With Industry Costs Rising, Is It Time to Sell Your Routes?
As rewarding as it is to be an independent contractor nowadays, the delivery industry has seen its share of challenges in the past few years.
It started with a surge in online shopping due to a global pandemic—a boon for business, to be sure, but also tricky to navigate for some route owners who suddenly needed to hire additional staff to keep up with heavier delivery loads.
Then came the supply chain disruptions, which impacted roughly every industry and likely led to frustration within your route operation. And, most recently, a surge in fuel costs that has those in the transportation and shipping industry cringing every time they gas up.
Now may be the ideal time to sell your FedEx route business.
When it comes to selling FedEx routes, timing is everything. Obviously, if you feel like you have reached a point where you are ready to sell, now is a great time to start putting things in motion. However, keep in mind FedEx route sales don’t happen overnight, and you may need to wait until after peak season to begin the sales process.
As a veteran contractor, you know that the FedEx peak season occurs during the winter holiday months: October through December. During this busy time, FedEx is wary of bringing in new contractors because the demands can be too overwhelming. As a result, they typically do not approve route transfers in November and December and may even block transfers as early as October.
Keep in mind that from start to finish, a FedEx route transfer may take three to six months to complete. Therefore, the optimal time to initiate your sale is three to six months prior to your ideal closing time frame. We recommend beginning the process early in the year—and by August at the very latest—to ensure you have enough time to procure the right buyer and get the best possible price for your routes.
Start getting your financials in order.
Your discretionary profits over the past 12 months will largely determine the valuation of your business and, ultimately, offers from potential buyers. Gathering the following documents and having them ready for review will ensure the sale of your P&D routes goes smoothly.
- Copies of corporate tax returns (last two years): Submit all pages of each completed tax return for the most recent two years. If your most recent tax return is on extension, please make a note of this and provide returns for the previous two years.
- Current year-to-date profit and loss (P&L) statement: This is an account of all income and expenses incurred by the company for the current year.
- Prior year P&L statement: This is an account of all income and expenses incurred by the company for the prior year.
- FedEx 1099 forms (last two years): Your 1099 statements are issued to you from FedEx at the end of each year. These statements will show the gross amount FedEx paid to your corporation each year.
- Prior year W-2 forms for any owners of the business: Payroll statement(s) showing all W-2 wages paid to any owner(s) of the corporation.
- Most recent (current year) W-2 pay stub for any owners of the business: Payroll statement(s) showing all W-2 wages paid to any owner(s) of the corporation.
Not sure where to start? The team at KR Capital can help.
Every FedEx route sale is unique, and there are countless variables that will help you determine whether or not now is the right time to sell your routes. While there is no “golden rule” for when to sell, KR Capital can answer any questions you might have and help you formulate an exit plan that works for you, your drivers, and your staff. With a decade of experience and over $200 million in FedEx route sales to our credit, we can help you sell your routes efficiently, confidentially, and for a premium price. Contact KR Capital today to get started.