Building on natural advantages in business

Blog published by Howes Percival LLP, under Business Development, Legal / IP

In life there are always some natural advantages that make some people better at certain things than others. For example, standing at 5’9 (on a good day!) it was always pretty unlikely that I could emulate my childhood hero, Martin Johnson, and play second row for England.

The same applies in business, where certain geographic advantages naturally result in industries being concentrated in a particular area. In our case, our central location and exceptional transport links make Northants & Bucks the ideal place to operate a logistics business.

Even with this natural geographic advantage, it takes an awful lot more to build and maintain a successful logistics business. Having worked with businesses in the region for more than 200 years we’ve seen the sector go through all manner of changes and helped guide local logistics businesses through some of their biggest challenges:

1. Managing your cashflow

As we all know cash is the lifeblood of any business and that is particularly true in the logistics industry, where overheads are substantial and self-employed staff will simply move elsewhere if they’re not paid on time.

Maintaining good cashflow is about a series of simple actions done consistently. It starts with having open and honest discussions with customers about pricing and payment terms. You then have to put those terms into a properly written contract which is legally enforceable (if you don’t share your payment terms with a customer until invoicing it’s probably already too late).

With these basic processes in place, it’s then about managing your debtors, following up regularly and, where the need arises, being prepared to take robust legal action to get paid for the hard work you’ve done.

2. Managing your property assets

The current discussions amongst the majority of the business community and press at the moment are all about reducing floor space and getting rid of property assets that have been shown to be excessive by the pandemic.

However, there are exceptions to this trend and logistics is certainly one of them. Whether you lease your properties or own them outright, having secure premises in quality locations with excellent transport links is vital to any successful logistics business.

If the current trends towards working from home and increased online sales continue there should be opportunities in this area for the logistics industry over the next few years, with investors and developers focussing on more warehousing and industrial units.

In navigating these potential opportunities, it will be important for logistics firms to take proper advice to ensure they’re paying a competitive price for their premises and are getting fair terms. Otherwise, a property portfolio that should be an asset to aid a business’ growth can quickly become an albatross around your neck.

3. Managing your people

The logistics industry has some unique challenges when it comes to managing its workforce. The nature of warehouse work naturally results in a high turnover of staff, finding qualified and experienced drivers in a competitive industry will always be a challenge and seasonal peaks and troughs require a degree of staff flexibility not needed in other sectors.

On top of these industry-specific challenges, employment laws are changing all the time. IR35 and employment status is the hot topic at the moment and is certainly a minefield in itself for those who rely heavily on contractors.

However, in the past two years alone there have also been changes to parental leave, terms of employment, agency works’ rights, apprenticeships, holiday pay as well as the furlough scheme.

With so much change in such a short space of time logistics businesses (given their complex employment arrangements) get the support they need from experts in these areas.

4. Managing the unexpected

If there’s one thing the last 18 months has taught us it’s that in business you need to be prepared for the unexpected. For years we have included “force majeure” clauses in contracts which were never needed but then Covid-19 came along and suddenly they were vital.

Whilst we all hope for the best, it’s important to plan for the worst and not just by taking out insurance. Insurance policies are clearly vital, but the insurers aren’t going to be the ones trying to get out of suddenly unprofitable contracts, finding new staff if your current ones go on strike or running the business if a key individual suddenly becomes ill. Whilst they are a great place to start, you also can’t assume that industry standard Conditions (such as the RHA Conditions of Carriage or UKWA’s standard T&Cs) will cover the specific issues in your business, because they’re not designed for that.

You need to make sure that your customer and supplier contracts anticipate unexpected problems, that you’ve got robust business continuity processes in place and that you’ve got proper plans understood by your key people if someone suddenly has to leave the business.

It is a great time to be a logistics business in our region. The growth of e-commerce has significantly increased demand and our infrastructure should only improve with the continued development of the Oxford Cambridge Arc. Nevertheless, our local logistics firms can’t afford to rely on geography alone to succeed and need to get the basics right to ensure that our region remains the UK’s logistics hub.

If you would like to get in touch in relation to any of the issues raised in this article, please email miles.barnes@howespercival.com or call us on 01604 230400.

The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.

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