What if competition becomes tight and rates go down in the lanes within which you operate your trucks? Do you have an exit strategy in place? This is about finding a new, better and more profitable direction in which to take your business or a way to gracefully get out of the business with the least damage to your finances.
Many new carrier owner/managers—and even those who have been in business for a time—forget to assemble an ‘exit strategy’ in the event that that worst-case scenario actually happens. This should not be a knee-jerk reaction to events as they unfold, but a strategy that has been well thought out in advance.
An exit strategy is a plan to get out of a bad situation or when events and circumstances show a new direction is required. It’s like coming upon a road that’s been closed for hours due to a major accident. If you know in advance where each exit will take you if you leave the highway, then you know which one is best to use in order to continue in the direction you need to go.
What are some reasons you might need an exit strategy? It can be an injury that makes it impossible for you to continue doing what you’ve been doing, or it can be a divorce, death, or other personal events. It can include the loss of business, a change of market, or a bad economy.
When assembling an exit strategy, here’s a list of things to consider :
- Is the business sellable?
- What’s its value in equipment?
- What is its debt load?
- What are its contract values?
- What would you realistically pay for it today?
If the business isn’t sellable, what are your other options? You could:
- Take on a partner or investors who inject cash into the company.
- Park the equipment, close down the office, and reduce insurance to storage only. While you wait for the market to rebound, you could get another job to cover the cost of the trucks and insurance.
- Sell or auction the equipment and assets and get out of the business—lock, stock and barrel.
- Look for a different market to serve.
- Partner with customers.
- Move the operation to a different part of the country.
- Haul a different product.
It’s never a good idea to wait until your company is in trouble to think about an exit strategy. As we have all learned from events of the past, you can never predict the future with certainty.
When you go into a crowded movie theater, you look to see where all the exits are located—which are the closest, which would be the quickest, and which are the safest. Just like in the theater, you need to have your exit options in place even though chances are pretty good you’ll never need them. But by knowing where they are, other business decisions will be far easier to make.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
