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Why Stand-Alone and Homegrown Systems Hold Transportation Companies Back

Alvin Phun 2018-10-15 09:54:51
Alvin Phun on Oct 15 2018

I love everything startup related. Talking about startups. Reading about startups. Startup blogs and podcasts. I can’t get enough.

I love hearing the stories of the early days. The resourcefulness the founders needed to make things happen. The creative ways they solved problems. The bootstrapping.

The founders of AirBnB sold political-themed limited-edition cereals to keep their dream afloat. When the Instacart founders couldn’t get permission to take pictures of products at a local grocery store, they just bought one of everything instead. Mark Benioff, the CEO of Salesforce, is known for doing just about anything to get noticed, from hiring fake protesters to renting out an entire fleet of airport taxis to pitch potential customers.

And in the beginning, that’s just what you do - whatever it takes to get the job done and keep the ball rolling.

Then you reach a point...

That’s how a lot of trucking and logistics companies start, too. Some ambitious people start moving goods from A to B and figure out the rest after.

Stand-alone systems get put into place willy nilly. Some programmers get hired to develop a homegrown system to handle the flood of paperwork. Everyone pitches in to fill the holes and plug the gaps.

And the best part is that it works. Countless successful trucking companies have been started this way. Resourceful folks, bootstrapping their way to a profit.

But just like tech startups, trucking companies reach a point where they have to make a choice - to grow big or go home.

The choice to grow big

Stand-alone and homegrown systems can only take a transportation company so far. Just as crazy stunts and resourcefulness can only take startups so far.

Eventually, the decision to grow bigger must be made and the right pieces need to be fit into place to solve the puzzle of growth. Eventually, you have to find a way to do things reliably, efficiently, and most importantly, in a way that allows you to scale.

As a Business Development Leader at Microdea, I see transportation companies get stuck at this point all the time. Their current way of doing things have taken them this far, but won’t allow them to go further.

Growing bigger would cause their current process to buckle under the stress. They would struggle to keep up with their bills because their cash flow wouldn’t be fast enough. They’d fall behind on getting invoices sent out, fall behind on settlements, fall on behind on every type of paperwork. They’d have to hire way more staff to keep up with the work, eating away at the wider margins they hoped to gain by growing bigger in the first place.

How to get ahead firstgetting-ahead

The way out is to get ahead. Growing successfully is all about positioning, putting better systems in place that give you room to grow. Sustainable, scalable solutions. 

And that means moving away from stand-alone and homegrown, even if they have gotten you this far.

Stand-alone systems, ones that don’t integrate with other 3rd party Transportation Management Systems, accounting packages and ERP software, are a recipe for inefficiency. If your systems aren’t connected digitally, people have to connect them manually, which leads to hours of repetitive work and human errors.

Homegrown systems don’t scale because you constantly have to pour money into development to help upgrade and maintain the system as your volume of business grows. That’s why bigger transportation companies outsource their document management and automation needs. It allows them greater flexibility, saves them money, and helps them focus on their core business. Let software companies do what they do best so that you can focus on what’s most important to your business: moving goods/amazing customer experience/etc.

Replacing a homegrown or stand-alone system with an integrated and automated solution is the first step to getting ahead. Starting with a Document Management System and automation engine like Synergize is a smart move because it helps speed up your billing and takes days off your outstanding receivables.

That influx of cash can be just what a transportation company needs to finally get ahead.

The chicken or the eggchicken-or-the-egg

One of the hardest things for a transportation company to do is make the leap.

If they don’t upgrade, they can’t grow bigger. But they also feel like they need to grow bigger to justify the investment. It’s a chicken-or-egg type problem.

The only thing I can say is that a good Document Management System, with deep integrations, automation power and strong scalability is the golden goose. It’s what comes first.

Because I’ve seen the results firsthand. Watched carriers upgrade their system and then double or triple their volume of business with no new hiring needed.

To grow or not to growgrowth

At the end of the day, growing big isn’t for everyone.

If that’s you, upgrading your stand-alone and homegrown systems could still help increase profitability on the loads you deliver.

But the real magic happens when you’re looking to rapidly expand your business.

If you want to jump into growth mode and grow fast like a startup, give me a call at 905-881-6071 x502, message me on linkedin, or email me at aphun@microdea.com. I’d love to chat with you about how your back office is currently running and how you can put the right pieces in place to accommodate and accelerate growth in the years to come.

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Alvin Phun

Alvin Phun is a Business Development Leader at Microdea who could talk all day about back-office efficiency, automated workflows, and slashing DSO. In his spare time, he loves learning about startups, growth hacking, personal development, and every other buzzword you can think of.

Supporting the trucking community

Truckload Carriers Association Ontario Trucking Association American Trucking Association Toronto Trucking Association Transportation Intermediaries Association

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