The trade off between risk and reward has always been a balancing act. On one hand, every business must embrace risk to be able to try and test new products and services to help maintain and grow revenue. On the other hand, few businesses can afford to waste time, money and human resources; developing initiatives that won’t necessarily contribute to the bottom line.
One business that knows how to walk this fine line is national delivery transport firm, Ontime Group. Its CEO Walter Scremin heads up the successful mid-sized business.
When it comes to the way the business assesses clients and mitigates risks, Scremin says ensuring the company takes on new customers in growth industries is key.
“We look for businesses that are trending up and have aspirations to get bigger; ultimately we want to partner with companies that we can grow with,” said Scremin.
“We try to be knowledgeable on what’s happening in the market, and keep track of trends in various industries. It’s also important to accept change. For example, if most of your clients are in a declining industry then you need to start thinking about new markets and new industries, and possibly adapt your services to suit,” he added.
Scremin says often it’s a case of starting off small with a client, then building up the relationship over time. “This has worked well for our business as a growth strategy because once the client sees what we can do and how we go about it, they usually want more of our services later on.”
Doing due diligence
In terms of mitigating risks, Scremin says research is key. “If you’re going to partner with someone and make a capital investment you need to do your due diligence. Good support people, such as accountants and lawyers, are essential. You need good people whose advice you can trust.”
He says the business mitigates risks by sticking to its core purpose. “If you know your area well, then there are generally fewer pitfalls and you know how to navigate the ones that are there. We’ve been in business a long time and know there are risks in getting excited by potential revenue gains and rushing into opportunities. We are always content to take our time on an opportunity and do the research required.”
Scremin explains the business is always innovating and uses software to manage and monitor operations.
“Delivery transport is often a top five cost of doing business. But it’s amazing how many companies don’t accurately know how much they are spending on it. They fail to take account of the many minor, unexpected and hidden costs that go into a transport division,” he said. For example, a van or truck that hasn’t been used for two weeks is still a cost.
Ontime Group has partnered with a software firm to develop a cost analysis tool, which reveals exactly what an organisation is spending on transport, based on its own inputs.
“It has helped many companies gain a better appreciation of what their transport is actually costing them. We have also designed our own telematics fleet tracking system, which uses GPS technology. There are a lot of these systems around but ours is tailored to delivery transport. It’s a stripped back, easy-to-use system without too many bells and whistles, which allows companies to track deliveries and keep customers informed. The system is available via smartphone and is giving many small-to-medium-sized delivery fleets a tracking system which was once only available to the biggest of firms.”
Approach to failure
Given its propensity to explore innovations, Scremin has his own take on the ‘fail fast’ approach, whereby businesses try new initiatives, but are prepared to walk away if they don’t work.
“Knowing when to walk away is as important as knowing when to start a venture. You always need a business plan and if it’s not being met you need to assess why and move quickly,” he said.
As an example, some years ago Ontime Group started a smaller, spin-off business delivering flowers. It seemed logical that its delivery transport expertise would translate well to flower delivery. In the first year the business made money and in the second year it broke even. But in year three the decision was taken to close it down.
“It became clear we were going backwards, but even worse it was causing morale to suffer. We found the manpower to run this minor business ended up greater than the manpower to run our core business. Winding that business up quickly allowed us to move on and our core business has since gone on to better things.”
Scremin has some final words of advice for businesses when it comes to walking away from a venture that’s not working.
“The most important thing is to remove yourself emotionally. People most often can’t let go because they’re so invested due to the time, effort and financial commitment they’ve put into their project,” said Scremin.
“Other emotions often identified with walking away have to do with pride, how the individual will be perceived by others and the daunting thought of what they’ll do next. People often perceive themselves as failures and struggle to explain this to family and friends. In reality, they should see themselves as being brave for trying and being decisive in making the correct decision. Unfortunately you can’t breathe life into something that’s dead,” he added.
- Try to take the emotion out of any business decision.
- Develop a business plan for a new initiative and regularly assess whether the objectives in the plan are being met.
- Knowing when to walk away is as important as knowing when to start a new initiative.