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Is It Better to Cut Trucking Business Costs or Invest That Last Dollar?

March 19, 2012 By Sozo Staff

When times are tight, the first reaction of many business owners is to slash expenses and keep costs down. But the long-term viability of a business is about more than day-to-day survival. The most successful trucking business owners are always thinking ahead to the future. Saving your last dollar may help your business survive another year. On the other hand, re-investing that dollar may get you to the next decade – and to a new level of profit potential.

Get Ahead of the Competition

Business reinvestment always slows during a recession, as most business owners focus on trimming costs and squeezing out a meager profit margin. But this is exactly why your company should consider doing the opposite. By making a move when the competition is dormant, truck business owners can capture the attention of new clients, pick from a pool of experienced workers, and access other opportunities that are ripe for the picking. Making smart re-investments during a downturn puts companies in a position to enjoy more funds when the market improves, which they can reinvest again, and so on.

Take Advantage of Capital Investment Opportunities

Capital investments typically aren’t cheap, especially when you’re talking about high-priced trucking equipment. But when most business owners are tightening the purse strings, prices are usually at their lowest point. Increasing your inventory can increase production capacity in the future. Investing in new technologies can lower future costs. Hiring new employees when your competitors are laying their workers off can give you prime pick of the best drivers.

While making individual purchases of brand new equipment is going to be costly no matter what the state of the market, a strategic acquisition may offer a bargain. Downturns are often the best time to merge with a small trucking business for sale. Just because a business is under-performing today, doesn’t mean their fleet, drivers, or existing customers won’t be valuable tomorrow.

Prepare for a Successful Sale

Even if you have no plans to list your trucking company for sale in the immediate future – or even a decade from now – it’s impossible to predict what tomorrow will bring. Reinvesting now can keep your business in shape so that when you are ready to pull the trigger, you can get the financial payoff you deserve for those years of blood, sweat, and tears.

Business owners have a tendency to think about reinvestment when times are good, and plan for exiting the market when times are bad – whether it’s due to the economy, personal issues, or simply boredom with the business. But that’s backwards. The best time to reinvest is when prices are low and opportunities are plenty. Along the same vein, the best time to put your truck business for sale is when business is booming and you can get the best possible price. If you do decide to cut your losses and get out before the market picks up, previous re-investments can increase trucking company valuation and help you attract the interest of a strategic buyer.

Whatever the state of the market or industry, investing in your company pays off. Whether you’re thinking of reinvesting in preparation for a sale or with a merger or acquisition in mind, a trucking business broker can help you understand and leverage your options.

Filed Under: Transportation

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