HOW TO SURVIVE THE UPS AND DOWNS OF BUSINESS
As we near the end of summer, many of us have found our businesses on a roller-coaster ride of sorts. Things looked great early on; 2010 started with a very good first quarter as freight availability increased along with rates. Now we're seeing a downturn in both freight and what we're paid to haul it. Just like a roller coaster, we're feeling that slow climb to the top followed by the screaming ride to the bottom with all the gut-wrenching winding twists and turns to add to the excitement. The difference is this roller coaster determines whether we survive financial ups and downs as the economy tries to restart.
You know your financial numbers. Here are eight things you can do to protect your small motor carrier's financial stability.
- Develop a capital reserve plan
Include in your hauling rates an amount above your break-even point, which, within 36-60 months, will allow you to set aside at least 1½ times your annual fixed costs.
- Market constantly
Be prepared for slow times with a marketing strategy to cultivate new business and reevaluate current customers.
- Track income and expenses
By tracking these, you'll see how certain events cause an increase or decrease in one or the other. Then you'll see a pattern develop, from which you can plan your strategy. Over time, you'll see a cycle develop, making it possible to anticipate and project monthly income and expenses. Then revise your business plan accordingly.
- Make the best of the really slow times
For the extremely sluggish times, consider cross-training your personnel, repairing equipment or assigning vacations.
- Create alternative revenue sources
Be creative. Add revenue sources to diversify the origin of your operating capital, e.g., hauling local loads to generate necessary income.
- Continue to upgrade your skills
Learn all the layers of services you're paying for, i.e., loadboard features, dispatcher software, or business-building think tanks.
Stay in touch with current and former shippers, brokers, drivers, dispatchers, insurance agents, and anyone else who directly affects your business. Join industry networking groups online. Keep current via trucking industry articles on new rules and regulations from local, state and national regulators. Know which of these affect your customers' industries too.
- You're in charge
In reality, most of what happens in your business is within your control if you anticipate what lies ahead. You can't control events, but you can steer around them or take a different route to reach your financial destination.
As the economy improves and tonnage levels return, continue applying these strategies regularly. The next time the current economic situation dips or blips, you'll have your hands in the air, confident of your carrier's financial safety as the freight rate roller coaster hits those winding turns.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com