The Business of Independent Service Provider Contracting

Does Your Business Fit In FedEx Ground's Future Plans?

Posted by Jeff Walczak on 10/6/14 8:22 AM

There has been a lot of talk lately. Most of the talk surrounds the adverse events that are leading to big changes at FedEx Ground, particularly in the relationship that the corporation has with its independent contractors and independent service providers.

What does all this mean for you?



Politics, increasing regulation, the current legal environment and business growth are fueling these changes. I talk to contractors all over the country, every day and the overwhelming theme of these discussions is 'what do these changes mean to me'? “What is going on and how will they affect me and my business”?

Some questions are tactical, like “will I still get van availability” and such. A few are strategic such as “what is going to happen to me since I only have one van”?

One thing needs to be clearly understood above all else. There is ZERO CHANCE that FXG will abandon it independent contractor and service provider model. There are a lot of folks out there who want to get clicks on their blog posts or news sites by trumpeting the end of this model. It is more likely that the planet will get struck by a comet tomorrow than FedEx changing this successful model...ever.

However, there is pressure on the model, and change is currently underway. The most important thing to point out here is the model is moving from contractors that have smaller operations, like 1 to 3 vans, to larger, more profit and growth minded owners who remove themselves from the day to day operations in order to stay on top of larger operations.


There are many reasons why, but you MUST understand what is happening and you MUST decide if you want to participate in these changes or not. There is no doubt that within a couple years, the business relationship you have with your parent company is going to change more than it already has. 

The reasons for all the changes are the subject for another blog post. While it is good to know why, the critical thing for you to do, right now, is to take a look at what you are doing and how you are doing it. You need to determine what type of company you are running. Then, once you have identified your business type, you can see if it is going to be consistent with where your parent company is going, and if you will go along for the ride or be sitting on the curb.

Business_TypesThe easiest way to look at this is to define two types of businesses that currently exist in the FXG system. One type is consistent with FXG's direction and one is not consistent with FXG’s corporate goals. If your business type does not match where FXG is going, then you have to decide if you want to go for a ride with them or not. There is a way to change your business into one that will survive, but you are going to have to welcome some real changes. If your business type is already consistent with the direction that FXG is going, I can tell you from 16 years of experience and talking to contractors every day, that even these operations will experience change. Understanding FXG’s direction while looking at your operation will uncover some business practices that you'll need to examine and change as well. 

In general, businesses can be put into two buckets: Businesses that exist to provide the owner with what they need to get by, and businesses that exist to provide a return on investment. 

The first type is termed a Lifestyle BusinessThey give the owner a certain amount of freedom FedEx_Ground_Contractor

and a degree of fulfillment from their efforts. The owners of these

businesses are not really looking for growth and are happy with "making it".

Another business type exists to provide a return on an investment while building it for a larger payoff later.

An easy way to classify this type is to call it a Business For Profit And Growth.

These are two very basic distinctions but the difference is important to your future.

FXG is looking for businesses who want to operate for growth and a return on an investment. The way these owners think about and operate their businesses is consistent with FXG goals and objectives. They "fit" together.


Currently, and historically, FXG has been dominated by Lifestyle business owners. Many of these folks think about their contractual relationship as a job and not a career or business. These types of businesses will be weeded out. Make no mistake about it, it is already happening.

These types of owners are more likely to try to blame someone else, like FXG for their inability to manage their businesses. When things go wrong, they seek to blame others through the legal system, where there are plenty of people, like attorneys and politicians who will use this situation to feather their own nests.

When you understand this, the shift in the business model is obvious.

So the first step for you is to determine what kind of business you operate. Then, if you wish to change, do something about it.

Let’s look at how Jeff Foxworthy would help us determine what type of business we have:

Lifestyle Business Traits

  • If you think that all you want is enough money to make the payment on the double-wide, make a pickup truck payment, and get a 12-pack on Friday night, you might be a Lifestyle Business Owner.
  • If you manage your business by only looking at the number of stops completed daily, you’re doing more than most, but you still might be a Lifestyle Business Owner.
  • If you look to see what your bank balance is a couple days after your settlement is deposited, and hope that it is positive, you might be a Lifestyle Business Owner.
  • If you don’t like weeks with holidays in them because you can’t pay yourself on those weeks, you might be a Lifestyle Business Owner.
  • If you have a larger operation, and your managers are sitting around your office from Monday – Thursday, and are gone on Friday afternoons, you might be a big one, but still you might be a Lifestyle Business Owner.
  • If you or one of your “management” employees says they can figure out your P&D productivity with a calculator and Quickbooks, you might be a Lifestyle Business Owner.
  • If you spend your days shuttling your trucks to and from your mechanic, you might be a Lifestyle Business Owner.
  • If you think that a route generation software package is the thing you need to run a more efficient operation, you might be a Lifestyle Business Owner.
  • If you hope for a light day tomorrow, you might be a Lifestyle Business Owner.
  • If you perform any driver duties, for any reason, you might be a Lifestyle Business Owner.
  • Finally, if you think that FXG is to blame for the majority of your problems, you might be a Lifestyle Business Owner.


 Business For Profit And Growth

  • If you know (not think you know) your average MPG across your equipment, or know where to find it within a minute, you might own a Business For Profit And Growth.
  • If you have business goals, and a plan for achieving them, you might own a Business For Profit and Growth.
  • If you know where your next 5 driver employees are going to come from, and know their names, you might own a Business For Profit And Growth.
  • If you have a digital system for keeping your records and particularly business discussions for easy sorting and retrieval, you might own a Business For Profit And Growth.
  • If you are into doing enough planning so you don't have to drive, you might own a Business For Profit And Growth.
  • If you know what a "business metric" is and how to generate them, you might own a Business For Profit And Growth

So you should be able to go through the list above and if you have more "yes" answers in the Lifestyle Business section than the one Business For Profit and Growth section, you need to do some soul-searching. 

FXG is looking for business partners who are seeking profit and growth, not lifestyle business franchisees. You need to choose if you want to survive and thrive, or go by the way-side.

We have written an eBook that will help you determine what you have and what you want. If you need to do transforming, then it gives you a 6 step process to help you make these transitions easy.

Click on the box below and get the free eBook for FXG contractors: Transform Your Lifestyle Business Into One For Profit And Growth below:

 Get The Transform Your Lifestyle Business Into One For Growth And Profit eBook


Topics: Business Planning, Business Outlook

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