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usiness strategies for 2008
Page 39
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limsoll Publishing divides road transport firms into four groups epending on the business strategy they are following. Note that hese titles are not designed to be positive or negative-they are imply descriptive of the state of play. For some* conservatism is bsoluteiy necessary. But if your operation has the inherent strength to go on the offensive that's where ou should be.
*inners
These profitable firms have low, manageable debt levels and pass on cost increases. Typically they will control their costs tightly and have contracts that insulate them from any fluctuation. They protect ashf low and push hard for sales growth, but from a sound financial background.
Chancers
These firms have many of the winners' characteristics but not their healthy bank balance. They will borrow heavily to push hard and the pay-off may only come after a few years frantic juggling. However, some highly profitable companies have been built on driving the tiger". In the US particularly, loading start-up companies
with debt is a popular way of forcing managers to focus minutely on costs and cashf low; it arguably produces leaner firms.
The chancers will be vulnerable in 2008 if starved of capital they must service their secured debt without fail because the banks will become very twitchy about unsecured overdrafts It takes courage, dogmatic management and long-term vision to achieve this.
Sleepers
Often older established or family firms, these operations are without ambition. They have achieved the footing they want and tend to operate in a defensive and protective manner. They are light on capital Investment and debt and can provide a steady lifestyle business for all involved.
Their potential weakness in 2008 will be the difficulty of passing on rising costs to long-term customers. If they can achieve this and have a tight rein on costs they are in an excellent position to shift gear and target the weaker players around them-if the (Vectors have the will.
Losers
These firms are losing ground, losing sales and losing money. Many are in this position for a second year and credit will only get tighter. Change, sell or die are the options. If cashflow is still viable they should tighten up on costs and identify the opportunities they can pursue. But cash wili only buy timedetermined management action is needed to turn the situation around.