possible new business advice needed

[m3sye]

Hi Guys, I have the opportunity to open a new business but my main issue is I have no experience in anything like this. I dont mind doing the hours so having no previous experience does not really put me off.

What I would like is some advise from you guys on how best I could work this.

The business opportunity is a contract collection - I am working closely with a company which is sending alot of contracts out per day (anything from 20-80) and are currently using Reps around the UK to pick up their signed documents. It costs them £60 per pack at the moment to get the contracts picked up. I could either match this or beat it ( I would get the work as I know the director well)
How best would I implement this business model

Ideas more than welcome, I have my own and I would like to mix them with yours

Many thanks

[Eric Mc]

How many customers do you have?

[m3sye]

There is around 30-40 added every day - via call centres

[IceBoy]

Asumning you win the bid at £50 per contract.

Average of 50 contracts per day x £50 per contract is £2500 income/turnover per day.

I think you have 2 main options or a mix of both:


1.

Employ drivers/bikers on a set-wage probably with an incentive that pays them extra per contract delivered.

You will have a fixed overhead and might need 5 permanet employees (Just guessing - not sure how many collections and deliveries would be possible)

To start with I would take on owner drivers / freelance contractors.

2.

Sub the work out to another company. Take a slice for yourself.

This is the easy option but one with issues:

• Quality control
• Image and brand
• Service delivery
• etc.

For me personally this is a much more risky business proposition.

If you are confident of that turnover then I would go with option 1.

You will then need to:

1. Set-up a ltd company
2. Get an accountant
3. Set-up the business phone line
4. Set-up business email / website

I WOULD THEN MANAGE THE BUSINESS......don't do anything else, just make-sure your employees do the contract collection/deliveries and you mange the process of getting the jobs to them.

This is very important....most people get sucked into the doing part.......in this instance I would try and stay away.

If you are a member on Linkedin - conect to me or drop me a PM.

IceBoy.

[m3sye]

Thanks Iceboy, I am and will add you later today

Si

[JustinP1]

IceBoy said:

Plan

With respect, I think you have overlooked something there.

If he were to take on 5 employees as per your advice, his business would be pretty risky. He has a huge overhead, and the business model just doesn't support that.

Indeed, his turnover is not relative to how well he does the job, but it is at the moment completely tied to not even what he can do - his turnover is controlled by another company. If that one company should pull the plug, go elsewhere, or even should their demand fall, then that is what will make or break the OP's business - not a good place to be.



My advice would be to sub out the work to start with to see how it runs - that way you know exactly how much profit per parcel you have got, and you will see how consistent the work is and whether is is growing or not. Then if you want to expand, you can then look for new business and use the same business model - and that will actually make the business safer rather than more risky.

Then once the business is consistent and safe then you can look to increase your own margin by instead of subbing out work, you can give them to your own drivers.

[V8mate]

JustinP1 said:

Then once the business is consistent and safe then you can look to increase your own margin by instead of subbing out work, you can give them to your own drivers.

With such small margins he should employ no-one. Simply have a network of self-employed mums/grandads etc who do the local stuff at £10-£15 a pop maximum (and they pay their own fuel)

ETA: In fact, some of the mail-order catalogue firms do just that, using local people to deliver parcels in their own area; try and get a hook into that network, as you'll be increasing the income of people who are already happily driving round all day.

Edited by V8mate on Tuesday 30th September 11:14

[IceBoy]

Guys,

I agree with all of you.....the question is really relating to RISK and how much you want to take.

Simple business model:

Buy low sell high...it can be applied to anything.

I have run a similar business in the past and that is why I said freelance/contractor drivers. This business can then be scalable.

Thanks for listening.
IceBoy

[V8mate]

IceBoy said:

Guys,

I agree with all of you.....the question is really relating to RISK and how much you want to take.

Simple business model:

Buy low sell high...it can be applied to anything.

I have run a similar business in the past and that is why I said freelance/contractor drivers. This business can then be scalable.

Thanks for listening.
IceBoy

It's not just the scalability, it's the randomness of it. 50 or so contracts per day is a drop in the ocea compared to the 30 million dwellings in the country. You can hardly have employed drivers in every area as they may only get one contract to collect in a whole year!

Would be worth asking the contract issuing company if there is any geographical basis to their business or whether it's as commonly used in Bournemouth as it is in Blackpool.

[IceBoy]

V8mate,

It is not an arguement I am after.

I also understand what you are saying...although it seem you don't want to understand what I'm trying to say.

Yes it is a drop in the ocean when compared to the whole market and yes it could be drops all over the country....but I'm sure M3sye knows about this already. Even if they are all over the place there are various methods that can be used. That is also whay in my first post I said a combination of the various methods to set this business can be used.

The fact is we are talking about a business that could easily turnover £1m p.a. With a nice dividend at the end of it.

it is just IMO right.

[V8mate]

IceBoy said:

V8mate,

It is not an arguement I am after.

I also understand what you are saying...although it seem you don't want to understand what I'm trying to say.

WTF are you talking about? How am I arguing with you or anybody?
My first post had nothing to do with yours, it was a view in its own right.
My second post built on yours, i.e. extended the point you were making.

[Wacky Racer]

[IceBoy]

I'm having a bad day.
I think I got the wrong end of the stick.

[cjs]

It sounds like it could be a logistical nightmare to me. 50 contracts a day, if they are all over the country, will be difficult to collect economically. I'm assuming the addresses are commercial? If they are residential it will be even more difficult. People not at home, having to collect in the evening etc. It would make more sense to send in DHL or similar to collect them.

[Eric Mc]

It sounds to me that you actually only have one potential customer - not 50.

[johnfm]

Not sure why the contracting compnay doesn't just stump up for some form of recorded delivery, pre-paid return packaging. They send out the contracts, punter returns them at no cost to punter. Saves compnay the difference between £60 and the cost of the package and recorded postage - which will be less than a tenner.

So, could put £50 per contract onto the top line.

Madness to collect these things.


Edited to add - I wish I knew your friendly director!!

Edited by johnfm on Tuesday 30th September 16:41

[edb49]

Eric Mc said:

How many customers do you have?

The correct answer is one. Do I get a prize?

[m3sye]

Ideally my thinking was to do like what V8Mate said and have alot of mothers,Mature Students etc picking these up. We already send out pre paid envelopes but only 35% return them. When there collected we are looking at more like 95%.
The collection can potentially be worth £400 so its worth while paying for someone to collect it.

In 4 weeks the numbers will increase from 50 to around 75-100 per day. We are in the process of getting more brokers involved as we speak.

Thanks everyone for the advice they ahve given to