PROBLEMS OF THE HAULIER AND CARRIER.
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Points in Connection with the Management of a One-vehicle Business and its Expansion.
AWOULD-BE haulier recently asked me, among other questions, whether it would pay him to run one vehicle only. This is a problem which many people come up against at various times.
The answer to the query—Does a one-vehicle business pay?—obviously is " Yes " ; but there is a condifion that it should be a properly managed concern. Just the same circumstances obtain in connection with other types of trade—a small tobacconist, ler instance, whose
• shop is barely bigger than a cupboard, can make a living wage in the same street as a concern whose stock of cigars, cigarettes and tobacco is measured literally in tons. In the same way a one-vehicle haulier can keep going, and going well, despite the presence of large flee'...-owning banners in the district.
The larger the number of vehicles, the greater the profit should be ; but I would urge beginners in the hauling and carrying trade not to be too keen to obtain a large profit at once by starting with two or more vehicles. The trouble lies in the fact that, instead of making a larger profit, ownership of several machines may be the cause of a serious loss. Getting down to the root of the matter, the profitable size of the fleet depends upon the average volume of work obtainable.
As a general rule, it is far better to start with one vehicle and expand the fleet as and when business conditions justify it, This course involves less capital outlay in the first pla.ee than buying two or more machines, and the standing charges during the time the business is growing up are less heavy. The owner who starts in a small way has a chance to see what measure of success he can obtain with one vehicle before he embarks on a venture with a greater number. Many people will argue that possession of one vehicle offers less possibility of enabling the owner to take on big jobs—this may be perfectly correct, but that leads up to the question of fleet expansion.
Hiring to Meet Special Demands.
One may have occasionally to turn down a job which calls for two lorries for the simple reason that only one is kept. Worst come to the worst, that job may be lost ; but think of the weeks during which the second lorry would be standing idle and consuming quite a large sum in standing charges! It is a question of whether the work justifies an extra machine—only consistent work counts; intermittent jobs do not really justify an owner in paying out the cost of a second machine. In any case, there is the possibility of hiring an extra machine to oblige a customer.
Cash is the chief consideration in a business, and the amount of money to be earned in the form of profit is the most important point in the eyes of the would-be
haulier. The object at which to aim is profit per vehicle, not profit from the concern irrespective of its size. One must review the account monthly, as I suggested in a recent issue of The Commercial Motor, and decide whether each vehicle is pulling its weight as regards profit earning. If one of the fleet be not, it is better to sell it, and at least to keep the value of the vehicle intact rather than let it depreciate in idleness, in addition to swallowing up standing charges for which it brings in no return.
Some users fix in their minds the profit which they want from the business—say, for tile sake of argument, £10 a week—and take little care whether they use one or two vehicles to get that sum. The proper procedure Is to decide the amount of profit which should be yielded by each of the vehicles weekly, and, when the prospect of extra work is sufficient to give a worthwhile extra profit, to buy a further machine. Return on capital invested is the first and foremost point for attention. Whatever has been spent in buying the fleet, a suitable return must be gained after all expenses have been paid or allowed for—note the latter point especially, as it is one almost invariably forgotten. It is a perfectly natural tendency to reckon up one's actual expenditure in cash, and to overlook those items such as depreciation, allowance for tyre wear and so forth, which are not put down in black and white along with the other bills.
Should the Owner Drive ?
Turning now to the matter of the owner's work and to increases in the fleet, the question arises as to whether all the vehicles should be handled by paid drivers, or whether the owner should take the wheel of one machine himself. There are various pros and cons to be considered, but before discussing the matter we must consider the relative expense of the two systems. When the owner drives he should earn a driver's wage, plus the profits ; when the owner does not drive, he must, as a management fee, draw a salary at least equivalent to that of a driving owner plus taking the profits, otherwise he is not so well off as when acting as a driver. In other words, an owner should get the same minimum sum as wages whether he drives or not. In view of this fact, therefore, if an owner gives up driving and employs another man to take over one of his vehicles, the establishment expenses are higher by the amount of the extra man's salary.
In the foregoing paragraph I have mentioned a disadvantage of the owner-non-driver system ; or, to put it the other way, cheaper establishment expenses are a feature of the owner-driver plan. Now, let us consider the alternative—when the proprietor is not driving.
He has more free time for superintending the accounts, to canvass for business and to organize the different types of work. When weighing up the advisability of — driving or devoting his attention to administrative work when the fleet is enlarged, the question turns upon the value of the owner's administrative ability. In the case of a fleet of two vehicles, working on a regular daily "contract, for example, when outside jobs are merely occasional, it is probably best for the owner to drive daily and to .put in a bit of office work at any Other time; the occasional jobs can be done by the driver.
An alternative consists of employing a boy to do some of the most simple office jobs whilst the owner does the management side of the work after he has Cnished on the road. This may be more economical than employing a driver and.the owner doing the whole of the office work hiniself. When work is not definitely 'booked up, however, and has to be canvassed for, in addition to the performance of office work, the owner is better out of the driver's seat. In this case, of course, the value of his administrative work is considerably greater than that of his driving.
If the mileage per week per vehicle can be increased by the owner's efforts, the operating cost per mile will be less and the expenditure per mile will probably be no higher than it was in the owner-driver days when smaller distances were accomplished ; low mileages are not practicable for hauliers. In addition, the turnover will be greater, the charges to customers can be kept reasonably low without foolish rate-cutting, and the owner can attend better to the administration of his
own concern. S.T.R.