In the Know: The commercial market

August 4, 2016 By    
This park tourist vehicle displays its propane-burning attributes, but other areas of the park are lacking propane applications. Photo by Dan Kovacs

This park tourist vehicle displays its propane-burning attributes, but other areas of the park are lacking propane applications. Photo by Dan Kovacs

In the Know is a monthly partnership between LP Gas magazine and Propane Resources. Our focus this month is on the commercial market, addressed by financial consultant and industry expert Tamera Kovacs.

Q: What opportunities are available to propane retailers in the commercial market?

A: Commercial applications for propane vary across geographic regions. However, the one thing each geographic region has in common is missed opportunity.

I visited a national park over the Fourth of July holiday and stopped to see the lobby of a historic hotel. As we entered the hotel, I noticed the staff grilling out. My initial thought was, “That’s neat. They must be having a cookout to celebrate the Fourth of July for their guests.”

In visiting with the manager of the hotel, I mentioned I noticed they were grilling for the holiday. His response was, “No – the entire county has been without electricity all day. Since we had a grill and a couple of propane bottles, we decided to cook for the restaurant on the grill. Luckily everyone dining with us today has had a great attitude and has gone with the flow.”

If you can’t guess my very first response to him, I will be shocked that you don’t know me better. “Why don’t you have propane? Talk about savings you could have over electricity.”

This conversation comes right after I saw the park tourist vehicles proudly displaying Powered by Propane parked in their driveway. I can understand why the park or hotel manager might not realize the potential cost savings. What I can’t understand is why there hasn’t been a propane company explaining the cost savings and benefits of using propane to provide all of the luxuries most hotel guests paying over $200 per night expect. And maybe a retailer has approached the hotel manager and the park and was told they weren’t changing. But it wouldn’t keep me from continuing to ask. After all, this was a new hotel manager. As we all know, with management change also comes opportunity.

My challenge to you is to look throughout your service territory and the contiguous counties and notice all of the commercial applications that use non-propane fuel sources. Consider these as missed opportunities. The challenge is for retailers to understand the cost benefits to the customers who might consider switching from their current fuel to propane, and effectively communicate those savings.

We in the propane industry love how propane is a clean energy or, as some say, green. Many business owners unfortunately do not care. Because the fuel they use is a line item on their profit-and-loss statements, all they really care about is stabilizing their expenses and cost savings. Or perhaps one fuel is all they know. If the fuel they use causes them to stop production, they have a much larger problem and cost implications.

The key is to understand the cost savings, even if it means converting their operation. Show them the savings they could realize over a five-year period. This sale likely won’t occur in just one visit. Take the opportunity to understand their needs and build the trust and relationship over time. Create a solution that is specific to their needs; don’t just try to fit them into an existing category.

Many go after the low-hanging fruit; instead, go after the cream that rises to the top. It’s a bit more work, but it should be worth the extra effort.


Tamera Kovacs is a financial consultant and industry expert in business valuations and sales with Propane Resources. She can be reached at tamera@propaneresources.com or by calling 913-262-0196.

Comments are currently closed.

Privacy Preference Center

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?