Subscribe online for mybusiness
My Business contains fresh,
easy-to-read articles, money-making
tips and expert advice.
Sign up for our E Newsletter
Our free, weekly newsletter brings you the best of this site, plus giveaways and other fun. Sign-up now and receive a free digital edition of My Business.
Are your transport fixed-costs dragging you down?
Story by "Walter Scremin" | September 26, 2012, 9:32 AM
But the incredible thing is how many SMEs choose to persevere with transport as a fixed cost, by owning and operating their transport. Business earnings are rarely fixed – they fluctuate – and transport costs should ideally fluctuate with varying business demand.
If owning and operating your own transport, the following expenditures become fixed:
- Buying/leasing vehicles;
- Driver wages;
- Vehicle maintenance;
- Registration; and
These costs are inflexible, even if deliveries have stalled and business is down. And this does not take into account the ‘unpredictable’ costs of transport – such as breakdowns or unforeseen vehicle repairs.
More businesses are considering options for making transport costs variable by outsourcing, which can reduce transport costs to only what you use. For example, you may negotiate costs on an hourly or daily rate. Transport costs will drop when business is quiet and increase when you are busy; these variable costs better reflect your actual business activity.
However, any outsourced arrangement will preferably become part of your in-house team and actively improve the quality of your transport – better vehicles, better drivers and better service.
Besides the cost advantage, outsourcing provides additional flexibility and scalability, which means a business can maintain its delivery service level while growing.
Walter Scremin is General Manager of national transport & logistics company Ontime Group.
Follow @mybusinessau on Twitter for breaking stories throughout the day.
Register now to receive the FREE weekly My Business Headlines e-newsletter, which every Tuesday morning delivers all the latest news for SMEs straight to your inbox. Find out why you should join the SME Association of Australia.
Government news for business
To get on top of the threat, click here to access a Symantec.cloud White Paper and discover:
- The top 6 security trends SMBs need to protect yourselves against
- A Security Essentials checklist - the essential security controls required to cover these threats
- How Cloud Security services can offer significant benefits in security your business