No General leads his or her army into war without knowing both the terrain he or she will face and what the strengths and weaknesses of the enemy they will face. In the current market environment, achieving profitability should not be difficult, even with pressing weaknesses. However, just like seasons change, the market will swing the other way. The smart companies know this, and are reinvesting their profits into building networks and advantages, to put themselves ahead of the their competitors when tide goes out. Knowing what your business needs to do next comes naturally to some business leaders, but for most, setting a course for the future requires equal parts Collaboration, Introspection and Honesty. An excellent way to get you started on this path is with a SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are internal business factors while Opportunities and Threats are external factors and variables. There are several different templates out there that can be found with a quick Google search and each organization will have their preferences. However, the physical form is not as important as actually doing the exercise.

This analysis is not just for use at the enterprise level. It is equally powerful when done at the division, department or even product line/customer account level. You are probably already doing a similar analysis on all your top accounts but possibly not in as formal a framework. By using this method in conjunction with being closely integrated with your large account you should be able to foresee any threats to that client and be prepared to fend off any attempts by other carriers to take over some or all of the business.

Strengths
Look at factors such as:
• What are the organization’s advantages?
• What do you do better than others?
• What unique resources can you offer (ideally ones that a customer will pay for)?
• What does the marketplace see as your strengths?
• What is your unique selling proposition?
When looking at your strengths, also look at where you are in relation to your competition. If all your competitors are achieving 98% on-time deliveries then you achieving that is not a strength, it’s a market necessity (a table stake). Also take the viewpoint of the customer as they are the ones making the buying decision!

Weaknesses
• What could you improve on?
• What should you avoid or eliminate?
• What does the marketplace see as your weaknesses?
• What does your competition do better than you do?
• What causes you to lose sales?
• Are their perceived weaknesses that you could easily overcome?
Be honest in this step as downplaying weaknesses will not allow you to move forward and address them.

Opportunities
• What are emerging trends?
• What changes in technology are coming in the near, medium and long terms that you are posed to exploit?
• What competitors are family owned and are showing signs of cash flow issues?
• What new developments are your current customers working on?
• What new businesses are coming to your marketplace?
One approach to take is to look at your strengths and ask if they open any opportunities. At the same time ask yourself if the elimination of any weaknesses could also create an opportunity.

Threats
• What obstacles do you face?
• What are your competitors doing?
• What technological game changers are coming that you are not ready to exploit?
• What is your financial position – any cash flow or debt problems?
• Are quality standards or specifications for your product or service changing?
• Are there any weaknesses that could seriously threaten your business?
• Are there any Political, Economic, Socio-Cultural or Technological (PEST) factors to consider?

Once you have made an exhaustive list for each category, it is now time to pare down the list and prioritize each item. Where possible ensure that all statements are precise and verifiable – for example you want “a cost advantage of $0.05 per mile on the Chicago to Des Moines lane” instead of “competitive pricing”. Finally make sure that any options generated are carried through to later stages in the strategy formation process. Make certain that you follow through and create a strategy once the analysis has been done.

An important task is to measure the gap between where you are and where you want to be. This helps you create goals that can be measured and verified. It’s much better to say “achieve a 5% increase in miles per gallon” than it is to say “improve fuel efficiency”. Understanding what these gaps are will guide both you and your staff towards implementing an effective strategy to get to where you want to be.

Finally, be prepared to revisit this analysis on a periodic basis – possibly yearly for the entire enterprise, more often at the product or customer level. Look at what has changed. Did you improve or eliminate any of your weaknesses? Did your competitor find a way to close the gap on your price advantage? Did something new that has the potential to be a game changer come on the market recently? This should not be a static document and it should be one of the first things you turn to when a new threat or opportunity comes on the horizon. By understanding what is happening on the playing field means that you can make the proactive moves of a market leader instead of reacting like a follower.

This post is the first in a series of five focused on narrowing or eliminating the gap between ‘Knowing’ vs. ‘Doing’. In our personal lives, we all know what we ‘should’ be doing, but our daily habits and tactics don’t always line up. Similarly, in business, a business without an achievable strategy, a business will ultimately deteriorate to the point where it’s simply a series of fires being put out. The Knowing Vs. Doing series is a lead-up to our TPP Seminar on December in Indianapolis  focused on preparing trucking enterprises for success in 2019. Take the Knowing Vs Doing Survey here.

Setting Priorities

Most senior managers are very aware of the things they need to do to reach greater levels of profitability and growth. However, many don’t have the time to come up for air to determine which actions they should take, and in what order to build momentum. Everyone wants to reengineer their freight network, implement a shipper scorecard, fix their billing process, eliminate redundant tasks, implement new maintenance practices and measured etc. This list can be endless. I would suspect that they vast majority of those reading this post are shaking their heads, saying ‘yep, yep…”.

Now, let’s stop for a moment and remind ourselves of the following quote:

“Well done” is always better than “Well said”.”

There will be a small percentage of readers who can state, with confidence, that they have a well-defined strategic plan, and have assembled a series of tactics to achieve this plan. For everyone else, it’s time to set step back, catch your breath and prioritize.

My two favorite methods/systems of prioritization are extremely simple, and are/were used by two very successful individuals – Warren Buffett and President Dwight D Eisenhower.

The Buffett Method of Prioritizing Strategies and Goals

You can read about the Buffett method here. In a quick summary here’s how it works:

1. Write down up to 25 goals – big and small, that you have for your business. This needs to be done by both principals and senior managers.
2. Combine all the goals you listed with those of the rest of your team
3. Circle the top 5 goals that are achievable in the next 12-24 months. This is your ‘List A’. The remaining goals are your ‘List B’.
4. Although it’s not technically part of the Buffett method, when it comes to execution, size and scale matters. For Large carriers (e.g. over 500 trucks), 5 important goals is a ‘doable’ thing in 12-24 months. However, for smaller carriers, I would pare the five down to 2 – max. For mid-sized carriers (100 – 500), 3-4 should work.
5. Now that you have List A and List B. What’s next? Simple develop a strategy and a project plan to achieve each item on List A and adjust where necessary. Make sure every person on your team knows what is on List A, meet weekly to discuss. List A needs to become engrained in the fabric of your team.
6. What happens to List B? Easy, store each of those goals away and don’t consider them until you’ve completed / achieved List A. They are not given any more time!

The key difference between the Buffett Method for personal vs business is collaboration. In order to build long-term business value, the decisions on which goals make List A must be done in conjunction with those in c-suite right through to the driver’s seat. You want buy-in, and a thorough understanding of what is achievable, and what’s not. For larger companies, this typically would involve departmental goals, and strategies, for smaller companies, company wide goals and strategies.

The Eisenhower Method: Prioritizing Daily Tactics, Tasks and Habits

Everyone has the person on the team that fills their day up with ‘busy work’ that provides little or no value to the business. People always ask me what is the number one cost-saving opportunity for trucking companies. Regardless of the industry, it will always be removing those people from your businesses. The longer you wait, and the more you grow, you are tacitly telling your team this behavior is acceptable, and suddenly you have a business full of ineffective people. Cut them from the team. It will improve culture, set a new course for that role in the business, and add to your bottom line.

Each if us also has daily habits and tasks we all do that are either redundant (not needed or done by someone else), or those that are not moving the business forward. Doing an audit of your daily and weekly habits and tasks is an important one that should be done by everyone in your business. Once you have that cumulative list, it’s time to prioritize. The Eisenhower Matrix is a phenomenal way for people in all roles, and at all levels of responsibility, to do a gut-check on their daily activities. How does it work?

President Eisenhower would regularly create a matrix to properly categorize and prioritize his daily activities. This eventually turned into a mental model that his team used to decide which things they should bring to him, and which things should be immediately delegated, or perhaps eliminated. Here are sections within each matrix, and how to consider those daily tasks and habits:

1.Urgent and important (tasks you will do immediately).

2.Important, but not urgent (tasks you will schedule to do later).

3.Urgent, but not important (tasks you will delegate to someone else).

4.Neither urgent nor important (tasks that you will eliminate).

Although setting priorities can sound boring, it can be the main difference between success and failure. Hopefully the above two methods provide you with some food for thought. Are you expecting too much from your team, from yourself? Do you need to be part of that email chain? Are you going to keep allowing people to use their time ineffectively and inefficiently? Does your team know their collective priorities other than the daily ‘busy work’? Take some time, give this some thought. Take action.

I spent some time this week talking with Jarit Cornelius, the Vice President of Asset Maintenance and Compliance at Sharp Transport.  One of the topics was my recent articles on site selection and building a new facility.  Jarit is very involved with the Technology & Maintenance Council and currently is the Vice Chairman of the S.5 Study Group (Fleet Maintenance Management). He mentioned that the TMC has developed Recommended Practices for New Facility Development.  This was a result of many consultations among various industry experts and real-world experience.

Some of the relevant Recommended Practices (RP) when looking at a new facility include:

• RP 510A – New Facility Development offers a great overview of what steps are needed to design a shop either from scratch or renovating an existing one. It offers guidelines on things like layout, energy efficiency, how to calculate or estimate the number of services required and much more.
• RP 518A – Fuel Station Planning offers similar guidance for developing on site fueling stations.
• RP 512A – Mechanic Staffing Determination – provides a formula to calculate the number of mechanics required to adequately staff a heavy-vehicle maintenance shop
• RP 513 – Estimating Number of Service Bays – gives an analytical methodology for estimating the number of service bays required in a facility
• RP 515 – Maintenance Shop Design Considerations – a listing of critical elements that should be considered in the design
• RP 517 – Managing Environmental Compliance – guidance on compliance education/training, self audits and record keeping.

These have undergone many updates and amendments over the years as the study group constantly looks at new and upcoming technologies and how to integrate them into individual shops.

Other Recommended Practices offer guidance from the following study groups:

• 1 – Electrical
• 2 – Tire & Wheel
• 3 – Engine
• 4 – Cab & Controls
• 6 – Chassis and Brake Systems
• 7 – Trailers, Bodies and Material Handling
• 8 – Cost Control Methods
• 11 – Sustainability and Environmental Technologies
• 12 – Onboard Vehicle Electronics
• 14 – Light & Medium Duty and Specialty Trucks
• 15 – Specialty Trucks
• 16 – Service Provider
• 22 – Onboard Data Systems

Copies of the entire Recommended Practices Manual are available at https://www.atabusinesssolutions.com/ATA-Store/ProductDetails/productid/3921373 where you have your choice of hard bound books, CD or PDF formats.  You do not need to be a member to purchase these manuals.

Now, let’s turn our attention to the building itself.  The first thing you need to do is determine what activities will go on in it.  Obviously, you will need some office space for your operations and admin staff.  You might need some warehouse or cross-docking space.  A shop area is probably on your list as well.  Here’s a few things that you may not have been thinking about:

• Space for your drivers while they are waiting for maintenance on their trucks or while they are waiting to be dispatched.
• Do you need to provide showers or other amenities for the drivers?
• What about file storage space for those documents that have a retention period?
• Will there be lockers, or a change room required for any of the staff, such as mechanics?
• Lunch room and any meeting/conference spaces
• Washrooms – both placement and the number of them
• Parts and equipment storage
• An IT room with adequate power and cooling
• Adequate clearance in any shop or warehouse areas to allow for their safe use

Develop your list of things that you must have but at this point, try to keep things general.  Many design engineers will tell you that good layouts develop from the general to the specific, not the other way around.  Don’t go in with a set idea of where things will be as they will act as constraints on where other things can be put.  Knowing what areas should be adjacent to each other is good but getting too many specific items such as “the tire machine should be here, and the parts room should be there” will likely result in a suboptimal design.  Next, determine what activities will occur in the facility, both now and in the future.  As an example, if you think your warehouse activities will grow over the next few years, you may want to place it at the back of the facility so that future expansion is a possibility.

Determine what areas are the priorities.  Many designs focus on the front end where the main entry and the offices are.  However, other areas may have more of an impact on your revenue stream, such as the cross-dock area or the shop.  Sometimes it is better to start with the rear of the facility and work your way to the front.  One question that needs to be asked before focusing on any individual department or area is “How does it impact the movement of people and/or product throughout the entire building?”  A way to look at this is the product to be handled will determine the warehouse and equipment needs.  Equipment locations determine workflows. Eventually you will need to put the pieces together on paper and determine what area needs to be adjacent to each other.

Some other considerations at this stage include the following:

General Building:

• Try to anticipate any future needs by designing spaces to be potentially converted or expanded.
• Anticipate any future loading docks, truck space and car parking and leave enough space for them
• Include enough structural capacity to handle any additional rooftop equipment, such as additional HVAC units.
• Avoid block or poured cement walls as much as possible to allow for future expansion. Ideally a curtain wall construction is used so that the outer cladding can be removed, and a new section added with a minimum of disruption.
• Try to specify the use of energy efficient items such as LED lighting and proper insulation. These will cost a bit more in the construction phase, but they tend to have a lower overall cost of operation.  LED lights also tend to last longer than other options, reducing the amount of building maintenance required.
• Try to avoid dark colors on the outside of the building and roof as these will result in additional cooling capacity. A more neutral color will also be less restrictive if the building needs to be remarketed in the future.

Warehouse Space:

• Consider what products may be stored in the facility and include enough fire protection based on the anticipated fire hazard.
• Allow for adequate circulation paths in both the warehouse and the shop areas. In the warehouse this includes walkways as well as paths wide enough for forklift trucks to safely operate.  In the shop this includes walkways for staff to circulate, safely move required parts to their service bays and allowing for the required number of egress points.
• If possible, separate shipping and receiving areas to avoid congestion both inside and in the yard.
• Ensure that the floor slab is capable of handling not only today’s uses but allow for potentially heavier loads in the future.
• Use pallet racking that is sufficiently rated for the products being stored. Racking should also be considered to maximize the warehouse’s capacity and utilization as well as to maintain proper laneways for both people and materials handling equipment.

Office Space:

• Try to anticipate any future computer or telephone locations. Cable drops are much easier and less costly to install before the wall cladding is installed.  If the exact locations are not known, consider running cables that are coiled and secured in the drop ceilings with enough extra length to allow them to be installed relatively quickly.
• Allow for natural lighting in the design for as many workspaces as possible.
• Take into consideration any fumes or smells that may infiltrate into the office areas. In some cases, the mandatory fire breaks may be enough but additional ventilation or air barriers may be required if the shop or warehouse must be adjacent to the office space.
• Looking specifically at the office area, consider having the structure capable of supporting either a mezzanine or the ability to add an additional floor above it if expanding to that end of the building is not feasible.

Shop Space:

• Shop bays should be designed with enough space at the sides to allow for both the storage of tools and equipment as well as the safe passage of employees.
• Where possible design shop bays in a drive through configuration. This will not only minimize the need to shunt vehicles around but also reduces the need to back vehicles out which can result in a visibility issue.
• Allow space for shared equipment, such as tire machines, bearing presses, etc. so that mechanics can access them without having to move vehicles that are being worked on.
• Consider the use of either a lift or a pit for doing fluid or tire changes to minimize the reliance on jacks or jack stands and to provide a more efficient workspace.
• Ensure enough airlines and/or fluid delivery lines are placed in each bay as retrofitting these is costlier than installing them during the original construction.
• Orient the overhead doors to allow for ventilation during warm weather but at the same time try to avoid orienting them directly into the prevailing winds. This allows the doors to be left open when the weather allows it while minimizing any snow or rain infiltration into the bays.

This is not intended to be a complete list but gives you an idea of some of the unique things for our industry that should be taken into consideration.  Make certain to look at any other items that make you different and ensure that those needs are put into the design.

As much as possible use an architect and/or engineering firm that has experience with truck terminals and repair shops.  They will understand some of the ways that industry works and what questions they need to ask of you.  At the end of the day it is more important to spend a couple of extra days planning up front instead of having to bring in a construction company to retrofit something a short time later.  Getting it right the first time is always less expensive in the long run.

Last week we discussed looking at the differences between jurisdictions in terms of taxes and any incentives that are available to you.  We received many requests for more information.

Note – the following is provided for information use only and is not to be considered as tax planning advice.  We also make no guarantees as to how up to date the information is or to its accuracy.  Please consult a professional familiar with the jurisdiction(s) under consideration.  Also, the following tools are offered as examples and no endorsement of the provider is being made nor should it be implied.  The author has no financial interests in any of the organizations presented.

A good place to start to look at different states’ overall tax climate is the Tax Foundation’s State Business Tax Climate Index (click here).  Their index is designed to show how ell states structure their tax systems and provides a roadmap for improvement.  All states levy a property tax, but their analysis provides a way to look at the overall tax burden.  Some states do this by foregoing one of the major taxes – either corporate income taxes, individual income taxes or the sales tax – at the state level.  It is possible for a state to levy all the major taxes id they do so with a low rate over a broad base.  The worst performing states tend to have nonneutral taxes with comparatively high rates.  A four-year comparison chart allows the user to see what the trends are for each state while a separate table shows the state rankings for each major tax type, so you can see how the ranking was reached.  An interactive web tool (click here) is also available to look at adjacent states at a glance.  Clicking on a state will bring up the ranking for that state as well as the overall ranks of the neighboring states.  A further click through allows you to learn more about a single state’s tax structure and average rates.

Financial advisors SmartAsset provide both an income tax calculator (click here)  and a property tax calculator (click here).  The property tax calculator estimates the property taxes for a given zip code location and assessed value.  While this is for residential properties, it will give you an idea of how that county and state compare to the national average.  This is not a direct proxy for commercial property taxes, but it will give an idea of if that municipality is a relatively high or low tax jurisdiction.

Locations Economists Biggins, Lacy, Shapiro & Company, offer both an interactive map as well as a pdf version of state economic development incentives (click here). Topics such as available tax credits, special zoning, grants, job training, tax exemptions and more are provided on a state-by-state basis.

Online journal Area Development provides several resources for a company considering a new facility, from site selection, facility planning among others.  They provide individual state resource pages that offer information on financial incentives, business taxes and economic development contacts.

Software provider BS&A offers an online search tool to find existing property and any other local taxes (click here).  Simply pick the state, county and municipality and then run a public record check on the address under consideration.

A comprehensive listing of contact information for both state and district economic development agencies can be found on the U.S. Economic Development Agency web site (click here). Simply click on the state to get links to each available level of economic development agencies.

Finally, check both the website of the municipality that you are considering as well as it’s local chamber of commerce.  Many will provide how they calculate and assess property taxes, but some will not.  If no guidance is provided they will have contact information that you can use to phone the appropriate department directly.  The local chamber can also provide information on local programs and incentives that may be available to you.

When trying to create the perfect facility there are many different things to consider – site location, site layout, building layout, lighting, security, etc.  There also is no such thing as a “universally perfect” facility.  Each company will have a slightly different priority list and even within the same company you will find differences at each different location.  As an example, a facility in Miami will have different priorities compared to one in Minneapolis.  The Miami location will need to worry about hurricane proofing while Minneapolis must worry about things like snow load.

In general, we have several common items that need to be considered:

• Site location and size
• Building construction type and layout
• Required infrastructure
• Parking for employee vehicles, tractors and trailers
• Environmental considerations
• Political/social considerations

This week we will focus on the site location and size.

When considering the ideal site, the following should come into your planning process:

• Size of the lot.
• Shape of the lot
• Proximity to an Interstate
• Proximity to your customer base
• Commuting distance for your employees

Regarding size, you will need to calculate how much space that the fleet to be domiciled at that location requires, including space to maneuver vehicles without causing any damages.  Assume 80 feet for a tractor trailer combination.  That means you need a minimum of 133 feet (80 feet + 53 feet), and more likely 150 feet between rows of trailers to allow for enough space to pull trailers in and out of the rows.  Additionally, you will need about 10 feet in width for every trailer. As an example, if you have 90 trailers and the lot is 350 feet wide, you will need to have enough room for 3 rows of 30 trailers (allowing enough space for a laneway at both ends).  You will then need approximately 450 feet in length to fit the 90 trailers.  This is before we find space to park the tractors, put up the building, etc.

Tractor parking is a little more of an art as highway tractors can be anywhere from 20 to 29 feet long depending on the wheelbase.  Day cabs will run about 5-6 feet shorter.  For tractor parking in a tight yard, consider using angle parking as it will shorten the width needed compared to straight on.

There are a few other major considerations with a site:

• Being close to your customers as well as an Interstate (or other major highway) means that you will be minimizing unpaid miles – this is a cost that needs to be considered when choosing a site as it is effectively a fixed overhead charge that will eat into your profit on almost every trip.
• The physical shape and landscape of the property. Ideally the lot will be either square or rectangular.  This will reduce the amount of wasted space that reduces parking capacity.
• What is the natural drainage of the lot? Will it need significant ground preparation and a catch basin system?
• Are there any waterways or aquifers in the area? Those could result in restrictions put on your ability to refuel in the yard as well as the storage of items like used oil or anti freeze.  You may need to construct a berm for any spill containment.
• Zoning – ideally any site you select will already have the proper zoning from the municipality. Having to apply for a variance or zoning change will result in additional time and expenses as well as injecting some uncertainty into the project.   The municipality may reject your application, especially if it is a jurisdiction that has already shown hostility to our industry with things like parking restrictions or traffic bylaws that require trucks to reroute.
• What is the planned use for surrounding properties? Will those uses have a potential impact on your planned operation?
• If you think that you may need to expand in the future, gain an option on an adjacent lot. Otherwise you could find yourself land locked in the future.
• What is the tax structure in that municipality? Pay attention not only to the rate but how the value will be calculated.  It is not uncommon for nearby jurisdictions to have vastly different property taxes on similar sized and priced lots.
• What services are currently available for the property and what will be the buyer’s responsibility to provision? Pay attention to things like natural gas and fibre optic availability as the cost to have these brought to your property can be high.  Without some form of reliable high-speed internet, you could find your staff unable to work effectively. What sort of electrical service can you get, and will it be enough to power your planned operations?
• Were there any previous uses that may require environmental remediation? Remediation can be very costly. Take this into account if buying a property that has already been used as a terminal.
• What sort of soil does the lot have? The soil composition may impact the footings required for your desired building.  How stable it is may impact the amount of earthworks are needed before you can use the property.  The soil can also impact any environmental concerns (example – a fuel tank leak in sandy soil may go down several feet until it hits bedrock or clay.  It may then run for hundreds of feet underground.  If you need to do a remediation this could easily cost hundreds of thousands of dollars).
• Surrounding neighbours – will your drivers be coming and going at all hours or will they mostly be operating during daytime hours?
  • What sort of surface the yard has have an impact here. If you have a dirt or gravel parking area you may run into a dust issue, resulting in the need for periodic applications of some sort of dust abatement product.
• There needs to be adequate parking for both your staff and any visitors.
• The building that houses the terminal should have enough room for future expansion without causing onsite traffic flow problems.
• Are there any location specific needs, such as where to pile snow in northern states? If you have a facility in places like Buffalo you will either need to leave aside space to pile snow, have some sort of melting system or have someone in place to truck it away.
• In northern states, there may be a need for plugs to operate block heaters in the winter months.

This list in not exhaustive and may differ depending on the location you are searching in.  The take away is you need to do your homework before you start looking.  Spend the time up front to know what you are realistically looking for will allow you to have a list that you can use to compare different options against each other. If you are not sure of what you need, enlist the help of an expert.  Many commercial real estate brokers will have people on staff that can give you the necessary guidance.

A final point – not all real estate brokers are equal.  Don’t just go with the person who helped you buy or sell your house.  A residential specialist is unlikely to have the skill sets or supporting services to help you through the maze of regulations that you will face in the commercial/industrial marketplace.  Go with a commercial real estate agent from the start as they will be knowledgeable about things like zoning or acceptable uses as well as knowing the questions to ask and have the resources to let you get things right the first time.

Next week we will look at how to design your ideal terminal building.