It's fourth-and-10. We're in the fourth quarter of 2009 and about to move forward into 2010. The year has been one for the record books. Going from record fuel prices to unprecedented low hauling rates has been a challenge. So what do we do for 2010? Punt! That's what it seems like most of us have been doing for the past year and a half anyway.
But from the majority of indicators, we've made it through the worst of this economic game. Of course that doesn't mean we can put our offensive team back on the field. Like the proverbial punt that hits the ground, the economy is going to bounce in unpredictable directions for the foreseeable future.
The question for 2010 for small motor carriers is: What should we be doing to survive the bouncing ball that is the economy and grab control when it finally bounces into our hands? There's irregular demand for our services, increased shipper scrutiny concerning hauling rates, fuel cost volatility, and excessive inventory. Until these level out, the economy will continue to bounce along unpredictably.
The big carriers are laying the groundwork for a quick turnaround when the economy begins to grow. What should this mean for the smaller trucking companies?
Don't follow the crowd. Select a niche that gives you an edge over your competition.
Have a vision of the future. Focus on the steps you need to take and how you'll accomplish each step.
Evaluate the facts and figures of what you're doing according to your plan. If it's working, stay the course; if it's not working, adjust the portion that is not achieving your goals.
Know your break-even point. It's the point where losing money stops and profit begins.
Base your business model on creating value in your services, not competing on price.
Don't let a single customer or broker represent any more than 20 to 25% of your accounts receivable.
Focus on the search for new business. Don't let the status quo be your downfall.
Control cash flow and add to it when necessary through a factoring company or a draw loan.
Invest in your company. Profits must be reinvested to build value. Don't take your profits in the form of bonuses. Set aside any profits to supplement times when you haven't met your break-even point.
Hire experts to do what you don't have time to do or don't have the skill to do.
The preparation and planning you do while the ball is bouncing through this recovering economy is what will position you to grab that pigskin and take it over the goal line when trucking emerges from the recession.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com