Ahern and Associates Reveals How Trucking Companies Can Survive the Recession

Ahern and Associates Reveals How Trucking Companies Can Survive the Recession

How can I survive these challenging times? I've done everything I can possibly do and nothing seems to be working;

Shippers keep extending payment terms.

I keep hearing that capacity is tightening, but;

Every time I try to get a rate increase, it falls on "deaf" ears.

I read your news articles and they say;

Think out of the box!

Be creative.

Stay focused, but;

It doesn't seem to work.

My response is, people in companies survive because;

1. They recognize their problems.

2. They recognize they need help, and;

3. They're willing to make the sacrifices necessary and the changes necessary to survive.

Trucking, today, involves constant change. You can't do things the way you've done them in the past, if you expect to survive. You can't hope that the economy is going to rebound to where it was in 2006 - 2007, because it's not.

I've stated, on numerous occasions, that the collapse of the financial system forever changed the way in which the trucking industry does business; as 911 forever changed the way in which we travel.

I recognize that, when people are going through stressful times;

When you can't meet payroll, and;

Creditors are pounding on your door, it's very difficult to stay focused; but focused you must be.

You can't make short term decisions because you're under pressure if they're not going to have a long term impact. As we are going through challenges, we always have a tendency to question our ability. What that means; we start losing confidence in ourselves and when we lose confidence in ourselves, we lose the ability to lead our company; we lose our self esteem and it starts a spiraling affect.

So, what do you do when you can't make payroll?

Announce immediate spending and hiring freezes. The freeze could include salaries, entertainment, unnecessary travel; any expenditure that will negatively affect your cash flow or profitability.

Get back to your roots; return to when you first started your business, when you didn't have a HR dept or the funds that you have now, and run your business based on the same ideals that you did then.

Use the minimum resources you had to survive in the past and you will stay afloat.

Be strategic about which practices you revert to.

If more than 50% of your business comes from advertising, don't stop the advertising, "think out the box" for advertising. Everyone uses the internet now!

Cut out the weak links in your team. Challenges force many people to rise to the occasion and you should use this as an opportunity to get rid of problem employees or those who are not pulling their weight.

Tell them you're sorry, but you have to lay them off due to economic conditions; a layoff is easier to defend, legally, than firing, so you're dodging a potential legal bullet as well.

Reduce salaries of over paid employees. Overpaid is defined as anyone on your executive team, including yourself, that you could replace for more than a 10% salary savings. Explain that you have two options;

a) To lay them off, or;

b) To keep them, but cut their pay.

As a leader, you must be prepared to reduce your own compensation, at least as much as the reductions to the salaries of your employees.

1. If an essential executive leaves, find an equally competent replacement who will work for less. There's someone out there that will always work for less.

2. Enlist everyone in the effort to cut expenses further and bring in more revenue. Explain the reality of the situation to your employees. Emphasize how it affects them personally and tell them how it affects you, personally, as well. Then, state that you don't want to lay off anymore staff but that, in order to avoid doing so, you need their help.

3. Do not lie, panic or act helpless. If you lie, you'll be found out and no amount of cash will save you. Be completely open and honest with all parties (employees, vendors, clients). If you panic, the rest of the company will follow suit and if you act helpless, your team will lose respect and focus.

4. Engage everyone in "emergency cash flow" procedures.

5. Propose across the board pay cuts. Explain that all staff must take a pay cut to avoid layoffs.

6. If you are still bleeding cash, enact layoffs.

7. Don't give up! The difference between successful people and unsuccessful people is that successful people do all the things unsuccessful people do not want to do. If 39 doors have been slammed in your face, be as enthusiastic on the 40th door as you were on the 1st. Persistence is the key to success.

When my firm is engaged by a trucking company that's hemorrhaging and they are 3 4 weeks from facing the bankruptcy court, we have to perform emergency service on their overhead. The first thing to do is instill structure;

We immediately enact pay and expense freezes, and we do not allow additional expenses to be authorized without the approval of the department manager.

We make management determine their immediate priorities and goals. As part of that process;

Identify short term goals and proceed accordingly, and;

If you can't cover your expenses, that means that you need to further eliminate all non essential and speculative expenses.

Identify your major business overhead expenses. These include such things as; telephone service, office supplies, printing cost, cleaning services, shipping fees, insurance, payroll, banking fees and leases.

Recognize that, virtually, everything is negotiable even if previously negotiated. You might think that your suppliers and vendors give you the best deal up front, but it's smart business to regularly shop these competitors and keep them on their toes especially in a time of need. Remember, you can not only negotiate how much you pay for something, but also when you need to pay for it.

Don't succumb to negativity. Be pigheaded and stubborn and track down the best options for your business.

Reduce telephone expenses; cell phones and land lines; they can quickly run up your costs.

Technology has advanced dramatically.

Monitor your cell phone minutes, to identify which is the best plan for you.

Consider converting traditional phone service to a VOIP service.

Be sure that your agreement states that you are automatically grandfathered into any future rate reductions or bulk savings.

Explore a group purchase plan. Or, as I've stated in many cases, become part of a partnership program;

1. Let the partner become the bank.

2. Let them do the credit checks.

3. Let them assist you with, not only with your credit and collections, but your DOT, and;

4. Allow them to help you cross sell your customers so, while everyone else is struggling, you can increase market share.

5. Involve your team. Create an initiative to involve your staff and solicit their suggestions on ways to cut expenses in their department.

6. Cut out the weak links. I stated that earlier! Remove personality from the equation and assess their job. If they're job is not essential, eliminate them.

Communicate clearly, honestly, and openly with your team, vendors and suppliers. Always remember to talk about what's in it for them as you explain the outcome you want. In other words, if you end up cutting expenses and taking on more work, you won't have to make further cuts and, eventually, you will get back on track. When dealing with a vendor or supplier, explain that if they help you, you will guarantee your business to them for a meaningful period.

Never feel guilty about asking for help. Your primary responsibility, as an owner of a trucking/logistics

company, is to earn a profit.

That provides you the leverage to create more opportunities for your staff.

That creates the leverage for an opportunity of additional growth, and;

Your relationships with your vendors, ultimately means that, if they're willing to work with you, you will be a loyal customer "down the road".

If all else fails; we will discuss how to obtain cash quickly.

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