Understand FedEx Route Financials: Profit Margins, Financing Options, and More!

Photo by JOHN TOWNER

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 Ground route.

In case you missed one or more of these posts, here’s a need-to-know round-up.

Look for P&D businesses with profit margins between 15 and 20% of revenue

For example, if you purchase a FedEx Ground route with approximately $800,000 in revenue per year, you can expect to pull in approximately $120,000 in profit (or 15%).

Net incomes within that 15-20% range are what FedEx Ground P&D routes are actually capable of making.

Routes for sale that advertise profit margins of 30% or more are likely exaggerating their profit and you should be extremely cautious.

Potential buyers often turn to bank financing to purchase FedEx Ground routes

If you are considering financing a FedEx Ground route, the two most common types of loans are a Small Business Association (SBA) loan and a conventional loan. 

Many investors do not want to invest all cash in the purchase cost of a route (typically ranging from $300,000 to over a million dollars). Some investors simply do not have that type of cash on hand and others want to hold back cash in order to cover capital and maintenance expenses for business operations after purchase.

Route Consultants has a deep well of quality FedEx Ground routes for sale with plenty of routes where financing should not be a problem.

One strategy for acquiring sufficient down payment funds is to reduce the loan amount via seller financing

A FedEx Ground route deal with seller financing means that the seller essentially loans you part of the cost of your purchase and you will pay back the seller this portion of the price (usually with interest). Rarely does a FedEx Ground route seller provide all of the financing for a deal.

Seller financing can often help cash-strapped buyers afford higher cost routes. It can also help buyers who have plentiful cash on hand, but struggle to secure additional funding via the SBA or a bank.

Have a Deep Understanding of the Charges you Will Negotiate in Your ISP Contract

You are charging FedEx Ground for your services. You will negotiate ten separate charges with FedEx Ground. All of these charges combined account for money flowing into your business.

As a new FedEx Ground contractor, you may find contract negotiations overwhelming. There are a lot of moving pieces to the puzzle! Complete your research on each of the ten charges and hire a consultant to help you navigate the process, if necessary.

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