Recently, my firm has been helping educate the management team of a flatbed carrier in “Business 101” with the goal of achieving higher company profits. We have found that the best way to help improve company profits is by teaching the management team the basics of business.
Approach the basics as if you were totally new to this industry. Indeed, many of your managers might as well be new because very few have any business-based education. Moreover, the trucking industry has changed so much in the last few years that even veteran managers may not be up to speed on current trends and best practices.
How would someone just getting into this business learn about the big picture and the best financial practices of the smartest participants? Two tools are an overall industry study and a financial benchmarking study. There’s a good chance your bankers consult both as they review your company’s financial statements.
Industry studies are overviews that attempt to provide a quick education on the hot topics, key questions, trends and developments, threats and challenges, as well as profit opportunities of a particular industry. In addition, they frequently have small-company financial benchmark information, profitability trends, selected public company financial information, trade association benchmarking stats, as well as other economic and statistical information.
Industry studies also are good for teaching managers industry averages. It’s essential to focus your managers on matching or beating industry financial averages, but they can’t do it unless they understand what the averages are.
Your accountant can help you compute your own numbers and perhaps lead discussions with the management team. In the process, you should discover new paths to profits.
There’s another great use for industry studies: understanding the industries of your customers. You will forge a stronger partnership with shippers if you can demonstrate that you are well versed in their issues. Perhaps you might even find a way to show one of your customers a new opportunity for profit.
Although industry studies are invaluable, they typically aren’t detailed enough to help good managers become outstanding. Good managers understand the basics. What they need is a tool to take them to the next level. That’s where benchmarking studies come in. The more detailed benchmarking studies frequently are privately sponsored by consulting firms or trade groups.
These studies can truly drill down into best practices for a particular type or size of company or on specific segments of an industry, such as refrigerated, van or flatbed.
Because this data isn’t just lying around, benchmarking studies often are expensive and time-consuming. The Truckload Carriers Association, for example, is involved in an ongoing benchmarking project that has been years in the making, including the time needed to win Justice Department clearance for the effort.
This kind of benchmarking is essential for achieving the absolute best results, but any education is better than none. Moreover, managers need grounding in the basics before they can tackle more sophisticated concepts. When seeking company profits, don’t assume your managers are fully trained on the industry. Make sure of it.
One source of industry studies is First Research. Industry profiles, including “Trucking,” are available online for $99 each at http://industryprofiles.1stresearch.com.
For more information on the Truckload Carriers Association’s benchmarking project, contact TCA’s consultant, Martin Labbe, at (386) 672-4413.
The TTS Blue Book of Trucking Companies includes strategic financial and operating data from 2,700 annual reports filed with the Department of Transportation, plus key state Public Utility Commission filings. For more information, visit www.ttstrucks.com.
The American Trucking Associations’ Trucking Information Services Inc. offers various publications on carrier financial and operating statistics. For more information, visit www.truckline.com/infocenter/econ/econ_tis.html.