The Business Of Independent Service Provider Contracting

Who Decides How Much You Earn?

Posted by Ben Weil on Jul 14, 2019 2:43:41 PM

It's a simple question with a simple answer. If you're a FedEx CSP, you may think - of course FedEx decides how much I'll earn because they decide what to pay for my services.

Confused business owner.But it's not the right answer.

Focus instead on two key words, "decides" and "earn."

FedEx offers, or negotiates, estimated fixed and variable revenues, but they don't decide how much of that you'll keep.

You will make decisions during the course of the contract  determining how much you'll earn.

Don't confuse income with earnings.

Income equals revenue, but it's not interchangeable with earnings.

The amount you earn equals the amount of revenue you keep. The more income you spend, the less you earn.

The smarter the decisions are about the expenses you incur, the more you'll earn.

Some expenses are wise (like training, data analysis, planning) and some are not (like the latest shiny techno-gadgets). Of course, there are required expenses such as wages, taxes, repairs, maintenance, uniforms, insurance, etc.

YOU decide where to spend your revenue. Choose Wisely

Your challenge is knowing the difference between which optional expenses will boost your earnings and which ones will not. 

For example, adding more trucks and drivers to your territory may seem unavoidable, due to expanded volumes, but is that going to increase your earnings? Or could you replace a truck with a different capacity truck that would lower the number of trucks you send out on a daily basis?

Can you increase the stop counts for two, or three, current drivers instead of hiring another driver thereby limiting additional safety and HR expenses?

You get the point - the more you're willing to work at analyzing your data, the more revenues you'll keep in your own pocket - which is the true definition of earning.

And if you'd like help with analyzing your data, I know some folks who can assist you.

Until our next post...

Topics: Business Structure, Business Outlook, FedEx, Training, Ground, FedEx Ground, Negotiation, Profit

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