systems can grind to a halt. While it has mostly been products and manufacturing inputs missing from overseas this year, the same effects can be felt when you’re short on power and equipment. Deliveries aren’t made, deadlines aren’t met, and paid team members stand idly by while nothing is happening.
It’s worth stating the obvious: there isn’t any way to completely cut delays, breakdowns, or inefficiencies out of your business. There is no perfect engine or flawless process. However, by choosing the right solutions and planning ahead, you can drastically reduce the likelihood that your company will be affected… and reduce the amount of time needed to recover from setbacks.
By working with a knowledgeable team (such as the one we have at Valley Power) you can help reduce inefficiencies in your transportation and power generation setup. As part of that process you also might discover a way to run a leaner, meaner business that suffers from fewer chronic issues. Then you could find your bottom line improving in a number of tiny ways that add up to an amazing result.
Need a Power Plan That Goes Beyond Equipment Lists and Prices?
Trying to put together the right strategy for your business and want to get beyond the basics? Need equipment like engines, generators, or variable frequency drives but aren’t sure how to bring the different ends of your needs and budget together?
Let the team at Valley Power help. We have developed a reputation throughout California and the Mountain West for reliability, pricing, and service by doing more for every customer. Contact us today to schedule a free consultation so we can power your company to a stronger future together.
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