Trucking is a profitable industry. And because of that, transportation businesses are attractive to buyers.
But how can you sell your trucking company if you don't know what's it worth? Right?
Think of why would your trucking business be valuable to a buyer?
The answer is that a lot of things count.
But the most important is to understand which factors may give you an advantage among other companies in the trucking industry. And these are the key factors that you want to show off to a potential buyer of your trucking company when he is ready to examine it.
Below, find several factors that make the trucking company more valuable to the buyer and tips on how to sell it.
What trucking business buyers want
Stagnating trucking companies don't inspire generous offers.
Trucking business buyers seek a well-functioning business that they can step in, develop, and advance to the next level.
As a seller, you should focus on the items that will be of interest to buyers:
- A compelling growth story that captures the buyer's imagination.
- A strong pipeline that shows the long-term forecast and contracts plan.
In short, a good potential buyer of your trucking company wants to understand the value of the company that he is supposedly investing in.
Show the value of your trucking business
To make the potential buyer's life easier show them an accurate presentation about your trucking company's worth.
Show the buyer the below factors:
- A general representation of the company that talks about how many trucks the company owes, how many employees it has, how many long-haul jobs it has been taken.
- The income factor that shows the forecast of the company's growth for the past 3 years and a possible projection of income growth in the future.
- The company asset factor substracts the liabilities of your business from the value of your owned assets.
You can use EBITDA calculators to compare your company's multiples values with your competitors in the local market.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This metric is used to evaluate companies on multiple levels.
The EBITDA metrics are complex. So, you might need the help of a specialist or of a business selling broker.
Things that may increases the value of the company
1. Minimize the shipping risks with your company
Your trucking business must take full responsibility for the customer's goods.
That doesn't mean that your trucks deliver safely while minimizing accidents and shipping costs.
That takes the stress out of the customer's shoulders and makes the company more attractive to work with.
2. Increase the reach of the company's operations
Trucking companies that haul predominantly long-haul loads have a higher potential for growth because it allows the company to serve businesses nationwide.
3. Employee retention
Successful trucking companies retain good truck drivers.
If the employees of your company follow the safety rules and contribute to a healthy culture inside the company, that makes your business even more valuable.
In this case, the potential buyer of your company could buy it and continue operating with your reliable staff.
4. Invest in the company's assets
Your trucking business must have an investment plan to maintain the fleet of trucks in a good operating condition.
Potential buyers are interested in trucking companies that maintain their trucks and invest in purchasing new trucks or replacing trucks when needed.
Any other capital investments into the company meant to improve its operations make it attractive to potential buyers.
5. Leverage technology
Many shipping customers look for help to track the entire supply chain.
The carriers that leverage technology provides shippers with the necessary apps to allow them to track their load including transportation, packaging, warehousing, and security.
6. Show how to improve financial KPIs
Financial metrics include bench-marking your fleet by revenue, cost, or load, as compared with a chosen target level of performance.
Show a detailed report of financial KPIs to track, which allows you to identify processes that require optimization to decrease the cost and increase the revenue.
Knowing the operational cost per mile is key to determining the rate that you should charge your customers.
Review the underlying reasons for any improvement in productivity such as decreased fuel or insurance prices, increased customer pricing, fuel surcharges, decreased length of haul, or the addition of revenue-producing vehicles.
Having this documented will support future forecasting.
7. Brand awareness and recurring revenue
Potential buyers of your trucking company are interested in businesses that have a good level of brand awareness and have recurring revenue.
That means that the company has a good name in the market due to delivering good service to its customers.
Recurring revenue allows the company to increase sales while controlling the marketing costs.
8. Cash flows
Your firm’s ability to generate cash flows is also important because business profit does not immediately produce profitability.
Positive cash flow or high profitability is key to increasing your business’s value.
If your trucking company makes a high profit, it will be much easier to sell.
Set up recurring revenue sources to increase your cash flow.
9. Diversify your clients
Diversifying your portfolio of clients is a good way to look more attractive to a potential buyer.
Having multiple sources of income decreases the risk factor a buyer might feel when thinking about purchasing your trucking business.