Taking on a FedEx Ground P&D business is not for every entrepreneur, but for some, this career option is ideal. If you’re the type of person who is more pragmatic than creative, someone who is regimented and can lead a team, then P&D might be where your golden egg lays.
For starters, you don’t have to worry about developing marketing to acquire new customers and generate revenue. Rather, FedEx provides the customers and only needs you to fulfill the Purple Promise, that is every transaction is an outstanding experience. Which basically means, no matter what you have to grind out holidays, and be available all hours of the day and do it with a smile! But it does pay off.
CONSIDER THE FOLLOWING
Payment types offered by FedEx include
- Annual rate:
FedEx contractors are paid a flat annual rate based on the size and other characteristics of the route.
- Delivery and pickup payments:
Contractors receive a payment for each delivery and pickup, for example $1 and $2 respectively.
Contractors can earn bonuses for things like customer service and safety achievements.
If an average route creates around $100,000, then you can expect your average annual profit to be $30,000-$40,000 per route. Although we recommend starting with a small number of routes to manage, there’s no real limit to how many you can own. So profits can multiply very quickly if you run a tight ship, handle the right number of loads, optimize your staff and manage your expenses.
The most costly expenses that impact revenue are:
- Purchasing the route
- Cost of Employees
- Vehicles, vehicle expenses & moving equipment
During your planning phase, you can count on the average cost of a route to be $100,000. That being said, the cost of a route depends on a number of different factors including location and how many people you have to pay to operate your business.
FedEx reports the average number of employees at a FedEx Ground contracting business is seven. As FedEx will explicitly remind you throughout the process – you’re responsible to pay their salaries, taxes, benefits, health insurance and retirement plans.
The third cost of operating your FedEx Ground business combines vehicles, branding and technology. You’ll need to develop a fleet plan which includes the specs and costs of the vehicles for your different delivery and route needs. Your employees are required to wear the FedEx uniform and use proprietary tools, both of which you have to pay for and will need to update from time to time.
Although the expenses seem daunting, we’ve seen a great deal of success for a number of our clients who can stick out the first year and take advantage of seasonal demand.