Making a Start in Haulage
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Fundamental Requirements of a Haulier: Capital; Aptitude, Business Sense and Mechanical Knowledge
IT is seldom that I go for Long without receiving an inquiry from someone who would like to enter the road haulage business and asks -how he can make a beginning.
It is interesting to find that many of these would-be hauliers are conversant With the Traffic Acts aspect of the . matter. They may, for instance, have been negotiating for the transfer—of a vehicle with a special " A " licence or they have been asked by a friend to buy a vehicle and operate under a Contract licence. Again, they may have been offered a small business as a going concern, subject to the transfer of a licence. What they want me to do is to tell them how to go to work.
First comes the question of the amount of capital required. Most of them think that they can make .a start with a small capital, whilst there are others who ignore the question of capital altogether and Want to know how to get business. Many of the latter make no inquiry as to what their charges should be or what the prospects are of success.
Most of the applicants are young; in fact in one case I advised my correspondent to undergo a form of apprenticeship by going to work for some established operator. I suggested that he should get a job as a driver for two or three years, a recommendation which met with a very cool reception, Let us consider the matter of capital. Lack or shortage of capital is a serious handicap in any business, and many hauliers commence business with too little. It is, indeed, one of the peculiarities of the industry that it can so easily be entered by anyone who so desires, whether or not he has the qualities and capital.
Given the availability of a licence, a man needs only to acquire a vehicle to become a haulier. The result is that many men who would be far better otherwise employed enter the industry.
There is, however, no criterion by which capital requirements or business, Personal or technical qualifications can be measured. The amount of capital required, which might seem to the inexperienced to be capable of assessment is, in fact, not easy to assess. There are times when it may appear to be the most insignificant of the factors concerned.
Many hauliers, whose capital is, according to orthodox standards, insufficient, make a success of their businesses. They do so because they have business and technical aptitude and a personality that helps, whilst many who have sufficient capital but are lacking in those other essentials, may fail. There is no doubt that, whilst shortage of capital B26 is a handicap, lack of personal aptitude is a complete bar to success in the haulage industry.
Many of my regular correspondent's are among the successful hauliers who started With little financial backing, and I am happy to he able to claim that not a few of them have been guided by me in the initial stages. This is particularly true in respect of inquirers whom I have met.
• Clearly, the course to adopt when dealing with a beginner who has not much money to invest is to examine his other qualifications. Usually, there is evidence only of experience of driving and maintenance. The question is; are any of the other requisites there and how is their presence to be discovered? .
Some clue is frequently afforded in the letter of inquiry. If it be of a character to denote that the writer has given long and serious thought to his project before writing, well and good. If, in addition, it shows that he has already had some experience of the kind of work in which he proposes to engage, even if it be only that of a driver, then his prospects are even better.
Personality Vital
• So much does. hciwever, depend on the personality of the man. Some will learn enough after a couple of years' driving, whereas others will learn nothing after a lifetime of driving. The ability to learn counts for far more than a few hundred pounds capital.
But if the letter has obviously been written offhand and embodies queries of only a general character, thus demonstrating that the writer has not devoted a great deal of thought to the matter, there is not much prospect of his success.
I think that the most extraordinary letter coming in that category was one in which the inquirer enthusiastically informed me that he had just paid the initial instalment and tax on a £1,250 lorry which he proposed to use for haulage contracting, and he wanted assistance in making a start. added, naively enough, that the expenditure involved in acquiring the lorry had absorbed all his capital.
The foregoing case Was, of course, an exceptional one, but I do receive many letters which are very vague in character and tend to show that the writers have not given much thought before writing. Generally, a letter of this kind commences with a statement that the writer is about to engage in the business of haulage contracting, or hopes to do so, and would like my advice.
What size lorry do I think he should purchase and is long-distance or short-distance work the better for him, taking his circumstances into account? All this Without a word, about those circumstances. Usually, the letter terminates with a request for general advice. My trouble, apart from the question of the psychology ef the writer as revealed in his letter. is that I cannot give him a useful reply. -.There is no answer to an inquiry of that sort. The opportunities for earning a profit are equally distributed between long-distance and short-distance haulage, with a bit to spare for medium-distance work. Nor can I say what size of lorry would meet the needs of an inquirer until I know what work he intends to do with it.
As for his final request for such advice as I think I should give him, that leaves me with the option either of telling him that he would be wiser to leave haulage contracting alone until he had made a closer study of the subject, or of spending the rest of my time in writing him letters in serial form.
Just the Ticket The type of letter that I do like starts this sysy: " I have been offered a tontract involving the use of a 6-ton lorry which will keep me fully occupied on three days of each week. I have been asked to quote for the work and I would like you to advise me with regard to my charge. 'Else mileage I shall cover in connection with this svork is 95 per day and I shall be able to complete each day's work within the ordinary working hours, without assistance.
" I have been looking round the neighbourhood and find that there is reasonable prospect of my -being able to find work for the rest of the week.
Another matter on which I would like your advice is capital. I have .£800 available. Would it be better for ne to lay out all my capital on the first payment for a s chicle acquired through 1-1.P. or should I keep a part of that £800 to help me through the initial years of this enure. In other words, would I be safe with the contract available at a price near that which I hope you will recommend, relying on the profit to enable me to pay the future instalments?"
Alternatively, as contracts do not often go begging in that fashion, a ktter after the style of the following meets my a pp royal :— " I have been investigating the possibilities for a parcels service in this area, between a market town A and the surrounding villages, B, C, D. I have made inquiries and a number of shopkeepers in this market town has promised support if I can quote reasonable prices.
"It seems that I could rely upon a 3-ton load every Friday, that being market day, and upon 30 cwt. to 2 tons each day for the rest of the week. The distances between the various places are from 10 to 12 miles and, taking into consideration the time involved in collecting and delivering, it would be as much as I could do to complete one journey per day. Will you please advise me what. I should charge per parcel according to weight and bulk?
Practical Approach "I have a motorcycle with box sidecar. Would it he a good plan to try out the route with this (carrying no load and making allowances for stops) before definitely committing myself? Please send me a copy of " The Commercial Motor" Tables of Operating Costs.'"
The point about these two letters is that they show that the writer has himself given thought to the problem involved in his project.
There is hope for a man who uses his head to supplement his capital, indeed, so much so that in these circumstances the amount of capital becomes almost a secondary consideration. Such a man is more likely to succeed with a small capital than the haphazard "bull at a gate" type of inquirer.
One point which sticks out in these inquiries is that most of therri, perhaps naturally, take advantage of hirepurchase schemes for acquiring motor vehicles. In that connection I was particularly interested in the story of an operator who complained that his vehicle was of no use to him, because all that he had been able to do during the 12 months in which he had beets operating was to pay the H.P. instalments.
The story is not by any means new to me. at least, not in its essentials. There are hundreds who view the matter in the same light. Many hauliers regard hire-purchase payments as an operating expense. In reality, they are paid out of profits and the fact that a man is able to continue paying them until his indebtedness on this account is expunged is a sure indication that business is going well, always provided, of course, that he is paying his way in other directions.
There are many members of the haulage industry who hold the view that hire-purchase is the ruin of the industry and that it would be a good thing if it were impossible for a man to acquire, in that way, a vehicle for use on haulage contracting. I entirely disagree. It is as true to state that strong drink is the ruin of the British nation. It is misuse of the facilities which the hire-purchase system Mfrs which causes trouble to some of those who take advantage of it.
Generally, when a haulier who has acquired a vehicle under a. hire-purchase agreement gets into difficulties, it is because he lacks appreciations of the fact that, in order to complete the contract to purchase, he must make sufficicat profit to enable him to pay the instalments as well as to earn a living. That is one of the matters which must he considered very carefully when dealing with the question of capital required.
One thing is quite certain. It is-better. in nearly every case. to take advantage of hire-purchase facilities and buy new vehicles rather than to purchase used machines.
The beginner in the haulage industry cannot afford to buy used vehicles unless they are perfectly reliable. He has a reputation to make and build up a business; his success in either of these two essentials is likely to be marred as the result of a breakdown.
A haulier who is well established and has a reasonably good reputation for promptitude and in hever letting the customer down, can Withstand the effect of an occasional relapse and he may take the risk which may be involved in the purchase of a used vehicle, the potentials of which are not too well known.
Buying Used Vehicles
Of course, this objection to the purchase of " secondhands " is subject to exceptions. An intending haulier who is a really good mechanic and has the knoWledge and ability necessary to make a right choice, may purchase a used vehicle with some degree of confidence;., He is not so likely to be saddled with an unreliable outfit, and his ability to execute running repairs and keep a vehicle in running order will help him to avoid the troubles which would beset a lessexperienced adventurer. There must be no doubt about his mechanical aptitude and no risk of his being deceived about the real value of any used vehicle which may be offered to him.
Many of those who write to me on this particular subject have insufficient capital. It is usually very little more than enough to pay the down payment on the purchase of a vehicle which has a load capacity. of 5 tons. That is just folly. There are exceptions, but they are so few as to be negligible. Here is one. A vehicle is bought in order to fulfil a remunerative contract which will keep the vehicle fully occupied from the start, at rates which will show a real and reasonable profit.
Generally, the minimum amount required as capital is double the amount of the down payment. That proportion holds good no matter what the amount may be, and if the payment is comparatively small then the proportion may well be more than double. If the budding haulier has that capital available, then the balance left after payment for the vehicle should be kept for meeting exceptional payments and especially to tide the beginner over the first few months, while he, is Obtaining business and to provide against the very probable contingency of a month when actual receipts may not be sufficient to pay the instalment then due. That, in a few words, is the pitfall which so often brings down the beginner: it is stated that when that eventuality arises, the operator is inclined to carry traffic at cut rates in order to get some ready cash. Actually, the argument cuts both ways, because the fact of having to pay these instalments makes the operator realize that cut rates mean cut returns and the possibility of not being able to meet the demand. S.T.R.