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Time to get real
Page 19
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CM's Perspectives series brings you alternative views from experts allied to road transport. This week financial expert Kelvin Briggs explains why it pays to be prudent when setting up in business — particularly in an industry as cut-throat as road transport.
Everyone wants to succeed when they go into business, but in the cut-throat world of road transport, as in any industry, there are shocks and surprises. So what's the mistake most people make? They get their hopes a lithe too high about how much business they're going to bring in. There's nothing wrong with a bit of ambition, but if you want to break even (or better still, make a profit) when the going gets tough it helps to keep your feet firm iy on the ground and be realistic.
What this means when you're talking about transport is being realistic about your vehicles.
First, don't buy more trucks than you need. Many people get an extra vehicle that they think they might use when they generate extra business. And there's a certain amount of vanity and ego connected to having that brand new top-of-the range LGV sting in your yard.
Some people borrow money for the pleasure of having this class of vehicle, but it's not a good idea. If you get more work, lease a truck instead. That way, if the work falls through you can lust get rid of the truck that you've rented -you won't be stuck with a massive loan to pay off for years to come. The beauty of renting a vehicle is that you can rent 'It for a day, a week a month or a year. There's no situation in which you have to keep paying for it when the money is not coming in.
However, if you are determined on gaining finance to acquire that brand new truck, try to match the funding package with the length of your contract. Flexible funding packages are a good option too.
Also, think about buying a truck a few years old instead of the latest model. The truck costs much less and can usually do the job just as well, although higher maintenance costs must be taken into account.
It's all straightforward, common-sense stuff, but sweat the assets and get the best out of what you've got.