While slide in crude oil in recent months has paved the way for a jittery stock market, Main Street businesses outside of the energy industry are benefiting from lower fuel prices — a key cost in operating smaller businesses.
With U.S. oil prices hovering around $30 a barrel, and prices at the gasoline pump continuing to plummet, small companies are seeing boosted bottom lines. The slide in crude oil prices come as small employers work to broaden the Main Street economy with more job creation after the recession.
Entrepreneur Josh York is a natural beneficiary of low gas prices, as his business is on wheels.
York is founder and CEO of Plainview, New York-based GYMGUYZ (as in “gym guys”), a fitness company that brings equipment and services to clients for onsite training in homes and other locations.
GYMGUYZ has 45 locations with 4,000 clients in 11 states. In the past eight months or so, York has saved about 20 percent on fuel costs.
In the past year, he estimates he has saved around $14,000 overall on fuel operating costs in four regional territories he services. York plans to re-invest that cash back into the business for marketing, technology and hiring.
“Since gas prices have dropped, it’s helped our business dramatically,” York says. “We have been able to bring on more team members to support our franchisees, and use our greatest marketing tool to drive even more — our vans.” The vehicles are portable gyms and advertisements on wheels.
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More broadly, the National Federation of Independent Business cites energy as a top-three issue for smaller companies, with more than one-third surveyed saying they’re concerned about prices for fuel including natural gas, propane, gasoline and diesel. Lower gas prices are a “bright spot” for smaller companies, the group says.
“Low gas prices reduce operating expenses,” says Jack Mozloom, an NFIB spokesman. “Think of contractors and farmers who rely heavily on vehicles. It also reduces shipping costs.”
Main Street is hoping consumers will ultimately spend their fuel savings on local goods and services. Some businesses are feeling that increase in consumer spending.
Brandon Shamy, who owns three New Jersey-based Smoothie King franchises, says his clientele is largely made up of college and high-school students, who seem to have more spending money with gas prices being so low. That coupled with an unseasonably warm winter, have given him his best season in six years.
“The consumer is more willing to spend — they will add something extra to their smoothie or a protein bar to their order, where I haven’t seen that in years past,” he says.
On top of that, fuel charges for the goods he has delivered to the store have also dropped. While small, any savings is meaningful for smaller companies.
Added Shamy, “If gas prices increase, it could have a negative effect because our fuel charges will go way up, and our clientele is primarily younger, so if their costs to visit our store increase, I can see that having a negative impact on us.”