In South Africa’s uncertain economic environment, small business owners grapple with high fuel costs, impacting profitability. Whether you own a fleet of vehicles or a delivery van, fluctuating fuel costs will have affected your business at some point.
Learning how to maximise fuel efficiency can reduce your operational costs, freeing up cash flow to help your business function and grow sustainably. For small businesses often operating with slim profit margins, even the smallest fluctuation in fuel prices can cut into already thin margins, making it harder to remain profitable.
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While larger businesses can more easily adapt to increased fuel costs, small businesses often have to pass these costs on to their end customers, and this is felt through the pricing of goods and services. This can have consequences for sales, and even lead to customer dissatisfaction and lost business.
By optimising fuel consumption through better route planning, fuel-efficient technologies, and improved driver behaviour, you can reduce costs in your business, and promote effective cash flow management, which can free up resources that can be invested.
Five tips to reduce fuel costs can help alleviate some of the pressure on your business’s cash flow
1. Use Telematics to Maximise Fuel Efficiency
A telematics device is a highly intelligent computer consisting of a GPS tracking unit and other onboard sensors that work together to monitor and report on the status and activities of a vehicle, including speed, idling time, fuel usage, and low tyre pressure.
Installing a telematics system will require an upfront investment, but the amount of detailed information and insights can help you optimise your fleet operations to significantly reduce costs. With business funding, you can get access to the capital you need for the upfront costs.
2. Optimise Route Planning
Efficient route planning is essential for reducing fuel usage across a fleet. Telematics solutions offer advanced routing capabilities by analysing historical traffic patterns, road types, and distances. This analysis helps fleets avoid congestion, reduce travel distances, and prevent unnecessary stops – factors contributing to increased fuel consumption.
By equipping vehicles with GPS navigation that provides real-time traffic updates, fleet managers can quickly reroute drivers, ensuring the most efficient path is always taken. This optimisation leads to shorter trip times, less fuel burned, and lower fuel costs.
3. Introduce a Fuel Management System
Fuel management systems go beyond simply monitoring fuel usage; they actively guide drivers toward more fuel-efficient practices. This data-driven approach helps drivers make informed decisions, such as adopting smoother acceleration and deceleration techniques, anticipating traffic conditions to avoid sudden braking, and maintaining a consistent cruising speed.
The systems monitor real-time vehicle performance and driving patterns, providing data that can help identify areas for improvement and help fleet managers promote economically friendly driving habits by eliminating idling, reducing harsh braking, and optimising routes.
4. Prioritise Vehicle Maintenance
Regularly maintain your vehicles to ensure optimal fuel efficiency. This includes keeping your engine properly tuned, maintaining tyre pressure at recommended levels, and replacing air filters and spark plugs.
A well-maintained vehicle consumes less fuel, reduces unnecessary fuel waste, and extends the life of the fleet. Simple steps like these can significantly reduce fuel usage over time and improve both operational costs and environmental impact.
5. Purchase Fuel in Bulk
You can lock in fuel prices by taking advantage of hedging contracts and purchasing fuel in bulk, which allows you to secure a fixed price for a set quantity of fuel over a specific period. Working capital or a business loan can help you make these bulk purchases when there is a slump in sales. Purchasing fuel in bulk can be advantageous during periods of market volatility, and ensures predictable and stable fuel costs for your business.
By applying these tips to reduce fuel costs, your business will be well on its way to maximising fuel efficiency, positively impacting the environment, and saving on operational costs. This can free up cash flow that you can reinvest in new opportunities, allocate to expansion projects, or invest in other important aspects of your business – like marketing or training employees.
Find out if you qualify for up to R5 million in funding through Lula’s easy online application process.
