There are a lot of times when you might want to make changes in your FedEx Route business, and it may be time to decide if it’s the right to for adding a route to your business. Maybe you want to expand, or you may get to the point where you want to sell off a route. This can be for a variety of reasons including lowering your workload and responsibility, raising capital, or even buying a different route to replace the one you are selling.
But how do you know when it’s right to do each of these things?
The Benefits of Adding a Route to Your FedEx Business
There are a few ways to add a route to your FedEx business. One of them is splitting a route when it gets too large. The other way is to purchase an additional route either from another route owner or one of the expansion routes occasionally offered by FedEx.
- There are several benefits to adding a route to your FedEx business. They include:
- More revenue. Another route means you have another source of income.
- An additional route allows you to add backup vehicles and potential substitute drivers, which can be a huge help during vacations or sick days.
- A larger footprint. If your routes are adjoining or in the same area, your drivers can help each other out, meaning you aren’t giving stops away to another route owner or sacrificing your own revenue for help.
There are plenty of other reasons you may want to add a route to your FedEx business. But there are some potential risks as well.
The Risks of Adding a Route to your FedEx Business
The risk of adding another route to your FedEx business is that with that route come expenses as well as revenue. For example:
- You’ll need to purchase an additional delivery vehicle.
- You’ll experience additional fuel and maintenance costs with an additional vehicle.
- You’ll have to pay and manage another driver.
- You’ll have to manage the paperwork associated with the route itself.
- You’ll have another driver with potential sick days and days off you have to cover.
These are simply risks, and while they should be considered, they don’t have to be seen as negatives. Instead, they can just be calculated into your overall business plan.
But there are times when you might want to sell a route rather than adding one that can actually grow your business as well. Here’s how.
The Benefits of Selling a FedEx Route
The primary benefit of selling a FedEx route is money: you get working capital in hand that you can use for a variety of things, including updating vehicles and equipment, bolstering your emergency fund, removing debt, and more.
In some cases, this can help you grow your business down the road. Selling off one route can leave you room for later expansion. For example, if one of your routes is growing, and you feel like you might need to split it soon, selling off an existing route can make room for that split and expansion.
And you know the new route will be adjacent to yours, making the logistics of managing two routes much easier.
The Risks of Selling a FedEx Route
The risk of selling a FedEx route? Well, the primary one is loss of income. You’ll get an immediate influx of cash from the sale, but you lose the steady income that came from that route. It’s a trade-off, and you need to look at some key factors.
- Will the one-time payment make up for the steady income from a route?
- How will you replace that income long term?
- How will you reinvest the capital from the sale of your route?
These are all things to consider. If you are moving toward purchasing another route or a different business, selling can make a lot of sense. This leads us to another option for FedEx route owners.
The Potential Benefits of a Route Exchange
There are times when selling a route also means adding a route to your FedEx business, allowing you to expand more efficiently. This can be done through a “route exchange.” You sell one route to purchase another one.
This can be a good thing to do if you can pick up a route that is geographically close one you already own. This can make your operation more efficient overall. Since you immediately reinvest the capital from the sale of one route into another one, you avoid any tax issues or having to reinvest in another way.
The change in efficiency can actually make it possible for you to buy adjacent routes in the future, or even split part of the two routes you now own into a third one.
There are all kinds of reasons to sell or expand your FedEx business, and these are just a few of them. Have questions about whether you should expand or sell your FedEx route? Looking for a buyer, or do you want help finding the right route for you to purchase? Contact us today at Route Advisors. We’re here to help!