If you are looking for your next route business or investment, you are no doubt taking stock of a variety of locations and you are probably looking at available businesses near you.
How big should your search radius be?
You may hear us talk from time to time about an active FedEx route for sale as having a “high potential for growth” and some of these locations may surprise you. Recently we made these notes on routes in suburban Ohio and Eastern North Carolina. How do we identify high growth areas?
Here are our recommendations for identifying your next route purchase.
High Population Growth is Just One Predictor
Many new investors want to focus their search in on areas that also have high population growth. Population growth does contribute to package growth. However, as we cautioned before, beware of route businesses in cities where outsized growth contributes to low unemployment rates and upward wage pressure. These can be expensive markets with substantial hiring challenges.
Notable Growth in Rural Markets
In our own experience we are seeing remarkable package growth in rural areas. In particular, towns and small cities located two to three hours from a metropolitan area have rapidly increasing package volume.
In these areas, individuals have a Walmart or Dollar General as the primary shopping destination without many (or any) other brick and mortar options. With the rise of social media and other communications, individuals and families are aware of other options for fashion, home goods, and healthcare products and are increasingly having them delivered to their doorstep.
More and more we also see families in rural areas have groceries and meal prep kits delivered (for free) as an alternative to the limited options in their immediate vicinity.
Let us encourage you to broaden your search.
Many new investors want to purchase FedEx routes for sale in their own residential area. We get it! However, available businesses near you may not be the right financial choice.
You want to find a business that has sound financials, a good contract, and potential for growth. The best investment option for you may be further away from where you live.
First, let us be clear: a route business is not a mailbox money business or passive investment. The term absentee ownership is inaccurate because you are going to need to be involved (even if that involvement is from a distance). We refer to investments away from your residential area as remote ownership arrangements.
FedEx Ground route businesses lend well to remote ownership opportunities. Most of your team will be out on the road for 95% of the day and employees rarely linger around the terminal. In this business, you are not missing out by not coming into the terminal each day.
For your first route business, we recommend finding an opportunity within a five and a half hour drive from your home. This allows you to easily make trips to the terminal on occasion or in case of emergencies, but also gives you a substantial radius to scout for businesses.
While high population areas and rural markets both have advantages, strong businesses need a balanced portfolio of routes to offset challenges in both locations.
If you choose routes in a trendy area you will see consequential growth in your package volume. Plus, you will have more choices in where you buy fleet vehicles and repair your trucks. Conversely, your labor pool is tighter and you will have higher payroll expenses.
If you want to talk more about your options for your next investment, connect with our team.