What are the successful Contractors doing?
Over the last few years, our business has changed rapidly in the face of unprecedented challenges. From the covid-19 pandemic to high inflation, we want to examine the past few years and the lessons learned during this time. Whether you own a FedEx Ground business or a small business on Main Street, no company has been immune to these rapid changes, yet we see similarities in what workers and consumers want.
We have one of the unique seats in the room as we look at all types of operators and what they do to adapt to these changes.
- A flexible work schedule is one of the most sought after benefits that employees are looking for. Contractors using a 4 day on, 3 days off type schedule have seen their employee retention sky rocket! Part-time drivers are also critical in today’s successful operations. Sometimes they are called in with little to no notice, but they are hired on with that expectation.
- Alternative vehicle utilization. We are seeing more use of this option as a more significant segment of the workforce is looking for flexible hours. The employee will utilize their vehicle to deliver smaller packages in a smaller area. The drawback is that anyone operating a vehicle under 10,001 lbs will need to be paid hourly and potentially OT. Consult with your CPA to ensure you comply.
- Hiring solutions: I have told every potential buyer over the years that you are always hiring no matter what! This will never go out of style. The most successful contractors have several avenues to stay competitive in today’s hiring environment. They have the typical websites, such as indeed, monster, etc. They also use recruiters and word of mouth to find the best of the best. If you treat your people right, they will tell their friends and pay them a bonus.
- Employee retention. This shouldn’t be a secret, but it seems like it is. Offer a retention bonus after they hit certain milestones. I see them doing 6-month bonuses or one-year bonuses that graduate over time. But most importantly, pay them right for the job they are doing. Your payroll should be running around 50% to 55% of the gross revenue.
- Keep the debt down to manageable levels. One of the most disturbing things we saw during the pandemic was the OVER addition of trucks to the fleet. It was undoubtedly dang if you do, dang if you don’t situation the contractors were in, but the key lesson to take away is this. Ride these storms out in short-term leased trucks. We have come off the highs of covid and had settled back to our new norm here. Historically we see 10% to 20% YoY growth in this space.