31Hello Everyone,
Firstly, I wanted to take the opportunity to say hi to all of you, and to introduce myself. I also have some questions, which I’d love to have input on from the ‘wise’ heads on the forum – comments, advice, and constructive criticisms all welcome !
So, I’m Chris, 30-something, I’ve worked in IT and operations planning for over 10 years – so whilst distribution & logistics is fairly new to me, I feel that the ‘planning’ side of my past will stand me in good stead. I’m being made redundant in December (wooohoo, finally !!), and have taken the decision that I no longer wish to work in an office behind a desk – I want to be outside, on the road, and working for myself.. I’ve spoken at length with a friend of mine who is an owner driver of his own courier/haulier company, and I’ve come to the decision that this is the field I too am going to start up on my own in.
So, to that end, I’ve started CDL Europe Limited, based in Central Scotland, and able to go anywhere – for the right price, of course. I am hoping to get some work within Western Europe as well as UK domestic. I hope to sort out all of the details and start “trading” in December once my redundancy comes through.
I have a fairly strong background in business, so the administrative tasks, accounting, planning etc. come easily to me, and I studied risk management at university. However the mechanics of running a courier / haulage business is something that I am looking for as much input as possible, until I can learn the quirks of the trade.
The rest of this post might get a bit long winded, so I’ll leave the ‘hi’ etc. there for now - feel free to skip to the end !
Here are my thoughts on several areas, again I welcome any comments:
- The Van It seems to me that a lot of people in this industry go out and get the biggest van they can drive on their standard license, without requiring a tacho / O-license. Upon researching several vehicles, and the industry / types of work available, it seems to me that there is a balance to be struck between physical dimensions, and payload (i.e. weight). Whilst there is plenty of work out there for a 4 metre long / 2 metre high van, the payloads of such van seem to be restricted to ~1000KG… and most jobs would comfortably fit in a smaller van – in respect of both weight and dimension.
I’ve therefore come to the conclusion that in order to keep costs down, which seems particularly important for a start-up, I am going to go for a Fiat Doblo Maxi van (1.6 SX 16v), it seems to strike a good balance between size and weight, can comfortably take UK or EU pallets, and a payload of up to 1000KG. I might also consider one of the Vauxhall variants of this chassis.
I’m so far undecided as to whether I am going to buy new at ~£11k+VAT, or second hand ~£6k+VAT with 50k miles. I’m leaning towards new, however I need to take advice (visiting business gateway soon) on what would be the most tax efficient option.
- Insurance I have done a bit of research on insurance, but could really do with some recommendations. I do not want to be doing courier work, i.e multi-drop, and mostly residential & city/town driving, I am looking to be doing mostly trade/commercial haulage work, e.g.1-3 drops a day over (relatively) long distances. ‘Express Light Haulage’, would be the most appropriate descriptive, I believe. However, the insurance brokers I’ve spoken with so far have both given me quotes of over £3k, however this has been for ‘courier’ insurance, apparently they consider anything ‘time-sensitive’ to be courier work, rather than haulage. Suffice to say I disagree.
I have been offered up to £50k GIT cover, and £2m public liability – these cover levels seem excessive to me, and whilst the GIT / PL parts of the quotes weren’t hugely expensive (comparatively), it all adds up !
So any recommendations for insurance, particularly light haulage insurance, would be great. I know there are arguments for and against this, however I’m fairly certain this is what I need.
Getting Work Again, this is something I have looked into, and have discussed with my friend… however there are some points I’m undecided on. Initially, I assume I’ll probably struggle to get work as I’ll need to build up my reputation, so I’ll certainly be relying on the trade/exchange sites at first, it is my intention to sign up for pretty much all of the major sites and scour them daily for suitable work. Unless anyone wants to be awesome and throw work my way, I’d appreciate any tips/pointers on things to look out for / avoid.
Branding / Getting Customers This to me seems to be a bit of a dilemma, initially my though was ‘Brand Everything’ – i.e. van, paperwork, uniforms (yes !!), website, etc… until it was pointed out to me that when subcontracting work from other companies (particularly on the exchange sites), I can’t be seen to be ‘advertising’ to my customers customers, even if that’s not my intent ! I fully understand the concept of poaching, and find it pretty underhand so certainly isn’t something I’d be doing… however that then brings me to the branding question – to brand, or not to brand. I certainly intend to have a ‘uniform’ – e.g. polo shirt with company logo on it, but I see the point about not branding POD paperwork etc, although invoicing is obviously fine. But, what about the van – again I had intended to have it sign written – but I’m getting the idea that if I’m to be subbing work out the van NEEDS to be plain. Any thoughts ?
PODs Considering what to do regarding PODs. Paper-based of ePOD ? I’ve looked at Podfather etc, but the cost of the additional equipment seems excessive/prohibitive. Probably just going to use paper, and scan to PDF either on the PC, or on the go using one of the iOS/Android apps such as Turboscan, etc. Anyone any thoughts on the best way to handle PODs.
Getting Paid Cashflow is important to any business, but again its something of paramount importance to small businesses, and particularly start-ups. I must admit that I have been fairly surprised and a tad concerned to read on several forums/exchange sites that it appears to be the customer that dictates the payment terms. I cannot think of any other industry where this would be the case. What I found particularly shocking, is tales of customers stating 45 and even 60 day EOM payment terms, meaning a supplier could have to wait up to 3 months in some cases to get paid. I can’t see how that is sustainable, nor how these people expect others to survive in business under such conditions. I’ve mentally made the decision that I will not be working for any customer who would dictate such ridiculous payment terms. However, with that said… I’d be interested on your views of ‘the norm’ – I had initially thought 30 days from the invoice (i.e., 30 days from the service being supplied), but I’m hearing 30 day EOM is common ?
I am considering building a discount scheme into my invoicing, where if a customer pays within X days (7 ? 14 ?), I’ll give them an x% discount. I’m thinking 5% - but I’m also wondering, would they ‘bite’ for such a ‘small’ discount, or would they need a bigger incentive. I’m also thinking that I’d be looking at building this ‘discount’ into the overall price I’d be charging them anyway, and that it’d only be applied to customer with lengthy payment terms. I am also considering just being realty strict and telling them that as I am the supplier, I will be setting the payment terms….. but I get the feeling that is unlikely to be a router that will help with ‘making friends and influencing people’ ! haha.
- How much to charge ? And of course, this brings us nicely on to ... From reading the forums, I think I realise this is almost a forbidden question.... so rather than ask, I’m going to tell you how I’m planning on working out my rates – and invite your comments.
I’ve worked out the cost of the van, fuel, insurance, maintenance, trade site subs, accounting & misc fees… added on 17p/mile for ‘wages’ and then divided the lot by 100,000 miles to give me a pence /mile cost. This, combined with my cashflow projection assumes that I am getting paid for 50,000 miles and running back empty, so it’s almost a ‘worst-case’ scenario as I plan on doing this as little as possible. I’m in the position that I don’t really have any ‘ties’ forcing me to return home each night, so I’ll happily go in whatever direction the work is, but I’m sure there will be work in roughly the right direction some/most of the time. My cheapo (backload ?) rate is around 55pplm, with my higher end ‘get it there ASAP’ rate being around 75pplm, all costs and rates are worked out exc vat.
Do these sound reasonable ? I’m considering charging slight ‘premiums’ for weights above 500kg, to counteract reduced fuel efficiency, but unsure if this is wise. Also, I’ve seen much discussion on waiting time, and/or charges for handballing loading/unloading My thoughts on this are 15 mins FOC at either end, any more I’d be looking to charge £25/hr (+vat) in 15 min increments.
- Bad debt I’ve read a little about this, and one of the questions I’ve been asking my friend is “Do you make your ‘new’ customers sign any sort of agreement ?” Effectively, you’re giving them free credit for X days – I’m slightly wary of someone just refusing to pay and denying all knowledge of it ! Does this ever actually happen ? Do any of you charge late payment fees / interest ? If so, when do you do this… immediately payment is overdue, or only if excessively overdue. Do you sell debts on, or chase them yourselves ? I’ve built 5% bad debt into my cashflow forecasts, Again, Reasonable, or plan for more / less ?
Anyway, that’s pretty much what’s floating around in my head for now (I’m sure I’ll have more questions at some point)…. For anyone that’s actually read all of that and/or taken the time to reply, thank you, I appreciate it. I look forward to, hopefully, seeing you all out there, getting to know you, and hopefully forming some good business relationships !
Cheers for noo ! Chris.