Kick off the year with a strategy built on industry data analysis to drive growth & tackle challenges
By Martin D. Kirshner, CPA, MSA & Bryan E. Pearce
Gray, Gray & Gray, LLP
Table of Contents
January marks the perfect time to review the year just passed while planning your strategy for both the year to come and the future.
Nobody has to tell you that propane companies — and their owners and managers — face a complex array of obstacles: volatile pricing, labor shortages, regulatory and environmental pressures, and evolving customer needs. In this article, we’ll use the recently released 2024 Propane Industry Survey from Gray, Gray & Gray to provide insights that can help inform strategic planning decisions. When combined with proven strategic planning principles, these statistics offer a road map for building a more resilient and profitable propane business.
The Strategic Planning Imperative
Management expert Peter Drucker emphasized that leaders must ensure their organization’s “capacity for survival” and ability to “adapt to sudden change and avail itself of new opportunities.” The propane survey results indicate that propane industry leaders are taking this advice to heart: More than one-third of companies now have a strategic business plan for the next two to five years, representing a meaningful increase from prior years. This growing focus on strategic planning comes at a critical time. While 82% of dealers report being either “highly confident” or “confident” in their ability to remain viable, the industry faces significant headwinds that require careful navigation and proactive planning.
Strategic planning requires a commitment on the part of a propane company owner or manager; however, the time, money and attention you invest in the process of creating a strategic plan for your business can pay you back many times over by fostering an organization that is purposeful, intentional and focused on what needs to be done to achieve the twin goals of future growth and sustainable profitability.
The goal of a strategic plan is threefold:
- To set out — in one place — the vision and strategic direction for the business, so that all leadership and employees are headed in a unified direction
- To create a business model that considers customer needs, talent, technology, processes and financial resources that will enable the company to achieve its vision and objectives
- To clearly define the actions that will be taken to achieve the strategic plan and aspects of accountability — who will do what and by when?
While most business owners develop a strategic plan in connection with their ongoing operation of the business, there is also real value in preparing a strategic plan for a business owner contemplating a sale of the company within the next one to two years. Such a plan should address both the issues of leadership succession and optimizing the EBITDA and related value of the business in connection with an eventual sale. This is particularly important as only 56% of survey respondents indicated they have a succession plan in place.
Key Areas for Strategic Focus
Analysis of current industry statistics reveals several critical areas that should be incorporated into your strategic planning process.
1. Technology Integration & Modernization
Our survey shows technology adoption has become a competitive necessity:
- 61% of respondents indicate they “need to keep up with best practices” regarding technology
- 42% are planning software upgrades in the next 12 months
- Tank monitor adoption continues to grow, with 31% of companies now having monitors on more than 20% of their tanks
Technology investments should focus on improving operational efficiency and customer service. The data shows companies are using technology to optimize delivery planning and fleet operations, improve customer communication and service, enhance back-office operations and data analytics, and monitor tank levels more effectively
2. Operational Efficiency
With per-customer consumption patterns changing and delivery costs rising, companies are focusing on operational efficiency to maintain profitability:
- 68% are working to make larger, but fewer, deliveries
- 69% are seeking ways to optimize fleet operations through better delivery planning
- The industry average for gallons delivered per stop is 182, with 1.9 stops per hour
- Daily average gallons delivered per truck: 12,899
These metrics provide benchmarks for measuring and improving your own company’s operational efficiency. Consider how your numbers compare and what changes might help you optimize performance.
3. Service Diversification
The survey reveals companies are expanding service offerings to create new revenue streams. For example:
- 34% offer generator services
- 45% provide HVAC services
- 14% offer plumbing services
- Many are exploring renewable propane options (25% considering adding this service)
Such diversification can help offset seasonal fluctuations and create multiple revenue streams. Your strategic plan should carefully evaluate which additional services align with your current capabilities and the evolving market opportunities.
4. Workforce Development
Labor remains a critical challenge:
- 58% of companies have one to five vacant positions
- 63% anticipate needing to fill one to five new positions in 2024
- 72% cross-train employees as drivers and technicians
- The average number of customers per service technician is 728
Strategic workforce planning should address competitive compensation (54% implemented raises/wage increases for retention), training and development programs, and recruitment strategies (45% recruit from vocational schools).
5. Growth & Expansion
Despite multiple challenges, the industry shows a strong appetite for growth:
- 40% of companies are considering acquisitions in 2024
- 74% plan to add vehicles to the fleet
- Companies are expanding into new geographic markets and service areas
Your strategic plan should define specific growth initiatives and identify the resources required to achieve them.
The Strategic Planning Game Plan
A well-constructed, strategic plan typically includes analysis of current strengths, weaknesses, opportunities and threats of the business — commonly referred to as a “SWOT” analysis. It is important to make this assessment in relation to the competitive environment the business is facing. Who are the primary competitors (direct and indirect) to the company? What are they doing to succeed in the market?
Based on the industry insights as reported in the survey, here’s a framework for developing your plan.
Begin by assessing your current position through key activities. Start by comparing your key metrics to industry benchmarks to understand where you stand. Then conduct a thorough SWOT analysis, including an evaluation of your technology infrastructure and a comprehensive review of your service mix and profitability across all of your service lines.
Next, focus on defining clear objectives for your organization. This involves setting specific goals for improving operational efficiency and identifying which markets you’ll target for growth. As part of this process, establish your priorities for technology adoption and outline some concrete workforce development goals.
The third phase involves developing detailed action plans. Create comprehensive implementation plans for each of your strategic initiatives, making sure to assign specific responsibilities and timelines. Establish clear measurement criteria for success and ensure you’ve allocated all necessary resources to support these initiatives.
Finally, monitoring and adjusting your plan is crucial for long-term success. Implement a system for regular review of progress against your established goals. Continuously compare your performance to industry benchmarks and be prepared to adjust your strategies based on results. Maintain ongoing environmental scanning to identify new opportunities or potential threats.
Communication & Implementation
Successful strategic planning depends heavily on broad engagement across your organization and beyond. Effective implementation requires sharing plans with employees, customers and vendors to ensure everyone understands the direction forward. It’s valuable to seek input from trusted advisors and industry experts throughout the process. Make certain there’s clear alignment between your strategic goals and daily operations. Keep all stakeholders informed through regular communication about progress and any adjustments to the plan.
The propane industry continues to evolve, but companies with solid strategic plans are well-positioned for success. Our 2024 propane survey shows that 82% of dealers are confident in their future viability, largely due to their ability to adapt and innovate.
Keep in mind that strategic planning is not a one-time exercise but an ongoing process of evaluation, adjustment and implementation. Use these industry insights as a starting point, but customize your plan to address your specific market conditions, capabilities and objectives.
The most successful companies will be those that combine careful analysis of industry trends with bold action to seize new opportunities. As you develop your strategic plan, focus on building the operational excellence, workforce capabilities and service offerings that will position your company for sustainable growth in the years ahead.
Marty Kirshner is a partner and leads the Energy Practice Group and Bryan Pearce is the director of strategic business planning at Gray, Gray & Gray LLP, a business consulting and accounting firm that serves the propane industry. They can be reached at 781-407-0300 or powerofmore@gggllp.com.
As originally published in Butane-Propane News
Frequently Asked Questions (FAQ)
Because the headwinds are real and specific: electrification pressure, volatile pricing, labor shortages, and evolving customer expectations all coming together at once. Gray, Gray & Gray’s 2025 Propane Industry Survey found that 88 percent of dealers are confident about their viability, but confidence without a plan is hope, not strategy. The companies that outperform over the next decade will be the ones that planned for the hard things before they arrived.
It’s moving in the right direction, but slowly. Thirty-six percent of propane companies surveyed now have a formal strategic plan for the next two to five years, up four percent from the year before. That’s substantial progress. It also means nearly two-thirds of the industry still don’t have one, which is a significant competitive exposure as the landscape changes.
As a reality check and a targeting tool. Benchmarks tell you where you stand relative to peers on key metrics like cost per gallon delivered, customer retention, gallon delivery size, and fleet efficiency. If your numbers differ markedly from industry averages in the wrong direction, that’s not just interesting data; it’s a planning priority. The survey results are most useful when you go beyond reading them and ask what they require you to do differently.
Delivering fewer, larger drops instead of many small ones, which directly reduces cost per gallon. Optimizing fleet routing. Adding service revenue through equipment maintenance and installation, which is less weather-dependent than fuel delivery. And adding new services that diversify the revenue base against seasonal and commodity risk.
A central one. Gray, Gray & Gray’s survey data shows that 56 percent of propane companies have a succession plan in place. That’s up from the prior year, but still leaves a large portion of the industry without a plan. For a family-owned business in a relationship-driven industry, a succession plan isn’t just about retirement. It’s about protecting the customer relationships, culture, and business continuity that make the company valuable in the first place.