Yikes! The price of gas keeps soaring!

We see companies like Amtrak raising their fares and airlines forced to go out of business, citing higher fuel costs as the primary reason. They are in the transportation industry so we just accept this.

The IRS has tried to keep pace by increasing the business mileage rate allowance each year. The rate has been raised almost 20 percent since 2005 and is currently at 50.5 cents a mile for 2008.

But what should a small service business do? On average, every time oil prices go up 10 percent, 150,000 Americans lose their jobs. While we probably won't lose our jobs, we do have to run our businesses better.

First, be aware of how the cost is affecting your profit margin. Be clear what percentage this is of your operating costs. For airlines this is between 20-30%. Your cost should be nowhere near this but looking at the real numbers may open your eyes. Knowledge can also spur the right action.

Then, some options for action are:

• Do nothing. Yes, you are making less money but your margins are still acceptable. You are at least making an informed decision.
• Look for a more fuel-efficient vehicle. I shouldn't have added this as surveys state the average consumer won't really change vehicles. It is an option though. I no longer carry a load of supplies to clients. We order them online and I have them shipped so they are waiting for me. As a result, I am able to drive the smaller car.
• Increase your rates. Your rates should cover expenses like gas anyway.
• Charge your clients for mileage. I have begun doing this for any job I have to travel 30 or more miles. It's a pain to remember to put it on an invoice but I am always amazed at how much the amount is and then glad I remembered.
• Schedule jobs more geographically, rather than on client demand. (Clients may have to wait a few days longer to see you or consider charging them extra.)
• Re-evaluate the way you deliver your services. Can you do more support via the phone or computer? I am doing most of my work this way nowand it has far more benefits than just saving money on gas!
• Refer work to other businesses in areas too far to drive.
• Hire staff that live farther from the office who could service those clients. Organize work so they don't have to come into the office as often.