Simple Mantra's for Startups in Logistics

APR 09

It happened recently at Trucklo ( where one of our vendors (truckers) approached our customer for business thus trying to undercut us in our own segment. However the customer didn't entertain him as they preferred Trucklo for it's service quality and organized processes.

It seems such things happen very often in logistics space, heard a story recently about a very big company, a well funded logistics startup, undercutting many of its business partners and approaching customers directly. They are so well funded that they undercut the price by 30%, cutting off other traditional players. That story is also funny as most of those customers went back to their previous vendors owing to poor service quality by the startup. Also, that startup is loosing traction and getting more resistance from within the trucking community.

At Trucklo, we keep asking this question on what is right and what is wrong or in other words what is ethical and unethical or is there something like that to be worried about. We take time between all our business meetings to discuss on fundamental values we should base a business on, sometimes it leads to meaningful discussions but at times we get stuck in paradigms. I can keep blogging about how important it is to have values, honesty, sincerity etc but practically human beings are complex and they have different set of environmental and social arrangements to take care of, so whatever we say, people always operate within certain boundaries.

Startups in Logistics space today (especially in developing countries) are full of challenges, have seen many logistics startups slowly fade away in last 4 years (i.e. from 2014), the ground level realities are hard, payment issues, handling local drivers, local truckers and cut throat competition have caused many to shut down shops before they even saw glimpses of profit or revenues.

Below are few points we believe is fundamental to any business (especially logistics) and can help them grow steadily

  • 1. Building a strong circle of "partners - this has been our primary focus at Trucklo so far, we have built a strong network of truckers, I have personally met most of them, we value our relationship with "partners", give them time for meetings, hear them out and set up finances accordingly. "One Size Fits All" model does not work here, working with them individually has helped us improve service quality. Some of my friends argue that you need to show many truckers on your platform to make it investment friendly but somehow what has worked for us is to have 10 good partners rather than 100 non engaging partners.
  • 2. Pay your vendors on time - we believe it's very important to pay vendors on time, we stop their bills, they stop other bills and the chain goes on. As long as there are no service or performance issues, we should try to pay their bills / invoices on time.
  • 3. Get paid from customers on time -last week I had a wonderful discussion with a CEO of a courier company and he shared how they moved from an "All Are Welcome Customers" model to a "Paying Customers Only" model, i.e. they initially had lots of customers, many were bad pay masters, they didn't lose money but payments were often late, so they gradually evolved to a model where they entertain only customers who pay on time. It's a common notion that customers pay late, that's not true, there are many who pay on time, we just have to look for them and set up a working relationship.
  • 4. Build an env of trust - we believe good ethics, integrity and discipline is important for any company as that will percolate down to the team, appreciated by customers and builds an environment of trust. The ethical behavior can bring significant and long term benefits to a business, in the end businesses are people, undercutting our business partners without their prior consent or agreement is not ethical and does not set the right precedent in the industry, short term gains must be replaced with long term objectives and strategic thinking.
  • 5. Keep a tight control on finances -understand the leakages, the spend, the incoming and the outgoing. Optimizing and channelizing finances can set the right growth trajectory. At Trucklo, we have a custom dashboard displaying financial summary, it's simple, tailor made and provides actionable strategical insights i.e. it acts an an indicator and measure of the current strategy in place, what we are doing right, what we need to improve and how to pivot forward etc. You don't need a data scientist to build such a dashboard, it's basically a mapping of what we have in mind to simple numbers.
  • 6. Don't bank on Investors -develop a plan to convert your startup to a proper business, startups rely more on funding, businesses are profit generating and self sustaining entities, you can be profitable even with a limited set of customers, profitable businesses are scalable, so focus on building a business and then plan for scale. Remember if we are profitable with 1 customer then that model can scale to 100 and more customers.

Small steps can make a big difference, growing slowly and cautiously in business we believe is the right thing to do. Value both your customers and vendors, respect their business, act in accordance with fundamental human ethics and values, so they respect you and your business.

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