Heidi Liou and Travis Wingate of Supermove recently sat down with Matt Mathias, Owner, Dave Finger, Fractional CFO, and Jon Daly, Operations Manager of Matt’s Moving to discuss ways to recession-proof your business through the lens of finance. Keep reading for our top takeaways from the session, or watch the full conversation here.
4 takeaways from our Moving Industry Roundtable with Matt’s Moving
Takeaway #1: Carefully consider staff across all departments.
One of the major themes that came up in the conversation was scrutinizing your business to identify areas where money could be put to better use. One of the areas that Matt, Jon, and Dave pointed out is staffing.
Matt says that he has a preference for in-office, full-time employees when it comes to sales staff, but he definitely sees an opportunity to use contract and project-based consultants (which he finds via Upwork) for a lot of higher-skilled roles. These are roles like controllers and CFOs that tend to be very expensive to have in-house.
Dave (a fractional CFO himself) added to this, saying that Matt’s Moving has found that 70% of what a controller does can be pushed down to lower-cost staff.
“If you eliminate the controller position you can push those jobs back down to the lower level staff where they belong. As you grow that’s gonna let you use that cash that you may spend on a full-time CFO or controller on different resources to help grow the company,” says Dave.
Takeaway #2: Think strategically about debt to improve cash flow
The Matt’s Moving team acknowledged that cash flow is always tight in moving and storage since you tend to carry debt from trucks and buildings. But they pointed out that there are different opportunities throughout the year to look at this debt and use it strategically, especially around tax time.
Dave says that since most moving companies are taxed as S-Corps or LLCs, they’re not taxed at the corporate level but at the owner level. There are opportunities here because they’re generally cash-based businesses and so the expenses are not on an accrual basis, they’re on a cash basis. So you can speed up paying some of your expenses (ie. insurance premiums) now to cut your tax bill and create more cash flow which, in turn, helps you pay down debt.
This is also the last year of full bonus depreciation. If you purchase a truck before December 31st, 2022, you can get a 100% write-off. Your tax bracket is probably going to be somewhere between 35-40% so that’s some significant savings that you can generate now. (Also remember that you don’t have to pay for that truck now so while it might increase your debt a bit, you’re still getting the benefits of improving cash flow.)
Dave points out that ideally, you want to pay off your highest-interest debt first. And if you’re not paying off the highest-interest debt, pay off the debt with the highest payment and generate a little extra cash flow there.
Takeaway #3: Scrub your income & expense statements
There are many hidden costs in an income statement that can be easily missed or passed over. Dave always encourages Matt and Jon to review the detail of general ledger accounts for recurring charges that are no longer necessary. Things like software expenses and membership dues for associations you’re no longer a part of can be sneaky and really add up over time.
Finally, the team encouraged everyone to look at all the ways you can either make or save money without ever “turning a tire”— review and renegotiate your insurance costs if appropriate, lease out unused space and review all policies and procedures that you currently have in place to assess cost/benefit.
One of the biggest takeaways here is that you have to have a really good handle on your financials in order to be able to make these decisions and improvements. Dave encourages all movers to use an accounting system. Modern, cloud-based moving software like QuickBooks Online makes it very easy for owners and managers to get a full picture of their finances.
Takeaway #4: Sometimes it’s just time to step on the gas
While the threat of a recession is nerve-wracking, the Matt’s Moving team pointed out that it can be a great opportunity for those who are financially savvy enough to take advantage of it.
If you have the resources, it can be a good time to add marketing programs and salespeople (which your competitors may be pulling back on), pick up assets at favorable prices, or even purchase another company to gain market share.
“Don’t hide under a rock. Take a look around and maybe it’s the time to expand,” says Dave.
Watch the full conversation with the Matt's Moving team here.