5 tips for running a successful transport business

Every day we hear of transport business going out of business, some for financial reasons, loss of a key customer, no one to take over the business as current owners look to retire or simply the legislative requirements have just become too onerous.

September 25, 2015 Mills Transport from the North Coast of NSW closed after more than 90 years of active business with four generations of the Mills family having managed the business. Mills was a successful transport company starting in 1924 with depots in northern NSW, Sydney and Brisbane. The decision to close was as quoted by Reg Mills “the investment in transport was no longer supported by the returns offered by the market”.

For a business to be successful I would offer the five following tips:-

1. Equipment

Equipment must be fit for task, do not buys a 10t truck to do a 20t job, equally you do not need a 700hp truck to do highway work.

Equipment must be safe and reliable. The NSW RMS have a Guide entitled Safety Technologies for Heavy Vehicles and Combinations which is extremely useful both form a safety perspective but also to consider what options should be added to a heavy vehicle purchase. The technologies are categorised by type

• Crash avoidance

• Protection System

• General Safety Technology

Equipment must also be cost effective, ensure your cost for equipment does not exceed one third of your total costs. Consider the length of time you will operate your equipment as to the payback period, a period of high activity i.e. a 24/7 operation with 2 or more drivers may necessitate a 2-year payback period compared to a single driver operation working 12 hours per day for 5 days per week.

Equipment must be supplied by a reputable Motor Trader who can support the equipment for regular maintenance and break downs. Time spent away from the usual income producing operation can be lost income. Down time is to be managed to its lowest cost, this can be achieved by scheduled maintenance and confidence spare parts are available as and when required.

2. People

Any business will tell you your greatest asset is your people. How you manage people will also be your most critical skill as a business owner. Most truck drivers spend most of their time away from sight and communications, yet they can be handed the keys to a Heavy Vehicle combination valued in excess of $350,000 and left to their own resources. So how do you best empower your drivers?

Training is a key objective for any business. From General Driver Induction, to Chain of Responsibility Training, to specialised driver training by the OEM to ensure the driver is operating the Heavy Vehicle in its optimum form. The more a driver is valued as a critical resource and investment is made in the driver’s individual development the more rewarding the driver will feel toward the business. They can be empowered to become your best marketing resource by speaking daily with your customers and potential new customers

The use of psychometric testing is of excellent value in deterring a driver’s emotional intelligence, how they cope with stress under pressure is a good indicator if support is needed to prevent incidents occurring.

Driver health is a critical area for a successful business to manage; NSW WorkCover has produced a guide titled Safety in the Road Transport Industry which deals with Wellness and other work related safety issues which will affect all drivers.

3. Customers

The success of any business is having a good solid customer base. Customers will engage a transport company for the primary purpose of completing their marketing objective of Distribution. They need you to get their product to their customers on time and in good condition. You need to know how to go the extra mile when asked, how to meet a deadline when asked without risking driver safety and how most importantly to provide a reliable and consistent service.

The opportunity for a Carrier Management Review meeting your customer/s is an important strategic tool.

Key agenda items covering:

• Safety

• Delivery Performance

• Operations management

• Cost management

• Volume management

• Customer management

Carrier/Customer Review Meetings should be held at a minimum quarterly and depending on the business weekly or monthly. For clear objectives around continuous improvement having bench mark metrics to work from with regular key performance metrics being captured and recorded will drive business improvement without emotion and lack of information. To be successful you need to demonstrate success and the best way is by showing how from a bench mark measure you have made improvements. These meetings can also become a reasonable steps defence in light of transport safety obligations on both parties.

It is important to be kept informed about the newest trends or innovation that may be available that you can offer to our customers. How to improve turnaround, how to reduce product damage, how to reduce their costs and how to improve safety collaboratively.

4. Systems

Given the increasing demands on a new business it is equally important that each business has a cost effective, simple to use Transport Management System. Depending on the size of the business and the complexity of operations there are many different types of Transport Management Systems.

A transport management system for a small transport business needs to complete the following tasks:

• Administration

• Costs

• Revenue

• Cash flow

• Customer Service

The more a transport management system is integrated into the business the less data entry is required, by having remote control terminals located in trucks the data entered by the driver can be easily uploaded into each of the above key tasks.

Transport Management Systems can also assist with inventory management if goods are being stored on behalf of a customer or be used for load planning and scheduling taking into account the various fatigue management plans a business may be working under.

A business having a Transport Management System that can produce accurate and robust metrics on all aspects of the business on a daily basis is a critical tool towards success.

5. Legislation

Legislation may not seem a critical tip for running a successful business, however we need to be mindful that to run a business today according to SAI Global there are over 4000 pieces of legislation a company needs to consider while in business. This is mind blowing and can be completely over whelming for most business owners, having suitable legal advice and financial advice are minimum pre-requisites for any business. Being able to ensure a business plan is drafted to take into account he legal and financial constraints of any business are a minimum to have in place before commencement.

Then to review that plan on a regular basis taking into account any legislative changes and updating the business towards recognising and achieving these business requirements will ensure longer term stability and success.

Small Business Connect is a funded service of the NSW Government which can assist with small business to work through all the multitude of Government legislative requirements.

Modal Logistics Pty Ltd has the strategic and operational resources to help your business with any issues you may have in regards to running your business. From Cost issues through to training your people or working through the legislative requirements of OH&S or transport compliance we have the tools that can be of assistance to you. Should you be considering starting a business and would like some support through the start-up Modal Logistics Pty Ltd can provide you with that support.