As we progress further into 2010, signs are pointing to a slow recovery process. But if you feel like you're still digging yourself into a deeper financial hole, the first step is to put the shovel down. As we enter the middle of the seventh quarter since the financial meltdown in the fall of 2008, and the beginning of the third year since the monumental drop in freight volumes and hauling rates in November 2007, it's time to put a stop to the financial slide.
The following five steps can help you assess your current financial situation and point you in the right direction financially.
Develop an emergency fund to help get you through the unexpected occurrences that are bound to happen in a slow economic recovery. Work on setting aside $1,000 for every truck you have on the road. This should only be used in worst-case scenarios; for example, if a driver abandons a truck and you need to send another driver or yourself to retrieve it.
Do not take on any new debt for the next 18 months.
Begin collecting past-due freight invoices. If you don't have the staff or the time to do this, look to a factor to collect those debts. If a factor says they're too old or cannot be collected, hire a collection agency. Getting 20 cents on the dollar is better than zero. It's better to have a factor or collection agency retrieve this money than to waste too much of your valuable time on this. Besides, they have the skills and tools to get the job done and you can move on to Step 4.
Start making those sales calls to companies that have turned you down in the past. Circumstances have changed for many shippers. The economy is different, their situation has most likely changed, and opportunity may just be waiting for your knock on the door.
Develop an exit plan. Most small companies never think it through to the end. We all hope to retire from business to a nice relaxing life of leisure and volunteering, but to do this we must have an exit strategy. Are you going to sell the company to outsiders? To your loyal employees? Or leave it to your children? Any of these would require the company to have a monetary value, including an excellent profit-and-loss statement (sans any losses), low to no debt, quality customers and collectible account receivables. Do you plan on liquidating the company's assets to finish funding your retirement? If so, you must plan before you act.
We've all been hit hard by this recession and with the recovery in its beginning stages, we need to be prepared to climb out of the hole into which we've fallen. Take it one step at a time, and while a bit bruised and battered, we can come out of this in better shape than we entered.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com