FINANCIAL ADVICE: Don’t overlook your most important Asset – your Customer base

1188

As Ireland Inc. heads into further restrictions and lockdowns, the biggest question all transport operators are asking is how they can protect the value of their business and their customer base. Finance expert Donal Dempsey explains. 

Very often when we consider assets, our minds immediately turn to cash in bank and moving stock, items that one would consider prone to theft or internal mis-management. In essence, the number one asset of all transport firms is its customer base.

During this crisis it has become obvious that there are various types of virtual on-line meetings available, poor communication is still prevalent due to all parties being under pressure. It has become the ‘new norm’. We even see in the hospitality sector that due to COVID-19 work practices have changed with some new accepted norms when it comes to customer care. With regard to customers of transport firms there is divided opinion by many owners. Some believe that communication with customers only gives rise for complaints and additional free services, while the majority of owners rightly understand than keeping in contact with the customer base is vital. It is a way to know what developments are happening in their business and if there are service issues, being the first to hear rather than to competition, especially when it comes to pricing work.

Developing a good customer base means that you are maximising the productive use of assets, it’s far easier to retain a customer’s turnover than go out and replace turnover lost. Good communication with your customer puts you in a stronger position re; rate negotiation and preparation for new services or changing work practices. Having a strong customer base means the actual goodwill value of the business, an asset that not often appears in a balance sheet is maximised, along with the value of plant and equipment to service a customer base that has a strong and sustainable margin.

It is not unusual for long standing customers to be truly engrained in how you operate your business. Your knowledge of their logistics requirements may exceed theirs and even stock systems may be linked where you offer the full logistics service to your customer. In this crisis the customer may even want assurance that business continuity will not be effected unduly and that you firm has an operational plan that does not expose the business or key personnel.

In this age of electronic information there is no excuse in not being able to monitor financially key customers as without a doubt they are doing likewise and in this crisis its vital that you are constantly monitoring and improving the customer base of your business. If you take an example in farming, the dairy farmer is always monitoring and improving the herd but still realises that multiple issues may arise and good management reduces this risk.