Note: This is Part 1 of a four-part series. Look for our other posts on How to Find FedEx Ground Routes for Sale, How to Distinguish Yourself as a Buyer, and How to Leverage Route Consultant’s Services.
If you are an investor ready to chart your own business path, we think you should give investing in FedEx Ground routes serious consideration.
You will be poised for success in the route industry if you bring a few of these traits and know-hows along to the investment:
Some type of business background
Past ownership or operation of a company with employees
Experience making payroll
Knowledge of customer management and addressing customer issues/concerns
An understanding of business financials and the basics of investment
A sense for how you will fund or finance a FedEx Ground route investment
So, why do we think FedEx Ground routes are great opportunity for this type of investor?
FedEx Ground route businesses are straight-forward investments. Unlike product-based businesses, you do not have to manage supply chains, production, inventory, and sales. Rather, you are an Independent Service Provider (ISP) providing your business’s time and manpower to another company.
Sales are a nearly nonexistent piece of your business experience. FedEx Ground corporate takes care of the company’s overall growth. And it is growing! FedEx Ground leadership targets approximately 10% to 15% earnings growth each year moving forward. As an operator, your sole focus lies around expense management.
You don’t need to worry about Amazon. While the buzz in 2018 circled around Amazon’s potential delivery service, the business from Amazon makes up less than three percent of FedEx Ground’s customer base. And, instead of worrying about Amazon, FedEx Ground is busting into the Chinese market at a faster than expected pace. Industry experts predict continued year-over-year growth for FedEx Ground.
This is also one reason why now is the right time to buy. Companies like Amazon are driving publicity and investor traffic to the delivery industry. As demand for FedEx Ground routes continues to climb, so will the sales price of these operations. There are currently many opportunities to generate a larger return on investment (ROI) than just the net operating income (NOI) you secure from operating the business. Our team can guide you through the proper path to a successful investment.
FedEx Ground routes are not part of a franchise. Corporations that own franchises often own the capital involved with your franchise. Or, corporations may collect franchise fees (you pay them) to use their branding and proprietary information. All franchise owners do the same thing, owe the same fees, and receive the same benefits. Fedex Ground ISPs are the masters of their own universe in many ways. As a FedEx route owner/operator you will select your routes and negotiate your contract, independently of other ISPs.
FedEx Ground routes are transferable. If you decide to move on from your investment, you can sell your routes (or a portion of your routes).
Well-run, efficient P&D routes will make a net income of about 15-25% of total revenue. (Anything advertised as higher than that is likely exaggerated.) This means, 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%).
While you will own vehicles as part of your FedEx Ground business, you do not need to hold real estate. All FedEx Ground ISPs operate out of FedEx Ground terminals in their area. This significantly reduces your overhead and risk.