The forecasts that have been presented for the trucking industry for 2010 and even into 2011 and 2012 are not the brightest. The key point to keep in mind is that these are industry-wide forecasts. For individual companies, and especially for small motor carriers, the ability to adapt to a changing economy will predict their future. It's been said in several recent economic reports that the Great Recession is over. This doesn't mean, however, that we are going to bounce back to the freight volumes and hauling rates we saw in 2006 and 2007. What it does mean is that we are in an economic reset. And that reset button will probably be pressed several times before our economic engine begins to purr again.
The best course of action is to go back to the basics of operating a business. Be prepared to roll with the punches while positioning your company so that when the engine starts humming again, you're ready to function at full throttle.
Here are some steps you need to know to be best positioned for when that opportunity knocks:
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Know how much revenue your company produces against your costs, your accounts receivable, and the quality and diversity of your customers.
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Manage all of your assets with a plan, i.e., cash, equipment, property, accounts receivable, customers, employees and contractors.
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Be prepared for lean times, equipment breakdowns and replacement, and covering the daily cost of operations while waiting for customers to pay. This strategy must not let growth outpace capacity; above all, there needs to be a vision of building net worth.
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Be willing to listen. Look for new and innovative cost-saving and revenue-producing ideas.
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Get input from your drivers, dispatchers, safety and sales personnel.
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Look for information outside the hauling side of the industry, and stay on top of the trends and news from your shipper's perspective.
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Know the risks your customers represent to your revenue-producing capacity. What's their credit rating? How's their paying history? What are their projections for growth? What are their weaknesses?
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Don't let a single customer represent any more than 25% of your total revenue or accounts receivable.
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Continually farm for new business.
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Don't divert cash from your company for personal use. Your draw or salary needs to be paid as an expense. It shouldn't be paid from company profits or what's left over at the end of a month.
As we continue making our way through the next few years, the small motor carriers that survive and thrive are the ones that do business by the numbers. Controlling costs, diversifying and finding new revenue sources, listening for new opportunities, understanding customers and not taking any unnecessary risks is the way to be prepared for the future, whatever it turns out to be.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
