Every year, reviewing a company’s business plan is a key step to growing an independent trucker’s business. What a thorough review will show can be the difference between no growth, slow growth, and sustained, scalable success.
Why Review Your Trucking Business Plan?
Every business needs a regular evaluation. Whether it’s a deep dive into the cash flow or a simple tax filing, the story of the company is told in the numbers.
Unfortunately, many owner operators think that it takes an accounting degree to understand that story. But that’s not true, if a trucker knows what to look for – and what the numbers say.
Starting with the annual income tax filing, anyone can read if there’s been a profit or a loss.
1040- SR? Schedule C? 1120? Something else?
The best practice for any independent trucker is to have a LLC – limited liability company – to protect the business owner. An LLC creates a shield against lawsuits and separates personal and professional finances. In the state of Ohio costs about $100 (other states have different charges) but it’s a good investment and necessary to get a trucking authority.
With personal and professional finances separated, it becomes easier to read the numbers. At its simplest, the question “Is there money (profit) at the end of the year?” gets a yes-or-no answer. It’s a place to start – not end – the annual business review.
If yes, there’s money left, then the questions are different from the questions if the answer is “no.” It’s a flowchart.
If a trucking company didn’t make a profit, the questions may require facing some facts.
- Did the loads hauled cover the cost of the trip?
- Were there unexpected expenses that led to a net loss?
- What is the cost per mile for an average trip?
Those aren’t hard questions to find answers for, but the answers may not be easy to accept.
On the other side, if the answer is “yes” then there are other questions:
- What loads were the most profitable? Are those loads available regularly?
- What costs were kept low – and how can I keep them that way in the future?
- What investments or changes will impact my profitability next year?
You can understand the numbers when you understand the questions.
Trucker Stats™
Trucker Stats™, a collection of reports and numbers produced by TruckingOffice PRO trucking software, helps anyone look at the numbers collected over time (wIthout adding extra time for data reentry) to understand what they’re saying. By limiting reports to a single trip, it’s easy to see what loads made money and which didn’t. Setting a longer date range may show which time of year causes the most expenses and reduces profitability.
Using TruckingOffice PRO makes it far easier to understand specific numbers. Because the formulas – which are pretty complex and cover expenses paid per month, not per mile – are preprogrammed into TruckingOffice PRO, it’s fast and straightforward to get the answers needed to determine whether next quarter’s cross-country trips are too expensive or whether using a particular broker yields the best loads.
Reviewing the Business Plan
It would be nice to say that all a business owner has to do is review the finances and cash flow of a business, but a business plan isn’t just about the numbers. It’s about the future of the business. New equipment, new employees, potential problems, and methods to handle them.
The fun about business plans is that they’re very flexible. There’s no grade on a business plan. It’s not pass/fail. It’s a measure, not an answer.
Over the course of a year, surprises pop up. New opportunities open up as markets and the economy change, while older, established lanes may disappear.
Maybe the best way to explain a business plan isn’t a dispatch with a route, but an atlas. It’s important to know the destination, but there’s rarely only one way to get there. Detours, weather, road closures – all of those have an impact on a trip. But with a business plan, it’s less about the route and more about how to get to the destination safely.
Writing a business plan will help determine the goal of an independent trucking company. Reviewing it annually is the opportunity to reroute as necessary, and to learn to cope with bad weather when it shuts down roads.
If you’ve spent the time writing a business plan, recognize it as an investment that’s worth the review. Pull it out, look at the numbers, and remember the goals. You might find you’re closer to them than you think!
Never Written a Business Plan?
Take a look at our previous posts about writing a business plan.
Your business plan will have
- an executive summary
- a company overview
- a marketing plan
- a set of goals or milestones
- a list of the current staff
- a financial plan.
It looks intimidating, but it’s one of the best investments of your time in your trucking company! Next year, or even next quarter, using a business plan with TruckingOffice PRO can provide the information needed to make the right choices about loads, business growth, and where your trucking business can go in the future.
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