Fake it until you Make it
For many transportation companies, the Winter season can be slower and anxiety increases as our accounting staff finalizes monthly P&L reports. But then we sit down with sales and marketing and we analyze bookings for Spring and Summer and suddenly we are feeling better. Spring is around the corner, baseball practice is about to start, the maintenance staff has the fleet back in tip top shape and optimism is in the air. Now what? What’s the next project I can go tackle. Maybe you are full of motivation and ready to tackle the world and you want to create the very best business possible in 2017. To do that might I suggest you envision selling your business in 12 months. What would you need to do right now to prepare your business for sale?
First, take a look at your social media presence. What do your consumers see or what would a potential buyer see if they were to look up your company on line? Do you have a nice landing page or does your website need some updating? Is your team actively on Facebook, Linkedin, Yelp, Instagram, Twitter, etc ? I am not saying you need to be on every social media platform but take a look at world class companies in any industry and see what they are doing. I am willing to bet they are very active in all of those platforms and the task isn’t overly daunting.
Transportation is an industry full of opportunities for error — i.e. liability. Create a culture of safety. We cannot have enough driver training, shop maintenance training, and DOT refreshers. As the business principal, attend these meetings. Document these meetings. Be willing to do random ride alongs to understand exactly the product your company is putting on the street. Take advantage of technology keeping drivers, passengers and equipment at all time safe levels. One thing that can kill a potential sale is extenuating litigation against your company — do everything you can to create the safest product possible.
Get your financial house in order. There is no way an operator can effectively quote business unless they understand their cost structure. Have accurate balance sheet & income statements. Review line item expenditures monthly and compare to last month and last year against any anomalies that may need addressed. Did maintenance cost spike last month? If so, find out why. Is workers comp up but we haven’t increased prices? Get back to sales and work on some price increases to match any rising cost. When is the last time you checked on pricing with your local trash hauler? Or uniform supplier? Do you have freon for this summer? It’s likely much less expensive to buy it now as opposed to waiting for July when prices go up. Realize when you are selling your business a potential buyer is likely purchasing as a multiple of EBITDA, and definitely a multiple of net income, so every dollar that filters to the bottom line will be rewarded many times over. And we aren’t talking about pinching pennies and driving your staff crazy, but we are talking about being a responsible business owner and spending the necessary time each month reviewing financials and keeping staff and vendors financially attune.
Take a look at your fleet list. Do you have an accurate fleet list on an excel document? I suggest several versions of your fleet list for different staff involvement however you should have one master fleet list which includes: unit number, year, make, model, # of seats, ADA or not, wifi or not, 110V outlets or not, engine type, transmission type (can include serial numbers), registration date, lender, original purchase price, original loan amount, current monthly payment, interest rate, term, residual or ballon if applicable, approximate payoff, approximate value, insurance value, domicile location. Fleet assimilation is very important to a potential buyer of your company. How well does your fleet match your potential strategic buyer? Is there deferred maintenance ? (let’s hope not) Is the power train acceptable? Do I have equity and if so, how much equity? Do I have some higher interest rates that I should consider refinancing? Do I have other company debt at higher rates or a plan for growth that requires capital and have untapped fleet equity to assist with debt consolidation? Your company fleet is your rolling business billboard. The condition of your fleet says everything about you, your company, your culture of safety & cleanliness, and not only sends a huge message to your drivers, staff and customers — but also to a potential buyer!
Seasons come and seasons go. So as we begin to turn the corner from Winter to Spring and we become more motivated to tackle challenges in our business, I encourage you to think like you are selling your business in a year. If you take a hard look at your sales and marketing presence via social media platforms, dedicate your company to a culture of safety beginning with personal involvement, dive into financials monthly making a commitment to hold staff and vendors financially accountable and really access your fleet beginning with a nice spreadsheet, you just might find your company with increased top line revenue and bottom line margins in 2017 —— and you might have so much fun that you will think “I’m never selling this business” and pass it down to generations to come. Sometimes in life we just have to fake it until we make it!
The Author of this article, Clint Guth, is founder of Chelax Industries — a merger and acquisition confidant focused on North American transportation companies. Clint has over 20 years experience as a transportation executive and has a mantra that “life is short, we all need to chill & relax — thus Chelax."