Case Study: FR8 Select

FR8 Select is a courier business that provides a service to the industrial, commercial and domestic markets. The business further expanded its services to include storage and distribution.

Introduction

FR8 Select is a small business partnership established in 2005 by Paul Duncalf and Stephen Drammond. The business provides courier services delivering documents, parcels and pallets of goods. Both partners were previously employed as machine setters in the print finishing industry. Working at a supervisory level, they were also required to organise transport and delivery of goods and this is how the idea of running their own courier business was conceived.

The proprietors opted for a redundancy package after the company that they worked for, Zed Cards, relocated its factory to Leeds from Runcorn. Although both partners were offered quite senior positions at the new location, they denied the option. With these new changes, Paul and Stephen actually saw an opportunity to pursue their dreams of becoming their own bosses. Both proprietors possess the knowledge and skills required in this type of sector and were fortunate to be offered substantial first contracts with their former employer. Nevertheless, the proprietors expressed their initial frustrations and anxieties and had this to say:

“It has not all been plain sailing, as we found that work was sporadic and we therefore relied more on contracts from Zed Cards. To our shock we also realised that big organisations had problems with payment and were taking longer than anticipated to settle invoices. For a period of 3 months we felt very discouraged and morale was very low. The thoughts of giving up occupied our minds all the time”.

However, the partners encouraged themselves and went back to the drawing board and resurrected their dreams. They embarked upon a vigorous marketing campaign. This resulted in getting regular contracts from more big companies and this put them on the right track for success. From almost taking the plunge in starting, Stephen and Paul have established a credible small business. The partnership is now building upon this achievement.

Market Challenges

The courier service industry, in the UK, has demonstrated growth over the past three years, indicating healthy profits and the trend is expected to continue. However, Paul and Stephen are finding that some areas of the market have become saturated and therefore are afraid that any potential economic decline could have serious consequences on their business. The demands by customers on businesses to meet deadlines, coupled with the increased pace of today’s business world has made the services of independent courier businesses invaluable. However, globalisation has also led to a greater demand of international delivery and many of the larger UK couriers have taken advantage of this. But, this has become harder for new small businesses such as FR8 Select to compete at this level and many do not bother to try. In addition, Paul and Stephen have realised that there is competition from people selling on EBay who can provide a valuable source of one off assignments.

FR8 Select is also facing the challenge of rising insurance costs. This has forced many small courier firms to close down because of escalating premiums. The proprietors also explained that the increasing congestion on the roads across the UK was quite prohibiting. This has had a detrimental effect on the reliability of the industry with congestion charges pushing prices.

Counteracting the Challenges

Feeling the pressure mounting from these challenges, Paul and Stephen did not put all their eggs in one basket. The partnership branched out the business into other areas of service such as storage and distribution. The business now takes care of the clients’ storage needs by providing easy to access storage facilities and warehousing. This enables the business to offer bespoke storage solutions tailored to individual client requirements. Paul and Stephen are targeting fast growing businesses that need extra storage space, thereby taking away the unnecessary burden of storage from their clients. Furthermore, the business has expanded the courier services market to cover countries such as Germany, France, Spain and some parts of Eastern Europe.

FR8 Select offers personal, reliable and efficient service to its clients and this has resulted in building up a brilliant reputation for the business. With many reliable and repeat clients, FR8 Select team can assure timescales are met for deliveries. They can now offer efficient road transport to get parcels to their destination quickly and efficiently following the purchase of new vehicles.

Issues

Paul and Stephen have been complacent and relying more on word of mouth, leaflets and business cards to market their business. Word of mouth has acted as a testimonial to customer satisfaction and the endorsement of satisfied customers has enabled the business to generate more clients. However, the business has no website to complement the other methods of advertising currently applied. Yet, by developing a website the business can maximise the opportunity of reaching a wider market. In addition, the business could gain the trust of potential customers, because consumers tend to trust the company more if they know something about the company and the people in-charge of the company.

“We have been considering this for a while now. In fact, our business advisor has suggested that we have a business website designed. She explained that the problem with word of mouth advertising is that customers, no mater how great the experience, they tend to forget as time passes. This is where reminders about the value they received can become very important through a website”.

Paul and Stephen have taken this advice on board and are now in the process of developing a business website. With a website, FR8 Select can have an edge over their competitors.

Legal Entity: Partnership. Description: FR8 Select provides a 24 hours, 7 days per week courier services. Products: Delivery of documents, parcels or pallets of goods. Trading since: 2005. Turnover: £120,000.

Success Stories

In the first 18 months of trading, FR8 Select turned approximately £76,000. Furthermore, the business has been recognised by Business Link Northwest as the best small business of the year in 2007. The success achieved to date has seen the business expanding its staff complement from two to six members excluding the directors.