Big Fleet, Small Fleet - Recession Proof Your Business
Posted by Brandy Alvarado on Mon, Feb 18, 2008 @ 12:24 PM
While the Feds are working to stimulate the pockets of American consumers, several businesses are left to their own devices when it comes to avoiding a potential economic slump. Industry-wise, financial markets have been among the toughest hit, especially businesses with even the slightest involvement in subprime lending.
While the trucking industry has managed to stay out of headlines in terms of economic slowdown, have there been any markers of decline? And if so - as a fleet owner - how do you recession proof your business to prevent the ill-affects of a national economic slowdown?
The trucking industry has dealt with rising fuel costs, declines in truck sales, and an overall drop in consumerism.
These challenges are nothing new however to a fleet owner, regardless to the number of years in business. The more pressing issues include environmental regulations, hours of service cutbacks, and industry-wide driver shortages. The 4th quarter gross domestic product only rose 0.6%, indicating a significant slowdown in the output of goods and services produced by labor and property.
How can fleet owners cope?
First things first - we are not in a recession. The Feds have enacted various programs to avoid a potential recession, but have not explicitly stated that our economy is in one. In a time of economic slowdown however, there are things fleet owners can do to prevent lost revenue.
Cash flow is crucial to a fleet owner who endures high operational costs. Freight bill factoring is one way to ensure you see at least some money as soon as a customer is invoiced. Consider it a down payment on the total bill. Instead of using a bank, a factoring company will finance the invoice and provide immediate payment for the customer.
A thorough review of the businesses financial plan can reveal beneficial cost cuts and enable fleet owners to allocate funds to money-saving investments such as biodiesel engines. It may be helpful to upgrade software as well, whether it involves implementing new routing programs that can minimize distance travelled or a program that can boost administrative productivity.
Work with your current relationships. Look at your current book of business and find ways you can enhance your clients’ business and vice versa. Texas based Transport Industries L.P. receives a fuel discount by frequenting major fuel stops throughout its service area.
In times of economic slowdown, adaptability is key. Considering the constant change trucking companies must endure - often from external forces - there’s little time to stop and review business strategies. As costs rise and productivity slows, now is a better time than ever to assess the books and determine where energies should be focused.