Oil and the State of Small Business

Oil and the State of Small Business

    As oil prices struggle to climb above $50/barrel and price stability seems to be anything but a reality, how do we plan for success in the current economic environment? The article below, published on FoxBusiness.com points to optimism in the market due to the lowering of crude inventories and the expectation that OPEC will extend their production cuts through the end of the year. But, is optimism enough to keep a business afloat? After 2 years of being hammered by poor oil production and now going into a third year of marginal growth now is the time to step back from your business, take the 20,000 ft. view and decide what you need to do to become or stay profitable! If you have already done this, great!! you are ahead of the pack. If you are sitting around waiting for the economy to right itself I’ve got 3 quick “projects” that you can tackle to start being proactive instead of reactive in your business.

 

  1. Read “Simple Numbers, Straight Talk, Big Profits” by Greg Crabtree. If you are new to P&L statements or business finance this short, easy to read book will get you up to speed quickly so you can make decisions on facts and your gut instead of your gut alone. (I’ll give a copy of this book to the first 2 people who comment asking for a copy.)
  2. Set SMART (Specific, Measurable, Achievable, Relevant, Time Bound) goals and keep them in front of you daily!!
  3. Find one or two KPI’s(Key Performance Indicator) and start measuring your performance. I would highly suggest using Revenue per Full Time Equivalent or Labor ROI as one of your indicators if you have more than a couple employees.

I’ve pasted the FoxBusiness article below. It’s a pretty interesting read as well. Reach out and let me know what you think of the article or anything in this post.

Oil Gains on More Support for OPEC Cuts, Optimism About U.S. Crude Draw

Markets Reuters

Oil prices rose for a second day on Thursday, closing more than 1 percent higher as support grew for OPEC output cuts a day after the U.S. government reported a big draw in crude inventories, boosting confidence that a global glut might diminish.

On Wednesday, the U.S. Energy Department reported that U.S. crude stockpiles posted their biggest weekly drawdown since December as imports dropped sharply. Inventories of refined products also fell.

“People are hinging the optimism today on the recent drawdown in inventories and I think that might last as long as we don’t have another inventory build,” said Stewart Glickman, head of energy research at CFRA Research in New York.

In recent days major producers like Iraq, Algeria and Kuwait have voiced support for extending last year’s deal from the Organization of the Petroleum Exporting Countries and other producers to cut supply by almost 1.8 million barrels per day (bpd).

On Thursday, non-members Turkmenistan and Equatorial Guinea said they would also join the cuts, though they are smaller producers.

On May 25, OPEC will meet to determine policy for the second half of 2017. Most analysts expect the group to extend cuts until at least year-end. If they don’t, Glickman said, “they’ll take the floor out from oil prices.”

OPEC said Thursday that group production fell in April. Despite the reduction, there are few signs that supply has fallen significantly as other producers have continued to supply key customers, especially in Asia.

OPEC also said it sees more supply coming from non-member countries such as the United States. The cartel raised its estimate of total oil supply growth from non-OPEC producers this year to 950,000 bpd from a previous forecast of 580,000 bpd.

U.S. oil production <C-OUT-T-EIA> rose to more than 9.3 million bpd last week, highest since August 2015. Even with this week’s drawdown in U.S. crude stocks, Glickman said the country has a way to go to reduce oversupply.

“You’re going to have to have a few weeks of 5 million-barrel draws just to get back to square one,” he said.

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