In the Know: Know who you are as a company

August 28, 2014 By and    

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

Q. In our travels, we sometimes hear that propane retailers should go above and beyond selling gas in order to grow their business and the industry. What’s your message to propane retailers who simply want to sell gas and not be “propane marketers”?

A. The retail propane industry has several types of “ownership” entities, ranging from master limited partnerships (MLPs), regional marketers, cooperatives (farm and electric) and local marketers, who are often called independent marketers.

The description “independent marketer” is a very true description for most companies in the propane industry. Many businesses are second and third generation, family-owned companies. Some, however, are relatively new businesses, and the reason they entered or reentered the propane business is because there are few requirements in the propane industry regarding offerings or marketing. Propane marketers are independent in nature and the fact they can run the business the way they want is appealing.

Probably the best advice we can give any marketer is to know who you are as a company and be the absolute best you can be based on your definition of a retail propane company. We can suggest to someone they should offer this service or that marketing program, but if they don’t believe in it then they won’t promote it and it won’t be successful.

The key for each retail propane marketer is to understand what it costs to operate their business and make sure they are:

  1. making enough money to cover their cost of goods sold and operating expenses,
  2. make enough money to repay any loans or debts, and
  3. make money over and above so they can decide how they want to spend it.

We once had someone tell us they didn’t want to make more money; they would share it with their customers by not charging much for propane. My thought was, “Why not make the money? Then you can choose what to do with it. Even if it’s to give it back – then it’s your decision.”

Simply selling gas isn’t all bad, so long as the company takes good care of its customers. Selling propane solely based on price, however, can be risky. If you gain a customer on price, you may also lose that customer on price. If a company is seeking to build value, having high tank control is a significant factor.

If you look back to this winter, being able to take care of the customer and make sure they had the gas when they needed it was much more valuable to the customer than a cheap price. Know who you are and, most importantly, take care of your customer.

Tamera Kovacs is a financial consultant and industry expert in business valuations and business sales with Propane Resources. The company provides consulting services to the propane industry in a number of areas. Contact Tamera at 913-262-0196 or


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