16 Ways to Run a Lean Trucking Business + Infographic

16 Ways to Run a Lean Trucking Business + Infographic

Running a lean trucking business could put more money back in your bank account and allow you to grow more quickly. Here are sixteen strategies that can help you get a better return on the money you spend. 

Maximize Working Capital By Running a Lean Trucking Business

Business owners that adopt a lean business strategy set out to spend less overall by ensuring that they are getting measurable value – and the most value possible – out of each dollar they spend on business operations.

The bottom line? Adopting a leaner business model could mean faster growth for less money. Below you will find sixteen ways to run lean trucking business operations in order to get more from each dollar you invest in growing your business.

Before you do, it is important to point out that lean businesses are not just organizations that try to cut costs.

Cutting costs outside of a business growth strategy could easily result in lost business when items that enhance the customer’s experience – and perception of the value of the goods or services of the business – are slashed.

A lean business model is an operating strategy that both:

  • strives to eliminate waste in product and processes, while also simultaneously
  • strives to satisfy customer wants and needs

A better understanding of the idea of a lean trucking business model might be the idea of creating more value for customers using fewer resources. It is about maximizing the value of each and every dollar spent in running and growing a business. The Lean Enterprise Institute shares a multi-step process for creating lean business operating tactics that boils down to this:

  1. Identify specific value prized by your customer
  2. Identify all the steps or inputs it takes to create that value, and eliminate any unneeded components
  3. Make the stream tighter; make the value-creating inputs occur in as tight a sequence as possible to get it to the customer as quickly as possible

While it might sound simplistic, tracing back all of your business processes to their elemental components might be difficult. Luckily, we found an Entrepreneur Magazine infographic (scroll down) which identifies sixteen ways to run a lean trucking business and make your company more efficient and profitable.

16 Ways to Grow Faster By Running a Lean Trucking Business – Infographic

1. Go Without

When it comes time to make a purchase or a hire, take time to be sure that it is necessary and eliminate the possibility that there are less expensive ways to fulfill the need.

2. Lead by Example

It can be difficult to get employee buy-in for a work environment that is too cold in the winter and too hot in the summer (for the sake of saving money) if you aren’t working in the same conditions. If you want others to remember to turn off lights and equipment when not in use, be sure they see that you are doing it too.

3. Source Creatively

You might be able to trade for goods or services with other companies at a lower cost than buying comparative goods or services outright. Network with other local business owner and Chamber of Commerce groups so that you can source more creatively. As a bonus, you will also be earning local goodwill as you create mutually beneficial networking relationships with other organizations.

4. Get Things in Writing

Eliminate unpleasant surprises by asking to have the details of your agreements with vendors, suppliers and clients spelled out in writing.

5. Recycle and Resell

Rather than throwing out old equipment or furnishings, see if there is someone willing to buy them from you, or whether some of the materials (such as metal) could be redeemed at a recycling center for money. Every penny recouped by recycling or reselling counts!

6. Max Out Available Discounts

Save money by taking advantage of discounts available to your company in business networking groups, industry purchasing groups or memberships in business office supply stores or big box retail centers.

7. Take the ‘Petty’ Out of Petty Cash

Petty cash funds are often made available to make it easier for staff to make change or to go out and buy miscellaneous supplies. In a lean business, there is no such thing as a “petty” – or unimportant – line item. Keep track of petty cash and any other slush funds and establish accountability.

8. DIY as Much as Possible

If you can save money by creating your own forms, printing and cutting your own business cards, picking up local supplies rather than paying for delivery and making repairs and renovations yourself, you may be able to shave lots of dollars off the operating budget. And do not forget to tap your staff, because they may have skills or connections that can be leveraged to help you grow that you aren’t yet aware of.

9. Ask Why

Take nothing for granted! Before re-upping or when auto-renewal windows arrive, make sure you are asking whether it is still essential to your business and taking the time to explore competitive quotes.

10. Hire for Core, Outsource or Train for Extras

Before hiring or refilling a position, consider whether you are hiring to a core business need or might be able to reduce costs by outsourcing or spreading tasks out among existing staff.

11. Waste Not

Save by buying in bulk when you can, printing on both sides of your paper, using waste paper as scrap for taking notes or phone messages, refilling print cartridges and other penny-saving practices. Pennies can add up fairly quickly when everyone is getting the most out of supplies and equipment on hand.

Going paperless and storing backup documents remotely can also help you cut office supply costs immensely over time, since you will not need to purchase as much paper or ink or storage units.

12. Get Professional Help Where It Matters Most

The cost of legal, marketing, accounting and other expertise might seem expensive, but it might be a drop in the bucket compared to the pitfalls you might encounter if you don’t pay for experts when it comes to doing your taxes, reviewing contracts, submitting trademarks and copyrights, writing business plans and completing other business activities.

13. Keep All Your Receipts

You may be unaware of all of the different business expenses that qualify, so to make sure you can take advantage of all deductions available to you, keep all your receipts, at least until tax time! You can save money and time by investing in a system for digitally scanning and storing all your receipts, eliminating the need to print and store vast amounts of single records of transactions and saving time by filing them digitally for easy retrieval when needed.

14. Use Plastic Money Strategically

Some credit and debit cards or banking activity can help you earn rewards, miles, and other perks. Look around for those that offer the type of rewards that would benefit your organization most and use your cards strategically.

15. Negotiate Everything

Ask vendors and suppliers for discounts on cash or early payments or negotiate for longer payment terms that will let you keep working capital on hand longer, whichever is more financially beneficial to your organization. Also, find out how factoring invoices with a top freight factoring company can put you in the driver’s seat when it comes to negotiating with vendors or extending better terms to your own customers.

We offer great freight factoring rates even to single truck and small fleet trucking companies, including small invoice, spot factoring and micro factoring programs that let you maximize the benefits of factoring only when it is best for your trucking company.

16. Buy Used Instead of New

Craigslist, newspaper classifieds, eBay and second-hand stores all make it possible for you to buy office furnishings, supplies and other items at a lower cost than new items usually require. Likewise, watch for local going out of business sales, surplus auctions, and other events where you may be able to save exponentially on the equipment, supplies and furnishings your business needs.

Featured image,  @5m3photos via Twenty20

infographic lean business

7 Ways to Speed Up Business Cash Flow

7 Ways to Speed Up Business Cash Flow

Waiting on customer payments? Leverage these ideas to speed up business cash flow so you can focus on growing your business, instead.

STUDY – 3 Out of 10 US Businesses Not Paid On Time

According to the 2018 Global Trade Credit Payments Study by Dun & Bradstreet, U.S. companies in many industries are not being paid on time. While nearly 7 in ten financial services invoices are paid by the due date, as few as 38 percent of manufacturing invoices are paid on time.

Average time businesses wait to get paid

The Financial Services industry wins again when it comes to the fewest number of invoices that go beyond 90 plus days late before getting paid. Retail Trade, Construction and Transportation and Distribution industries have the most invoices that remain unpaid three months past their due date.

Retail Trade, Construction and Transportation and Distribution industries have the most invoices that remain unpaid three months past their due date.

Whether your business falls into one of these categories or a different one, every business that invoices customers or waits on third party payments (like app developers and merchants selling on Amazon, Zulily, Poshmark and similar platforms) experiences some kind of opportunity cost while waiting to see these on-the-books receivables turn into working capital.

The Opportunity Cost of Slow Business Cash Flow

Yes, sitting around waiting on customers to pay accounts receivable invoices or for third parties to pay out your commissions and sales revenues does have a name: Opportunity cost. It’s the sum total of anything you couldn’t do because you had working capital owing on the books instead of in hand; such as:

  • Waiting to replenish inventories or supplies
  • Limiting marketing and advertising funds
  • Stressing your ability to meet payroll or expenses
  • Precluding you from getting quick-pay discounts from your suppliers or vendors
  • Preventing you from expanding, taking on bigger customers or new orders
  • Watching competitors take advantage of emerging opportunities while you wait on the sidelines

Working capital is opportunity! Let’s talk about some of the ways you can speed up business cash flow so that opportunity cost doesn’t slow your organization down or keep it from growing as quickly as it might have otherwise.

Speed Up Business Cash Flow with 7 Proven Tactics

1. Restrict Customer Payment Terms

So this might seem a bit obvious, but one way to get customers to pay faster is to reduce the number of days customers have to pay. This won’t work in every case and of course doesn’t apply if you wait on payments from platforms like Amazon, Zulily, Poshmark, mobile apps, etc., because the platforms have non-negotiable terms. It could also be perceived negatively in terms of competitive advantage, causing customers to turn to businesses that extend more generous payment terms instead.

2. Factor Receivables

We help speed up business cash flow every day, every time we forward an advance on an invoice factored by one of our clients.  It works like this:

An organization or entrepreneur that sells products or services on terms to customers (or via third party retail or e-commerce platforms) factors – or sells – that invoice to us for a small fee (called a factoring fee). Within 1-2 business days, that organization receives an advance on the invoice (or promised payment) of up to 93 percent.

The invoice can be factored as early as the same day the customer invoice is generated (or the third party platform statement is received), so instead of waiting weeks or months on payment, the organization can completely eliminate opportunity cost and stay focused on growth. This enables organizations and entrepreneurs to:

  • Better align expenses with corresponding revenues
  • Meet payroll and operating expenses more readily
  • Access working capital needed to capitalize on fast-emerging opportunities
  • Increase inventories or supplies to take on more orders or serve larger customers
  • Negotiate fast-pay discounts with suppliers to save money on operating expenses
  • Reinvest in the organization more quickly (operations, staffing, marketing, advertising etc.)

3. Provide More Payment Channels

Waiting on customers to send payments via U.S. Mail can add days or even more than a week onto your wait. By adding more payment channels including online pay capabilities you make it possible for customers to choose the payment method that is most convenient for them. In addition, emailing invoices to customers instead of mailing them by postal service may cut additional days off your wait time.

4. Communicate Frequently

Staying in touch with your customers keeps your business top-of-mind and can passively remind them that they should send payment to you. Nor does communication need to be about the customer’s invoice, although this may be a necessity with slow-paying customers. You can stay top-of-mind with customers by sending occasional email newsletters, updates, special offers or expert advice, thereby adding value to the relationship as well.

5. Think Lean

If you overstock inventories or supplies, then your money could be sitting on the shelf instead of at your disposal. Pay close attention to customer preferences, buying cycles, patterns and seasonal trends to see where you may be tying up working capital on slow-moving products or services.

6. Create a Formal Process

What kind of plan do you have in place to communicate with slow-paying customers? Creating a formal process – almost like an email drip campaign – can remind and encourage customers whose payments are late to bring their account up to date.

7. Extend Quick-Pay Incentives

Giving customers some type of incentive to pay you ahead of schedule may speed up your business cash flow. These incentives need not be quick-pay discounts, although that is a commonly used tactic. If you are going to extend discounts, be sure that to examine how they will affect your organization’s overall profitability. You may find that the fee for factoring invoices is far less than the amount of customer discount it would take to incentivize early payment.