Surviving financial challenges is a testament to a company’s resilience. Companies should be mindful that the workload they are accustomed to servicing may change drastically over short periods of time. Fluctuations in workload and business volumes can be attributed to various causes, each of which can be categorized as either controllable or uncontrollable. Even those factors outside of our immediate control, however, can be managed such that risks and impacts to the business are minimized.

Uncontrollable Factors 

(Market and Environmental Forces)

Every business is subject to environmental forces over which management and staff have no direct control. The impact of these factors on companies can range from immaterial to immense. Common types of such factors include the following:

Regulatory and policy changes (implemented by authorities including government and national or international entities or organizations): Our industry is inherently subject to rules, regulations and policies set by various bodies worldwide. For example, a country may decide to hold all work permit allowances for prolonged periods of time, or to start levying duties on personal effects. Shipping many common articles (such as batteries, which are now pervasive) now demands added due diligence and expense (to satisfy IMO regulations, for instance). A more extreme scenario is a government changing from a democracy to a dictatorship.

Labor availability: Finding skilled, motivated labor in the moving industry is becoming more and more challenging. Many members of the younger generation do not want to work as manual laborers, particularly in extreme environments (summer heat or winter cold). For those who do pursue this type of work, we find ourselves competing with other market sectors, such as the construction industry, where the pay scale is higher than what the moving industry can offer. In some countries, governments subsidize residents who stay at home, thus not making it attractive enough for some capable individuals to go out and find a paying job.

Currency fluctuation: In recent years, we have all experienced wide currency fluctuations. As large portions of our costs are affected by currency exchange rates, the profitability on our moves may be significantly affected.

Changes in consumer habits: Many companies have transitioned to an environment where their employees work from home, either full-time or part-time; therefore, the need to relocate employees has decreased and this may affect the total volume of our industry.

Global pandemics: Unfortunately, we have all witnessed the impacts of pathogens on our economy, wellbeing and operations over the past few years. Fortunately, workers in the moving and transportation industries have largely been considered “essential workers” exempt from isolation and lockdown orders throughout the recent COVID-19 pandemic. Furthermore, many individuals whose jobs were impacted by the pandemic—through early retirement, for instance, or the ability to work remotely—took this opportunity to relocate. As a result, our business flourished following the early days of the COVID-19 restrictions.

War: Regrettably, the geopolitical situation has become less and stable in recent years. This situation can potentially halt all business operations or, at the least, increase shipping costs (through shipping line war premiums, for example), alter vessel schedules and routes, and hamper processes that are critical to our operations (for instance, ports and customs offices).

Inflation: The cost of living and the cost of inputs (labor, materials, freight, etc.) have gone up significantly in recent years. Not only does inflation impact our costs and pricing, but it also limits the ability of consumers to pay for moving services. In response, customers may choose to ship less or to not ship at all. In an inflationary environment, margins are narrowed and competing based on price has become increasingly important. Moving companies must economize by managing costs and reevaluating pricing models (see “Strategic Response,” below).

Controllable Factors

These factors can be directly managed through good business practices, meaning management decisions and actions will dictate the success or failure of a company.

Cash flow: A company should maintain a positive cash flow and healthy reserve funds to be able to cover all necessary immediate expenses— not only for the short term but also for extended periods of time. This can be challenging in a seasonal industry, particularly one whose success depends on many factors outside its control. Prudent moving companies cannot assume that the coming year’s business trends will mirror those of past years. Plan for the unexpected.

Staffing decisions: Employees are the most important asset of any company. However, it is important to continuously monitor market conditions and react when necessary. Workforces must be adjusted continually based on individual employee performance and business needs. Furthermore, selecting the right employees—and providing them with the training and coaching needed to succeed in their roles—is critical.

Rent: Rent is one of those factors dictated almost entirely by market conditions. If you have the ability to own your facility, it will go a long way in times and locations where the rent is very high. If not, try to negotiate long-term rental agreements when the market is low. You may also want to consider exit strategies when negotiating the rental of a facility. Review contracts in detail and ensure you have the ability to terminate or transfer if possible.

Buying power (materials, supplies, equipment and capital): Try to buy in bulk rather than buying what you need for a few days or weeks ahead. Seek out discounts and consider changing suppliers when warranted. Compare the costs and benefits of renting versus owning vehicles and equipment.

Diversification: Don’t keep all your eggs in one basket. Try to find other business activities that fit your business profile and offer additional revenue streams to your core activities. Consider specializing in niches or functions where you hold a competitive advantage or where competition in your service area is weak.

Knowing when to say ‘no’: Do not agree to service moves at just any rate. Consider how much work and resourcing goes into each move, accounting for administration, materials, labor and your ability to deliver the scope of service demanded. Make sure there is a healthy profit, which will enable you to make money on the move and contribute towards your overhead costs.

Strategic Response

All of the factors outlined above demand adaptive strategies and tactics to ensure sustainability. It is advisable that you create budgetary restraints, streamline operations, and leverage technology to strengthen your financial stability.

One of the most pressing dilemmas for companies is aligning budget constraints with the rising prices of goods and services (which have been seen during and after COVID-19). Here are some strategies to consider:

Strategic cost management: Implement cost-control measures without compromising quality. This involves scrutinizing expenses, optimizing processes, renegotiating contracts, and seeking cost-effective alternatives without negatively impacting the customer experience. Seek value from your suppliers, agents and employees.

Dynamic pricing strategies: Companies should recalibrate their pricing models, considering market demands and competitive landscapes. This might involve periodic price adjustments aligned with continually increasing costs. It is important you invest in enhancing customer experiences and showcase additional benefits to justify any price adjustments.

Streamlining operations for financial efficiency: Seek technological solutions for simple repetitive tasks. Manual and time-consuming processes can impede a company’s ability to scale and remain competitive. Embracing automation through technology minimizes human error. Don’t be afraid to evaluate the newest CRM software available. There have been major developments in the past few years. Video surveys, electronic inventory entry and automated communications are examples of time-saving technologies with multiple benefits to both the customer and service provider.

Optimizing customer and employee onboarding: Simplifying staff and customer onboarding processes significantly reduces lead overhead costs. Getting the right information up front and minimizing the time spent inputting data into various systems reduces time spent and the potential for costly errors.

Facing financial challenges is inevitable in today’s business landscape. However, the way in which companies respond to these challenges defines their longevity and success. By adopting some of the suggested strategies above, businesses have a better chance of surviving financial hurdles and emerging stronger in our competitive marketplace.