As you consider buying FedEx Ground routes for sale you need to know that these businesses are structurally simple and niche. What do we mean by that?
If you know what to look for, conducting due diligence on a FedEx Ground operation can be straightforward. However, if you approach due diligence with these routes as you would a more traditional business for sale you are going to miss key flags.
These Answers to These Questions Can Make or Break Your FedEx Ground Investment:
How much business can I afford? How involved do I want to be with the day-to-day operations? What sort of returns do I expect from my investment? What are my long and short term goals with the business ?
Don’t be afraid of using debt/leverage to buy these businesses. These FedEx routes for sale can sustain a higher debt load than what some other businesses allow. Typically, your finance source will require a down payment of 20% or more. With a 20% down payment you lever your business 4:1. You have 1 part down payment and 4 parts debt.
Are you having trouble getting a response from a route broker? Or, are you finding that every listing that peaks your interest is under contract before you ever even make contact with the broker? In this industry, there are 20 prospective buyers for every FedEx route for sale listing you see. As we noted previously, the market is hot!
If you are an investor ready to chart your own business path, we think you should give investing in FedEx 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…
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.
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!