How to “keep on truckin” when demand weakens
In spite of the continuing shortage of drivers, small trucking and logistics businesses may be heading into a recession with the rest of the country’s small businesses. Added to the ballooning cost of fuel, a recession will mean competing for fewer customers who are all price-sensitive. This added pressure on profits will make it absolutely necessary to look at every way possible to run a lean, mean transportation operation. While this sounds obvious, the devil is in the details. Here are a few thoughts to help you get started.
Become More Efficient
Motivational speaker and positivity expert Tony Robbins makes some excellent suggestions on his website about running a motivated team, as well as being a more efficient company. His insights cover some wide ground; citing everything from having frequent-but-brief team meetings in order for people to remain focused, to examining operations to determine what best to keep and what best to cut. On the latter subject, we are in complete agreement. Cutting expenses does not mean cutting corners. Rather, cutting expenses is giving all of your operations a careful and complete review to learn where inefficiencies—and redundancies—might exist.
Your bookkeeping and accounting, for example, may be perfect tasks to transfer to an outsourced remote service. An outsourced solution ensures you have access to professionals, the latest technology, and of course accurate information without the cost (and downtime) associated with an employee.
Some purchases are mandatory to keep a business running. Others are somewhat discretionary. One of the most common perks, excuse the pun, is the company coffee supply. Everyone likes a fancy cup of java, however, an expensive coffee service can be replaced with periodic trips to the big box club store for coffee and supplies.
Keeping office supplies inventory under lock and key is another way for some businesses to reduce waste while stopping employees from stocking their homes with your office supplies.
Larger expenses, like copiers and other equipment leases, should be reviewed for less expensive (or more efficient) alternatives. Don’t forget to look at vendor purchases to see if you can find less costly alternatives for products that are purchased to keep the fleet maintained and other business-related materials.
In a growing economy, many businesses let overhead creep up. Tightening your belt might mean rethinking how things get done. Perhaps that might mean repairing instead of replacing everything. Or squeezing an extra year out of an older, but adequate piece of equipment.
Reducing overhead may also mean looking at the physical space you require to conduct business. Since the advent of Covid-19, many businesses are finding they can get buy on less square footage. If that is true in your business, you may want to consider subletting a portion of your shop to offset some of your rent expenses. Alternatively, sharing resources in exchange for rent is a way to help a growing business survive. Perhaps you have a big repair shop with bays that are not used after 5 pm. Those idle hours could be rented to another business for onsite repairs and servicing.
Invest in Marketing
When you are hungry, you know it is time to hunt. So, if business is down, one activity you must increase is marketing. If you are not yet active using social media, this is the time to start. Be part of your local and industry associations, business organizations, and the associations of your client’s industry. That is where you will meet the people who will become your new customers. It may also be a time to invest in sprucing up your website, start some discussions on LinkedIn, and send out emails to the folks that you call friends, clients, and referral sources.
Look for Advertising Partners
This one may not work for everyone, however, some companies find extra money can be made by allowing companies to advertise on their vehicles. Not everyone gets Goodyear or Coke on their jackets, but you may be able to get your local parts shop or tire store to promote in your space in exchange for cash or even a barter of services. Be creative! It never hurts to ask.
Avoid Foolish Shortcuts
It goes without saying that some cuts are foolish. Don’t shortchange your insurance, or ignore paying your taxes. Certainly don’t skip maintenance or safety upkeep at the risk of your people and equipment. It really takes a bit of strategic thinking to plot out a plan for cost savings and survival when business gets tight. However, preserving capital and running lean while increasing your sales and marketing is the best way to survive—and maybe even grow—in a downward economy.