Recovering from the COVID-19 crisis is a challenge for all businesses, but being aware of the challenges ahead and have a plan in place, road transport operators will be in a better position to survive and thrive. Transport Financial Advisor Donal Dempsey provides the following advice.
At the present time all transport businesses have experienced a slow and moderate increase in volume, with no rate pressure, together with significant cost advantages in both diesel and wage support. While all companies are aware that this may be the ‘calm before the storm’ many are trying to future proof their businesses against a possible recession and volume decrease. The advantage now is that we have seen the effect the Coronavirus has had on the economy. We have also seen how the transport industry can cope in crisis and for once State support was made available. But the sector can perform even better.
Step 1 Make sure the business is as profitable as possible and be in a position to monitor this accurately. Do not delay in making the tough decisions early to safeguard the existence of the business and the value that has been built up. Now is the time to work on the business so that it is streamlined. Ensure the best processes and people are well positioned when and if the next crisis happens.
Step 2 Cash is King. As the banks and finance houses have been accommodating business’ with cash flow and the build-up of a cash reserve, most hauliers have not experienced bad debts and along with the Government wage support and an agreement with Revenues re; deferred payment of VAT – all have contributed to improved liquidity positions.
Step 3 With the possible/likely re-emergence of the pandemic, all businesses are looking to put plans in place that will safeguard the continuity of the business long term, company owners now more than ever before do not want to put all eggs in the one basket, not overcommitting to assets that will be lying up or may have significant drop in value.
Step 4 Successful transport businesses are those planning ahead of the competition by way of how they operate, what services they provide, how efficient they are in the use of new technology and in general better able to read the road ahead. Many traditional businesses that had a large workforce, with their own stock holding, reps on the road and delivering to wholesales or retailers are now under financial pressure. They may have to decrease in size.
Step 5 Appropriate business planning takes out all unnecessary costs and addresses the bottlenecks that could result if the crisis returns. Simple things like moving all accounts and administration functions to operate remotely, reduce a two-person vehicle unit to become single manned with appropriate handling equipment installed. Establish simple drop off procedures to avoid personal contact, as well as flexible work practices.