Are You Putting All Your Eggs in One Basket, Or Do You Diversify?

Are You Putting All Your Eggs in One Basket, Or Do You Diversify?

One thing that we believe very strongly in with our business is… Customer Diversification. In the spot market, we rely heavily on the broker to get our loads and we have run into many carriers who rely heavily on a small number of brokers to provide a large number of their shipments, as they keep them moving at a fair rate and make their job easier when it comes to finding loads. We believe that the customer/broker list we have for our businesses should be something that is constantly evolving and not something that stays stagnant to make the load acquisition process easier. Relationships are key in any market or any business, which is why we should always strive to perform at a consistent level for anyone who trusts us with their freight, working to become the carrier of choice for all. We believe in having preferred customers/brokers who we give priority to, but we also believe you should be constantly checking them against the market and other customers who may be raising rates, or improving the carrier policies that favor your business more than someone else who you have been relying on. We need to have loyalty but, we always need to ensure our business is first, as it is the only thing we can control in the equation.

When an investor or someone looking to purchase a business reviews the company of interest, they will typically place a lot of value on the businesses customer diversification, as any business relying on a few customers for the majority of their revenue can be seen as highly risky. They like to see a diversified customer list, showing that you are not too vulnerable to market changes, or that your business isn’t formed to just provide service to one provider, making sure you can serve many businesses in the market you operate. A diverse customer base is a proven way to protect your business against market shifts, as well as one of the best ways to improve your bottom line long-term. What if your main broker who moves you 40% of the time leaves the business, or gets promoted to manage another office? You will have to trust that his replacement doesn’t have an existing carrier list that he favors, along with trust that the customers the previous broker managed will remain loyal to the replacement, which none of this is in your control. If you maintain an active customer list that is constantly evolving and improving, where no one customer or broker is in control of a majority portion of your revenue, you can be insulated in instances like this and your business can go on as usual, as you remained in control of your own business, diversifying your revenue makeup.

In our current market conditions, now the time is more important than ever to diversify where you get your loads. Shippers are making changes, smaller to medium brokers are getting chances at taking some market share and newcomers are improving the carrier agreements to provide more favorable conditions for the carriers. Go through your list of brokers/shippers from the past quarter and make sure your business is diversified and if you are heavily relying on a single or dual source, we recommend getting out there and testing the market heavily to increase your broker/customer list and making sure you are maximizing all that is out there at this moment. You will still move and practice your due diligence as you always do, but now you will add more baskets to divide your eggs into.

 

Autor: Merge Transit