Looking to Purchase a Ground Route

gixxer squid

Well-Known Member
You are receiving some real good free advice. We have made ours work, it can be a major headache at times and this business OWNS you, you don't own it, LOL

Just reread my last paragraph on my last long post. If you can make it work, than go for it but please don't comma crying later if you didn't follow good sound advice that many have given, my violin strings are long worn out :)


ps. Have you even been approved by fedex to take over? Its not as simple as throwing some money down and taking over FYI, at least not in my ISP state.
 

gixxer squid

Well-Known Member
Your contractor may somehow be grandfathered in. Most Owners now HAVE to be incorporated. Incorporation means payroll, no way around it which means more taxes which means less net….
 

rkj77

Member
You are receiving some real good free advice. We have made ours work, it can be a major headache at times and this business OWNS you, you don't own it, LOL

Just reread my last paragraph on my last long post. If you can make it work, than go for it but please don't comma crying later if you didn't follow good sound advice that many have given, my violin strings are long worn out :)


ps. Have you even been approved by fedex to take over? Its not as simple as throwing some money down and taking over FYI, at least not in my ISP state.
Thank you for the advice and insights, it is appreciated. Yes, I have been approved by Fed Ex as I have a clean background and license and the necessary driving experience, which is all that seemed to be required here in NY.

At this point, I am leaning against it simply because if my state should go ISP in the near future, I would likely be able to afford to purchase a second route, but probably not a third in the near future and I definitely would not want to be faced with having to sell or joining with other single route contractors in some sort of nightmare business arrangement.

I spoke to the route owner as well as a couple of other single HD route owners from another terminal and they all said that no single route owners that they know would ever put a second driver on the payroll because it makes no financial sense. They all use flex/temp drivers for coverage and it is apparently not a problem according to them. Now I realize that in the event of a sudden serious illness or injury that could put me in a real bad place and that is the second reason I am leaning against it. This arrangement appears to work OK for most single route drivers in my area, but I am probably not willing to risk it since I could lose everything if I am unable to find adequate coverage.

Ground and HD routes in my area are hard to come by and are all priced much higher than most other areas of the country. 1.5 x net is about the best one can do for a stable and profitable route, so there's also that downside.
 

rkj77

Member
Your contractor may somehow be grandfathered in. Most Owners now HAVE to be incorporated. Incorporation means payroll, no way around it which means more taxes which means less net….
Sorry, yes, I would have to be incorporated and of course take out payroll taxes on myself. I would be paying taxes just like I would if it were a salary from any other job.
 

gixxer squid

Well-Known Member
Thank you for the advice and insights, it is appreciated. Yes, I have been approved by Fed Ex as I have a clean background and license and the necessary driving experience, which is all that seemed to be required here in NY.

At this point, I am leaning against it simply because if my state should go ISP in the near future, I would likely be able to afford to purchase a second route, but probably not a third in the near future and I definitely would not want to be faced with having to sell or joining with other single route contractors in some sort of nightmare business arrangement.

I spoke to the route owner as well as a couple of other single HD route owners from another terminal and they all said that no single route owners that they know would ever put a second driver on the payroll because it makes no financial sense. They all use flex/temp drivers for coverage and it is apparently not a problem according to them. Now I realize that in the event of a sudden serious illness or injury that could put me in a real bad place and that is the second reason I am leaning against it. This arrangement appears to work OK for most single route drivers in my area, but I am probably not willing to risk it since I could lose everything if I am unable to find adequate coverage.

Ground and HD routes in my area are hard to come by and are all priced much higher than most other areas of the country. 1.5 x net is about the best one can do for a stable and profitable route, so there's also that downside.


We started with a route and supplement. Not 2 PSA's. We partnered with another single contractor as 2 PSA's were minimum. Everything was fine, settlements WERE easy to read and self explanatory per truck or I should say WA (work area). Other partner decided to sell, we did not want his route but fortunately for us, we were able to combine routes with someone we knew from HD. The problem with that was that the money was paid into one account, the HD contractor. We received all our monies but he knew our business so if your private, forget about it, your partner will know your business. A few years after that we purchased 4 PSA's and 2 sups with it so now we are on our own, no other partners and we have a full time manager so i rarely get the phone call. However, the 3 years prior we had 3 different drivers quit or they weren't cut out for the work. In a 6 month span I had to take 3 months off work to train the various new drivers, this job is NOT for everyone, especially if heavy volume. Lucky I have my own business and can somewhat make my own hours so it did not affect me a whole lot to a certain extent.

Your success will be determined by the relationships you make. Be humble and realize that you may be the new dog in town if you move forward. Our contract was just renewed end of July, I have no idea when everyone else's from other states is renewed. Again, my advice, find out how many other single contractors are in your station, befriend them as you may need to partner with them if Fedex changes there model. It had been my experience regardless of what others may say, that they are somewhat tolerant and reasonable and they will not come to you and say you need a partner next week. You will have some time to make changes if need be. Is it a perfect system, NO, but what is.

I understand what your saying about not having another driver on payroll, trust me I get it. My saying this was and IS a insurance policy for your business, an insurance policy to cover your 140-160k investment, thats all. I think you understand this and I am sure any other contractor would agree with me.

1.5 net earnings is the general rule of thumb for business valuations plus assets. Are you financing or paying cash. Cash is king and you should get a discounted rate if so. I am still having some problems computing your figures. 145 gross and 119 net. Are your taking the net directly off the settlements?????? We used to have a gross and then our net showing on our settlements. I am just trying to figure where the 119k is coming from. Is a schedule C being filed if not incorporated yet? Have you seen the schedule C ? is the schedule C showing 119k before personal deductions?

We are currently looking at another PSA right now and gross is as i recall is 128k, contractor is selling for 90k and comes with a 2009 p1200. PSA's are generally selling between 80-100k here and at other stations as well, they don't come up very often but that seems to be the general norm. Our first PSA and Supp we purchased for 110k and it grossed exactly 144k.

Lots of info to digest but don't be scared, not my intention although others may disagree. We are growing and getting busier. If your terminal does have floaters, do they know your route.? Who pays for them? Is it pooled by other contractors? Do you have to schedule the floater way in advance? How many are at the stations disposal? Where is your route on the food chain if there are 3 floaters and 4 guys show up sick. The reason I ask is because I don't care how good you think you are, you get put on a route with over 100 stops you have never done before and welcome to DNA (did not arrive) city. Then when you come back next day, you have your daily inbound volume plus whatever the floater was not able to deliver, now you have 160 stops, LOL. I commend you for coming to this forum and asking questions. Not sure what states require a minimum of 3 but know our sunny west coast state only requires a minimum of TWO. Knowledge is power.
 

rkj77

Member
We started with a route and supplement. Not 2 PSA's. We partnered with another single contractor as 2 PSA's were minimum. Everything was fine, settlements WERE easy to read and self explanatory per truck or I should say WA (work area). Other partner decided to sell, we did not want his route but fortunately for us, we were able to combine routes with someone we knew from HD. The problem with that was that the money was paid into one account, the HD contractor. We received all our monies but he knew our business so if your private, forget about it, your partner will know your business. A few years after that we purchased 4 PSA's and 2 sups with it so now we are on our own, no other partners and we have a full time manager so i rarely get the phone call. However, the 3 years prior we had 3 different drivers quit or they weren't cut out for the work. In a 6 month span I had to take 3 months off work to train the various new drivers, this job is NOT for everyone, especially if heavy volume. Lucky I have my own business and can somewhat make my own hours so it did not affect me a whole lot to a certain extent.

Your success will be determined by the relationships you make. Be humble and realize that you may be the new dog in town if you move forward. Our contract was just renewed end of July, I have no idea when everyone else's from other states is renewed. Again, my advice, find out how many other single contractors are in your station, befriend them as you may need to partner with them if Fedex changes there model. It had been my experience regardless of what others may say, that they are somewhat tolerant and reasonable and they will not come to you and say you need a partner next week. You will have some time to make changes if need be. Is it a perfect system, NO, but what is.

I understand what your saying about not having another driver on payroll, trust me I get it. My saying this was and IS a insurance policy for your business, an insurance policy to cover your 140-160k investment, thats all. I think you understand this and I am sure any other contractor would agree with me.

1.5 net earnings is the general rule of thumb for business valuations plus assets. Are you financing or paying cash. Cash is king and you should get a discounted rate if so. I am still having some problems computing your figures. 145 gross and 119 net. Are your taking the net directly off the settlements?????? We used to have a gross and then our net showing on our settlements. I am just trying to figure where the 119k is coming from. Is a schedule C being filed if not incorporated yet? Have you seen the schedule C ? is the schedule C showing 119k before personal deductions?

We are currently looking at another PSA right now and gross is as i recall is 128k, contractor is selling for 90k and comes with a 2009 p1200. PSA's are generally selling between 80-100k here and at other stations as well, they don't come up very often but that seems to be the general norm. Our first PSA and Supp we purchased for 110k and it grossed exactly 144k.

Lots of info to digest but don't be scared, not my intention although others may disagree. We are growing and getting busier. If your terminal does have floaters, do they know your route.? Who pays for them? Is it pooled by other contractors? Do you have to schedule the floater way in advance? How many are at the stations disposal? Where is your route on the food chain if there are 3 floaters and 4 guys show up sick. The reason I ask is because I don't care how good you think you are, you get put on a route with over 100 stops you have never done before and welcome to DNA (did not arrive) city. Then when you come back next day, you have your daily inbound volume plus whatever the floater was not able to deliver, now you have 160 stops, LOL. I commend you for coming to this forum and asking questions. Not sure what states require a minimum of 3 but know our sunny west coast state only requires a minimum of TWO. Knowledge is power.
Thanks for the post - lots of great info. Sorry, let me clarify how I arrived at gross vs net. His settlement sheets from Fed Ex as well as his 1099 for 2013 shows income of $140k after all Fed Ex deductions were taken out, which were about $90/week, so that is what I am calling gross. After the Fed Ex deductions and the remaining expenses of vehicle maintenance and fuel, his final net as reflected on his corporate return was $119k. Because the truck is old, his maintenance expense averages out to be >$200 per week. His fuel costs are on the lower side since the route is 5 mins from the terminal and averages just 50-60 miles per day. He also takes 5 weeks vacation, so these numbers would be higher since I would not take as much time off.

Getting a newer and more reliable truck is a no brainer since he is spending >$800/month on the old truck now.

He averages about 40 pickup and 100 delivery stops a day during non-peak. I would think there is overlap there, but I am not totally sure how that is calculated yet. His peak numbers are higher, but not as much as they would be because he chooses to flex a lot.

I am going to ride the route with him for a week and also find out all of the info you've presented such as swing drivers, other single route owners, etc. before making a decision one way or the other.
 

STFXG

Well-Known Member
DO NOT RELY ON TEMPS/SWINGS! You need to get over the idea that you have help. It's a crutch and it will come back to bite you in the ass. Be independent.
 

rkj77

Member
DO NOT RELY ON TEMPS/SWINGS! You need to get over the idea that you have help. It's a crutch and it will come back to bite you in the ass. Be independent.
I totally agree and I am not going to rely on anyone and my mindset is that I will not need help, but I am also simply looking at what other single route owners do when something unavoidable and out of your control comes up for which there is always that risk.
 

STFXG

Well-Known Member
I totally agree and I am not going to rely on anyone and my mindset is that I will not need help, but I am also simply looking at what other single route owners do when something unavoidable and out of your control comes up for which there is always that risk.
Nothing is unavoidable or out of control. Contingency plans and contingency plans for your contingency plans.

The only thing out of your control is the weather or road closures. FedEx has codes for those situations so you won't fail service. You should have plans for any other possible situations.

Be ready to be nonexistent to your family. You won't be reliable to make it to anything in your social life. You WILL have to miss special occasions. Just the nature of the beast when running solo.
 

rkj77

Member
The route runs Mon to Fri and Mon to Sat during peak, so I'm not real worried about missing many family events since weekends are free except for Sat during peak. The current owner operator is done by 6:00pm after his last scheduled pickups during non-peak.

No offense to anyone and perhaps you have multiple routes and I am sure it is different, but a single Ground or HD or any other type of route is simply not that big of a deal compared to running other types of small businesses. I have also worked in NYC 70+ hours/week with a commute of almost 2 hours each way for the past 10+ years, so I am familiar with long hours and this will not be as long.

From what I have been told by other route owners, swing/temp drivers as well as fellow contractors are all part of a contingency plan for single route owner operators, at least here in NY that is the case. I would also look to get someone that I know and trust who has the necessary driving experience and a flexible job schedule approved as a backup driver just in case I need to call upon him as well.
 

STFXG

Well-Known Member
Running a single route is far easier than multiples. We are pointing out worse case scenario type stuff that might not happen but you have to be prepared for. For the most part it's just the daily grind. But it can turn hectic real quick and FedEx isn't forgiving.

They are more likely to strip a single work area guys contract for service problems than they are the bigger multi route contractors. A single route can be swallowed up rather easily by others in the building.

You probably won't have any issues. You seem to have it together more than most of the dopes in my terminal.

No one wants to see you lose your investment. We've all just seen it so many times and its always the same problems. Guys not knowing what they are really getting in to. Good luck with your venture. You'll do well here.
 

rkj77

Member
Running a single route is far easier than multiples. We are pointing out worse case scenario type stuff that might not happen but you have to be prepared for. For the most part it's just the daily grind. But it can turn hectic real quick and FedEx isn't forgiving.

They are more likely to strip a single work area guys contract for service problems than they are the bigger multi route contractors. A single route can be swallowed up rather easily by others in the building.

You probably won't have any issues. You seem to have it together more than most of the dopes in my terminal.

No one wants to see you lose your investment. We've all just seen it so many times and its always the same problems. Guys not knowing what they are really getting in to. Good luck with your venture. You'll do well here.
Thank you STFXG. That all makes sense. I still need to ride the route with him a few times and really see firsthand what this guy is doing and dealing with every day before I can decide if it is for me. In the meantime, I will keep researching and will remain cautiously optimistic.
 

gixxer squid

Well-Known Member
STFG hit nail on the head. There are times I wanna strangle myself and other times I enjoy.

We started out small and built once we learned business. No experience what so ever. You can do it.

Depending on how much is flexed, that's money you are giving away to another contractor. My insistence on a part time driver was strictly for insurance on your investment. I am sure you now understand. It is hard work but it can be profitable. You can PM me if you like with your number to discuss further. Always available. I don't frequent board often and stay outta politics most of time so I am a 5 year lurker of sorts.

If you are going to buy, make sure contractor will stay with you for a month. Cant learn a route and scanner in a week. If your making this kind of investment, I am sure he will oblige. Contractor meetings usually held in morning once or twice a month, attend those and have him introduce you to other contractors. I know you can do it. There won't be much paper work if its yourself so thats a good thing and you won't have to worry about spending all day with CPC on the phone.

I don't know all the routes but the ones I do know I have a detailed map and spreadsheet, spreadsheet simply lists whether delivery to front or rear and a box for FDO's, (unscheduled pick ups) 40 pickups between 3-5 or 3-5;30 is cutting it close. Pay EXTRA careful attention to pickups, mess up here will BITE you in the arse. CPC is your friend, they will extend windows, however, before they are closed, LOL You don't understand yet but others do. I broke our route in sections so in the event someone else had to drive, they would be much more successful. Things need to flow. God I was so overwhelmed when I started, I have lived in my city for 20+ years and thought I knew it like back of hand. Well, Jump on your truck and you will most likely find stuff you never thought existed.

I am rooting for you. It is an investment that has immediate returns. You don't have to hustle to get people to come to you. Its a good situation if you have the right mentality which is seems you do.

Got a saying I love.

Those who fail to plan, PLAN TO FAIL. :) :) :)


Once you learn, don't flex if possible, more money in your pocket.
 

msg915

New Member
I'm in the process of looking at two separate routes with multiple PSA's and supps. One has only Ground and the other has Ground and Homes. Seems to be that the sellers don't want to release any tax returns. I was able to have one show it to me, but not to release them. Hard to figure out exact net without seeing breakdown of certain expenses. Any thoughts on this would be appreciated.
 

bbsam

Moderator
Staff member
I'm in the process of looking at two separate routes with multiple PSA's and supps. One has only Ground and the other has Ground and Homes. Seems to be that the sellers don't want to release any tax returns. I was able to have one show it to me, but not to release them. Hard to figure out exact net without seeing breakdown of certain expenses. Any thoughts on this would be appreciated.
Are they offering to let you see any financial records?
 

STFXG

Well-Known Member
I'm in the process of looking at two separate routes with multiple PSA's and supps. One has only Ground and the other has Ground and Homes. Seems to be that the sellers don't want to release any tax returns. I was able to have one show it to me, but not to release them. Hard to figure out exact net without seeing breakdown of certain expenses. Any thoughts on this would be appreciated.

Run away.
 

vantexan

Well-Known Member
Someone said don't listen to those hateful Express drivers but I'm seeing experienced Ground people giving you good advice. As an experienced Express driver in those type of routes, have you done a lot of heavy, hard work? It may pay well but will you have $120k after all expenses? Are you prepared to grind it out for many years? 60 hrs a week of constant in and out of the truck will wear you down and with that kind of daily mileage it will be constant. If so great, but think about that if you haven't because as pointed out things change and can get messy. Possibly why route is being sold to begin with.
 

l22

Well-Known Member
It really seems like there is a far bigger possibility of failure than there is of success with purchasing a Ground route. So many things can go wrong unexpectedly to where I'd say it's really not worth it. There are other ways outside of this industry to make good money. If you really want to purchase a route and deal with Fedex Ground and it seems like it will be profitable - I'd consider how much risk is really involved in making the potential profit, which it seems like you are trying to do. Like Gixxer Squid said, hope for the best but prepare for the worst - the very worst. Ground and Fedex in general will likely have to deal with changes in how they treat their employees/how they do business/how their business functions in the coming future. If I were you, I'd look into getting into the mortgage loan business, real estate, learning a trade, getting certified in something, etc. lol. I am me (an Express courier) and I've been looking to do something else in recent months - or just staying at Express p/t.
 

overflowed

Well-Known Member
Just don't.The ground guys on here will say you can make money if you do it right. What exactly does that tell you. Some of these guys have been caught up in the scam so long they don't want to be the only ones.
 
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