Big Ideas for Small Carriers
Any event that combines education and entertainment while raising money for needy folks gets my seal of approval any day of the week. That’s exactly what my pals at TransCore Link Logistics have been pulling off for the past 18 years with their annual conference and charity golf tournament.
Earlier this summer I had the pleasure of moderating a panel discussion at their shindig on carrier and freight broker relationships.
The goal was to provide real-world take-home advice for small and mid-sized players before we all went out to whack Mr. Titleist.
The speakers were among our industry’s brightest up-and-comers: Jon Saunders (Polaris Global Logistics), Michelle Arseneau ( GX Transportation Solutions), Bob Cascagnette (Highlight Motor Freight), and Mike Fontaine (C.H. Robinson).
Here’s what they had to say to the golfers/transporters in our audience:
Have a Big Mac
The panelists agreed that, to grow organically, every company needs a secret sauce. Doing something better than everyone else is the only real way for smaller players to create the scale necessary to get customer pricing power.
The overall consensus from the panelists was that the “l can do anything and everything” strategy just isn’t sustainable any longer.
Small? Act Big
We fielded a question from someone who seemed rightly agitated by the lack of respect for small companies in this business. She stood up and asked what a small carrier or broker can do to break the stereotype that often paints them all with the same brush.
The response: Small players need to think and act like big players.
You don’t have to have a ton of revenue to be a true business partner to your customers. Get out of the office. See your customers as people, not accounts. Be a professional and you’ll earn their respect and their business. You won’t stay small for long.
Most small companies can do a better job managing cash.
Cash on hand is a huge advantage. You can pay your bills on time (paying them early is smarter), and you can solidify your brand by showing the industry that your company is on a solid financial foundation.
When I ran MSM, I’d rather haul three skids for $600 with instant payment versus getting $700 of 90-day money.
Cash can also help build your margin. Carriers can generate cash by offering quick-paying programs to customers. Brokers can get access to equipment during peak times by paying quickly.
When you’re small, you don’t have a Chief Financial Officer to run the business side of the freight business. Cash management is a skill you need to work on.
The panelists all agreed that factoring receivables can help speed up cash flow, and it’s a great strategy for managing large-volume, higher-risk customers.
Big, new shippers always made me nervous. If you secure a daily milk run that generates $4-0,000 a month in revenue but has 60-day terms, the shipper will be into you for $80,000 before you see a red nickel.
That’s a risk few small companies can afford to take. Selling the invoices to a factoring company for fast cash is a better way to go, even if it costs a percentage of the freight bill. But the panelists also agreed that customers and suppliers may see factoring as a sign that you’re hard up for cash.
At MSM our payables team would salivate when they saw that a carrier partner was factoring. We offered better terms for quick payment than the factoring company. We generated hundreds of thousands of dollars in enterprise value by using our strong cash position to grow our bottom line.
It’s a wrap
Only two things disappointed me about the day.
First, the banter from the panel was so good that we ran out of time before we got to discuss one of our industry’s latest hot buttons: contracts between freight brokers and carriers. Amazing how much liability is suddenly getting dumped on unsuspecting carriers.
That’s for my next column. The other thing that disappointed me was how God awful I golfed. Man, did I stink the joint out. Glad my panelist playing partners brought their “A” game both in the classroom and on the links.