The Business of Independent Service Provider Contracting


Posted by Jeff Walczak on 6/23/19 2:52 PM

We’ve been preaching it, to those who would listen, for years.

Recently, FXG finally admitted itTransformation Is Underway

You’ve been a part of it for years. But I bet a lot of you don’t even know what it is.

Now, you are actually living it.

It’s not being disguised anymore.

FXG has been telling you change is coming, but downplaying its severity in order to not upset the apple cart...too much.

So what is it?

The TRANSFORMATION of the FXG Business Model

"It’s" actually a multi-purpose & multi-operational transformation of FXG’s contractor business model that has been underway for at least 8 or more years. It's been planned and sorely needed for a multitude of reasons.transformation2

During the move from the IC (legacy) contract, to the new ISP agreement, FXG has been describing the move as just transition from one contract version to another.

While it’s true that there is a new contract, the Transformation has been down-played , and will actually serve as the basis for a much bigger, bolder, fundamental change in the way business is conducted with what today are called, “CSP’s” (Contracted Service Providers - or yes: "Vendors").

In fact, look for the elimination of any reference to the now toxic term: contractor. As evidence, be on the lookout for something as familiar as “Contractor Relations” to be renamed in a much larger effort to transform the fundamental way the relationship between FXG and its Contracted Service Providers is defined.

FXG has been in the process of TRANSFORMING the contractor based business model, to that of utilizing transportation companies to provide service for their customers.

I Shouldn’t Have To Worry About This….Right?

Many current, slightly naive, contractors have already said: "well, that's no problem, Transformation Worrywhat's the difference?, I already run a transportation company".

Well, not really.

Many think they are operating a transportation company, but the sobering truth is that many CSPs still operate what is termed a "Lifestyle Business".


The "Lifestyle Business mindset" of its contractors is exactly what FXG is trying to disassociate itself with.

A Lifestyle Business owner generally gets directly involved in the day to day operation of the business, in many ways. The guiding principle behind a lifestyle business is to create and sustain a particular level of income for the founders or owners & nothing more. In other words, its purpose is to facilitate a particular lifestyle and do Transformation Lifestyle Businesswhat is easiest.

A lifestyle business is run by thoughts, feelings and past lifestyle business experience.

Lifestyle businesses base decisions on what the owners and managers think and feel. Very little, if any, consideration is given to numbers and most importantly, the data behind any particular decision.

This was fine when businesses had 5 or fewer employees. It was easy to shoot from the hip and ignore fundamental business practices. But as you will see, it’s not going to be fine anymore.

 >>> Don't believe it? Don’t believe that FXG is trying to eliminate Lifestyle Businesses?

Take a look around you. How many single to 5 van (500 stops) operations do you now see?

It's not a mistake and this move was taken to purge the first round of Lifestyle Business Owners.

Now it's time to TRANSFORM the rest of them.

So, What’s A Transportation Company?

By contrast, “Transportation Companies” rely on systems, processes and data to facilitate getting to scale (grow) and be managed.

Transportation companies need to be able to operate without the direct daily intervention of the owner. The organization must have strong management, sound practices and solid systems & procedures that allow actions to reoccur without Corporate Officeongoing direct supervision. This does not mean there is no longer a need for leadership, but it does allow for management to occur, meaning the efficient allocation of resources (including people) to accomplish set objectives.

In fact, strong leadership is needed more than ever to run a successful Transportation Company. Those where leadership is missing will quickly wither and some sort of business exit will need to be planned.

Transportation companies are agile and can adapt to the operational and business changes that they are faced with.

Transportation companies typically have more than one customer. Almost all current FXG CSP'S do not.

Above all, Transportation Companies look inward at their ability to increase Increase Efficiencyefficiencies when faced with the outside pressures on their margins, which is what FXG is now imposing with it's latest version of the operating agreement (ISP).

Why Won’t My Lifestyle Businesses Make It In The New Environment?

Usually, one of the first complaints that is voiced when it starts to sink in, that some real, tangible changes are going to have to be made to survive the Transformation is: “Where am I going to get the money I need to run my business like a Transportation Company”?

You must understand that FXG thinks it’s already paying you to do so.

Simply put: The Money Needed For Operating A Transportation Company, Is Trapped In The Inefficiencies Inherent To A Lifestyle Business.

Those of you who are veterans of our various training courses know that this is what we have been trying to teach while preparing you for the Transformation. The good news is that we are preparing a whole new set of issue specific courses, such as "How to schedule for a 7 day operation" and will be offering them soon. Trapped Money

If you are to survive, and thrive, you’re likely going to have to learn some new ways to conduct business.

Now, it’s not all bad news because those that can adapt, will be rewarded with increased margins and business value, as the new businesses that will emerge will be highly sought after in the investment community, even more than they already are.

The transformation of your businesses is imminent. Whether you think so or not.

If you are going to make a go of the new model, it's time to prepare your thoughts and goals to align with the coming changes.

We'll be writing a lot more soon about topics and issues associated with the Transformation that are going to have to be addressed. We'll take them one by one and get you thinking about what you are going to have to do to roll with the changes.

Stay tuned!





Topics: Business, contractor

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