Moving Words – Emergency

Written by Timothy Brady.

“Be Prepared… the meaning of the motto is that a scout must prepare himself by previous thinking out and practicing how to act on any accident or emergency so that he is never taken by surprise.”  – Robert Baden-Powell

Are you, your staff and van operators prepared for that personal emergency?

We’ve seen it happen to others or it may have happened to you in the past. Either way, the possibility of it happening increases with each year you’re in business. What’s the occurrence? The personal emergency that takes your van operator off the road for an extended period of time. It could be an on-the-road injury or accident, a sick or injured spouse, child or relative; another hurricane like Katrina, or a local event such as an ice storm or tornado. Any of these have the potential to take a driver off the road for a couple of weeks to several months. What can you do to prepare for the financial upheaval of any of these? How do you save your business from suffering while your van operator is taking care of personal emergencies?

Now, while most agency and company owners will have an emergency plan in place if they should be out of the business for a few weeks to several months (and I’m sure you have yours as well),  what about your van operators and critical contractors who are totally dependent on themselves for their incomes and revenue production? In those cases, it’s completely up to them to have their own safety nets. So here are some suggestions you might want to pass on to your independent contractors.

There are several things they can do to protect themselves and their families from a financial setback if the worst happens. This also provides your moving company with some level of assurance that when the emergency is over they return, able to continue where they left off providing you with their valued services taking care of your customers.

1. Have a comprehensive accident /disability insurance policy that pays regardless of where or when they injure themselves. This policy needs to pay a daily amount or a lump sum amount for the period of time the contractor is indisposed.
2. They need to carry either workers’ compensation coverage (even if it isn’t required by law), or at least an Occupational Hazard policy to cover job-related injuries so if they’re injured in the course of doing business, medical and some of their living expenses are covered.
3. Have Air Medical Transport Coverage on their health insurance or accident policy that will either bring the contractor home or bring the spouse to him or her if they’re injured away from home.
4. Carry Emergency AirEvac Ambulance coverage in case a serious accident or injury occurs in a remote location.

The best protection for not having your van operators and contractors put out of business by an unexpected event is by suggesting they create their own insurance policy, in the form of Sustaining Capital. This isn’t discounting the suggestions listed earlier. But by far your best assurance is having the necessary cash set back in your own account. When you pay an insurance premium, you’re betting against the insurance company. With a Sustaining Capital Reserve, your contractors have access to every dime and interest paid into the account, and if they don’t ever need it, they’ll get back all the money plus interest invested later.

It’s not difficult, but it does take some dedication and time. Here’s the procedure:

1. Establish the contractor’s annual fixed costs. Include in this fixed cost an annual salary for him/her.
2. Take this annual figure and multiply it by 1.5 (one and a half years or 18 months of fixed costs).
3. Take this total and divide by either 156 weeks (three years) or 260 weeks (five years).
4. This figure becomes the contractor’s Weekly Sustaining Capital Goal. Add this number into his/her Fixed Cost plus Operational and Shipment-Specific costs and it becomes their minimum weekly revenue goal.

At this point, select the weekly amount that’s a realistic match to the revenue the contractor’s operation produces. (Remember to add  their weekly Operational, Shipment-Specific and Fuel costs to this figure for the contractor’s total cost per week.) For  this discussion, let’s say we figured a three year weekly goal amount of $832, or a five year weekly goal of $499. For this to work, they must consistently place either $832 for 156 weeks or $499 for 260 weeks into a specially-designated Sustaining Capital bank account. Obviously, the shorter the time period, the quicker your contractors reach their Sustaining Capital Reserve Goal. But be careful not to set an unrealistic, too-large  dollar amount per week, as this discourages the contractor from participating in attaining the necessary growth in the account. Note if even the 260 week (five years) target is still more than they can afford, just extend it to six or even seven years for the period to attain the goal

Once they’ve reached their Sustaining Capital Goal, they’ll have 18 months of fixed expenses set back for those unexpected accidents and emergencies. Remember the contractor’s pay is included in this, so not only will they be able to pay all the their fixed cost business bills, they’ll have the money to take care of all their personal home expenses. Add in comprehensive health, Workers Comp or occupational hazard policies and disability insurance, and your contractors should be able to maintain their trucking operations, meet all their home expenses, and have a large majority of any medical expenses paid.

Is it easy? No, but with some effort and determination, it can make their lives – and yours – a lot less stressful.

“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.”  – Arnold H. Glasow

Timothy Brady ©2018
To contact, Brady go to www.timothybrady.com.