Here are the financial highlights from our industry overviews this year. We focused on content this past year on giving you as much insider information as possible—especially information on the financials of buying a FedEx route. We resurface ideas such as: look for P&D businesses with profit margins between 15 and 20% of revenue; potential buyers often turn to bank financing to purchase FedEx routes; one strategy for acquiring sufficient down payment funds is to reduce the loan amount via seller financing; and have a deep understanding of the charges you will negotiate in your ISP contract.
One strategy for acquiring sufficient down payment funds is to reduce the loan amount. Obviously, that can mean purchasing a less expensive route. However, it can also mean reaching a financing deal with the seller. This is called seller financing.
MYTH: Investors can't use financing to buy a fedex route
FACT: you need to find the right route and the right financial institution
Potential buyers often turn to bank financing to purchase FedEx routes. If you are considering financing a FedEx route, the two most common types of loans are a Small Business Association (SBA) loan and a conventional loan.
You are charging FedEx for your services. You will negotiate each of the following ten charges with FedEx. All of these charges combined account for money flowing into your business. It’s critical you understand how and when those charges occur. And how you can increase your cash flow! Following is a quick overview of the charges you will negotiate as part of your Independent Service Provider (ISP) contract.
While a very profitable business, FedEx route businesses do not generate profit margins of 30% or more. As you look to buy a FedEx route, look for P&D businesses with profit margins between 15 and 20% of revenue. These are healthy businesses!