The Bottom Line, and How Haulage Companies Manage
Posted: Dec 23, 2014
Every industry has its own appeals and challenges. Maybe you were drawn to transportation because you enjoy the freedom of the road or the knowledge that it is an industry that can exist wherever societies take root – but maybe you face the challenges of dead mileage or route management, for example.
Paying the bills, managing your bottom line, and surviving financially is at the heart of a business no matter which industry it is in.
Keep the cash flowing
One way for haulage companies to stay afloat financially is to manage their cash flow well. This is not just a matter of getting more and more work; it involves a judicious measure of expenses and profit, costs and income. Being able to see your business as a continual flow of money coming in and out, and taking into account both liquid and solid assets, will help you envision your finances in terms of healthy, monetary blood coursing through your business' veins. As a result, you will be able to make sure that as a whole you will head in the direction of growth rather than loss, and thus can thrive, not simply stay afloat.
Good debt, bad debt
Debt, or at the very least paying back debt, is a spectre for many small businesses. Small to medium sized haulage companies may well be reluctant to borrow money when faced with high levels of interest and uncertain income. This is why it is important to know the difference between good debt and bad debt, and in particular to realise the difference in specific relation to your own business. Bad debt is what most businesses fear, involving rates and fees that in both the long term and short term drain the finances, while good debt is seen as a short term investment that in the long term grows the net worth of a business, even after the interest paid is considered.
Invest or Save?
The issue of considered good debt relates to the issue of investment. Most haulage companies will have to consider, at some point, whether they should save a certain amount of profit, reinvest it back into their business, or invest it into another venture. When your books measure out your cash flow accurately and when you understand your options for debt, it is important not to baulk at wise investment. While saving in general prepares for a rainy day, investment in various forms grows your assets, if done in a way that limits risk.
MYOB, and more
Most owners of haulage companies are good at transportation - it is their bread and butter. But there is a need to have a degree of financial smarts also. In this regard, once you have laid the foundation for financial survival and growth, you should consider when you should mind your business yourself, using MYOB skills, or seek financial help from experts. The reality is that you should do both; the trick is knowing when do to one rather than the other for your specific business.
Norman Dulwich is a Correspondent for Haulage Exchange, the leading online trade network for the road transport industry across the UK and Europe. It provides services for matching haulage companies or drivers with jobs and to buy and sell road transport and haulage work in the domestic and international markets. Over 3,000 transport exchange businesses are networked together through their website, trading jobs and capacity in a safe 'wholesale' environment.
Writer and Online Marketing Manager in London.