Why Now Is the Time to Sell FedEx Routes
Are you ready to sell your FedEx route? It might be time to get the ball rolling! Now that another holiday season has come and gone, it’s the best time to start looking for prospective buyers.
Let’s explore why selling your FedEx route after the holidays (instead of later in the year) may be a smart move.
You can include peak season profits in your year-end financials.
FedEx, like many other businesses, experiences high peaks in profit and volume during the holiday winter months: October, November, and December. This is especially true as online shopping continues to boom.
And, in the case of 2020, the ongoing COVID-19 pandemic has further increased the need for delivery services. The decline in in-person shopping and social gatherings (where gifts are usually exchanged) has prompted more consumers to utilize delivery services for sending and receiving packages.
Needless to say, the winter holidays are a highly profitable time for FedEx. By selling your route after this time—in January of the new year—you can include the peak season revenue in your yearly financials.
Here’s why that’s important: The value of your FedEx route will depend on your cash flow during the previous 12-month period. By including your most recent peak season profits, your valuation will likely be higher—and so too will offers from prospective buyers.
Of course, other factors will also influence the valuation of your route. In addition to your company financials, factors such as location, management structure, fleet condition, etc. all matter as well. With that said, your profitability over the prior 12-month period will be the dominant factor when calculating enterprise value (the value of your business). As such, it may be wise to sell shortly after the peak season to ensure these recent, high-volume months get proper credit in the valuation.
FedEx is more likely to approve route transfers after the holidays.
As mentioned earlier, FedEx is extremely busy during the winter holiday season. Contractors often hire seasonal drivers and rent additional vehicles to meet the increased demands.
That said, FedEx typically avoids route transfers just before or during the peak season. The spike in holiday deliveries, after all, can be overwhelming for a new contractor. Even experienced contractors need time to prepare themselves for the surge of expected peak volume. Additionally, the holiday months are hectic in general; adding a route transfer to the mix can be stressful for you and potential buyers.
Due to these factors, FedEx is far more likely to start processing route transfers in January. FedEx will typically stop approving transfers in November and December, although we have seen transfer delays occurring as early as October in some cases.
Contact KR Capital to Sell Your FedEx Route
When you are ready, we invite you to work with KR Capital. As a team of experienced FedEx brokers, we specialize in the purchase and sale of FedEx routes. We can explain the best time frame for selling routes, offer a free route valuation, and help you prepare the necessary paperwork to move forward.
Contact KR Capital today.