>It seems to me that if you are driving for an owner, the
>only major decision that you are making on a day to day
>basis is what loads to accept. I can see a personal finance
>plan for how to spend the money you earn, but I don't
>understand why a sophisticated business plan is needed to
>drive someone else's truck.
Our (wife and me, team drivers) business plan includes and does the following:
1. Demonstrates business acumen to the lender that will make the decision to finance our new truck (or not) and at what rate. The better the plan, the better the rate.
2. Includes a monthly budget that ensures we (a) operate profitably month by month, (b) build cash reserves to deal with unexpected developments and opportunities, (c) set aside money for our new truck's maintenance and eventual replacement, (d) maintain insurance coverage (life, health, disability, property), and (e) invest money in retirement accounts and manages that money to achieve our retirement goals.
3. Includes a detailed disaster recovery plan that will enable us to return quickly to the road in the event of the theft or destruction or other loss of the truck we're driving (fleet owner's or ours) or vital contents (business records, computers, computer data, etc.). Also lists actions to be taken and support people (family members mostly) to be mobilized if our health is lost, short term or long term.
4. Includes an estate plan so that if one or both of us dies, our assets are allocated in accordance with our wishes and our fleet owner's property (if we have a fleet owner at that time) is properly returned, and that loose ends with our carrier (outstanding settlements mostly), are easily processed by our executor who would not know much about the process. Includes documents and instructions on file in locations accessible to appropriate people.
5. Includes short term and long term industry projections, including freight cycle analysis and a carrier-competitive analysis. That assists us in making major equipment purchase decisions and in things like when to lock in an interest rate and what kind of loan term to shoot for, when to change carriers, when to take vacations and go out of service for truck maintenance, etc.
6. Beyond the above, the plan contemplates numerous adverse conditions that may develop (personal, carrier, industry, and the economy). That portion of the plan helps us be prepared for, and to the extent possible, be unrattled by such events if they actually occur. That includes gap insurance to cover things that insurance offered by our carrier does not cover.
Whether you are an owner/operator or fleet driver, a test you might take is: Assuming for the purposes of discussion that all other things will remain unchanged, can you say this instant how high fuel prices can go until you are running at a loss? To answer the question you must know your monthly fixed and variable costs, your fuel consumption rate, and your current profit margin. Can you answer the question?
Another test is: State right now the annual percentage increase of health insurance costs that credible economists are currently predicting. Do you have those costs built into your income and expense projections over the next three years?
A third test is: assume you stumble and fall into a storm sewer drain on the side of the curb and suffer a severe ankle and leg injury that prevents you from driving for six months. If it happens when loading a shipper's facility, who pays the medical costs and what portion, and who covers the income loss? Same question, only it happens when you are fueling at a truck stop while deadheading to a load. Same question, only it happens when you are waiting for a load and you are walking down the street to take in a nearby festival. Same question, only you are out of service, at home, and walking out to get the mail.
A fourth test is: State right now, the rate of inflation credible economists are predicting for the next year. Do you have inflationary price increases built into your budget? In other words, how much will the tire and headlamp you buy today cost next year?
In your plan, where will the money come from to pay the higher costs? What item or items in your business plan must change to offset the increases? Will freight revenue increases cover the higher costs? Will the difference come from your bottom line? Will an expense you have this year disappear next year and can that be used to offset the higher costs?
Truck drivers do not need to have elaborate business plans to drive down the road and bring money home paycheck by paycheck. But if you want more to show for a lifetime of driving than a social security check and a tiny bank account, a business plan may be worth the time.
You said, " I can see a personal finance plan for how to spend the money you earn,…."
I say a business plan is not about spending the money we earn, it's about keeping it, and then using the power that money (capital) has to produce more.
>One thing that has occurred to me in reading some of your
>other posts is that you may have developed some kind of
>sophisticated load selection formula which you believe gives
>you an edge over other drivers. Do you have such a formula
>as part of your business plan?
No. We do not have a formula that gives us an edge over other drivers. We learned from other drivers (the top producers we know) the formula we use today. Having tried a number of techniques found nothing that works better, our load strategy is: Accept any load that does not cost you money. After you deliver, stay put for 24 hours to see if you get dispatched from there. If not, deadhead to the nearest "good" freight center.
That's not a recommendation for anyone else. Let me emphasize that point. I am not recommending this strategy to anyone. There are those in this Forum that say I should not give business planning advice because I lack sufficient truck driving and truck owning experience. I hope they note that I'm simply sharing our practice here, in response to a specific request. I am NOT giving advice. If they have better advice to give or other POSITIVE business practices to share, I hope they do so.
The strategy works for us because (1) We don't care where the freight takes us. (2) As FedEx CC White Glove drivers in a White Glove-equipped truck, we're eligible to haul a wide variety of freight that many other expediters never see. Such freight often gets us out of remote areas under load or on our way to a load that makes it worth the trip. (3) Most loads offered to us by FedEx are not money-losing loads. While some loads pay better than others, our 80%+ load acceptance and 90%+ in service rates keep gas flowing into the tank and money flowing into the bank.
Those numbers (80%, 90%) also mean fixed costs are less of an issue for us than for many other drivers. While some trucks sit home and the fixed costs continue (insurance, truck payment, depreciation, etc.), our truck (fleet owner's or ours when it comes) is on the road offsetting those fixed costs by producing revenue.
It's not a foolproof strategy by any means. We have our idle days waiting for freight just like other expediters. It's also not a hard-and fast rule. It's just what we do most of the time because we don't know any better. If we did know something better, we'd do that.
If anyone knows something better, this is the time and place to share it.
