Expansion: Should You Buy a Second (or third) FedEx Route?

A FedEx Route is a great business to own, but what if you want to grow your business? Well, rather than waiting for your own route to grow to the point where it can be split, another option is purchasing another FedEx route or even more than one.

But when is the right time to do that? And should you? Before you decide, there are some important factors to examine.

Look at Your FedEx Route Finances Now

First, you should take a look at where you are now. How is your current route performing? How profitable is it? Do you have substitute drivers who could potentially take over your route for you while you learn another one? What about vehicles? Do you have a spare you could press into service, or would you have to purchase another one?

All these factors, including whether you have the cash on hand to purchase another route or will need to finance it, can play a role in your decision.

But it is also important to keep in mind that an additional route will also mean additional income. If you’re at the point where you need to increase what you are making, purchasing another route is a great choice.

Look at Your Schedule

It’s also important to not only look at your current financial situation but also at your schedule. Taking on a new route will mean a time investment while you learn the area and the businesses and figure out the most efficient delivery and pickup schedule.

These factors will determine if you are able to dedicate the resources and effort to the new route that it will require. If you don’t, you may want to wait for a better time to purchase or hire the help you need to make the transition to a multiple route owner.

Getting Ready to Purchase Another FedEx Route

This leads to the next step in preparing to take on a second or even a third route. You may need additional equipment, another driver, and more. You need to prep before you make the purchase. Ask yourself some questions:

  • Does the purchase of the route include a truck and other equipment?
  • Are there vacation or backup drivers who know the route well?
  • What will be the overlap with the current owner for training?
  • What other equipment could you need?

If you have these things in place or at least know what you may or may not need when purchasing a new route, you will be on your way to being ready. But you also need to have working capital just in case anything goes wrong, just like you did when initially purchasing a route.

The better prepared you are, the smoother your transition to being a multiple route owner will be.

The Pros of Business Expansion

So what are the pros? Well, if you own routes already, and you are financially and otherwise repaired, there are many. First, a second route (or more) may add to your income significantly.

Secondly, there are some services you won’t have to duplicate to take on a second route: you already have an accountant and tax professional, legal counsel, and while your insurance will go up, it almost certainly won’t double.

Thirdly, while you will invest some time initially, you can free up time in the long run. You’ll already have one sub driver, and you can add others using your new profits. This could mean you can take time off as needed or even just take a well-deserved vacation.

Lastly, adding another route and becoming a multiple route owner can open up opportunities to purchase more routes, or grow and split your own. Your earning potential can increase greatly.

Things to Watch For

Of course, that is not to say there are no potential drawbacks, and these are the reasons you need to be prepared. Personnel can be an issue you have not had to deal with before, so be certain you have a payroll system in place. You’ll need to decide if you are going to hire drivers as contractors or W-2 employees. This will partly depend on your state regulations and the tax advantages of either approach.

More vehicles do require more maintenance, and many owners find it better to purchase newer equipment rather than older, used equipment to offset the cost and stress of breakdowns.

It’s also imperative that you ensure the route you purchase is profitable or can be quickly. Get as much information from the current route owner as possible, and do your due diligence to verify that data.

And this is why you need a good route broker on your side. Whether you are purchasing a route for the first time, purchasing another route, or more than one to expand your business, it’s good to have someone you can turn to with questions, who can help with due diligence, and ensures you get the right route for you. Have questions? Contact us today at Route Advisors. We’re here to help you no matter where you are in your FedEx delivery business.

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