Archive for July, 2014

Owning Your Own Business

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If you are an independent contractor, you are self employed, i.e., you own your own business and work for yourself.  Many trade the safety and security of working for someone else for the freedom and control of working for themselves.  Sure, some people like the security of a regular paycheck, but if recent events have taught us anything, it’s that this kind of security is an illusion.  The most important ingredients for success are a mindset that (1) takes the responsibility for consequences along with the freedom, (2) takes control of the business’ money and (3) constantly looks for improvement.

  • Do you have a business plan?  If you want to get somewhere, it helps first to know where you are going.  A business plan looks out into the future, sets goals and defines steps along the way to achievement of those goals.
  • Do you have a budget?  Being self employed carries with it the opportunity of making a profit and the risk of losing money.  Successful independent contractors work with their spouse to develop a budget for the business, as well as a budget for the home.  This will help you to set goals.  Revenue is a function of miles.  Miles depend on how often you go home and whether or not you turn down loads offered.  Work with your spouse to achieve an agreement to balance home life needs with your business needs.  Expenses are easier to control.  The largest expense by far is fuel.  Your budget should include goals on miles per gallon.  Keep your expenses low on the road and don’t take advances against your settlements unless you have to.  Stay ahead of the curve by building up some cash reserves for your business.  Have you planned your budget so that you have left enough for savings?  In one way trucking, your miles will not be consistent.  You will have busy times and slow times.  Plan for this.
  • Do you know your numbers?  A good accountant also will provide you with monthly profit and loss statements.  You can’t be successful without this information.  Profit and Loss Statements add up your revenue, your expenses and shows your profit or loss.  Good business people always review these numbers to see if they are meeting budget.  They also always look for categories to improve.  Successful business people are always on top of their numbers.  A weekly settlement statement does not show your profit or loss…it shows your cash flow.
  • Have you planned for taxes?  As a self employed person, you are completely responsible for saving for and paying your own taxes.  This includes not only federal, state and local income taxes, but self employment taxes as well.  You must file quarterly estimated taxes and if you don’t or are too far off the mark you will pay penalties and interest.  One of the advantages of being self employed is that there are more deductions you can take.  A good accountant is worth their weight in gold and they are deductible.
  • Read and understand your agreements.  People who contract with you expect you to perform what you have agreed to and you expect no less from them.  Then doesn’t it make sense to know what the agreement says?
  • Are you willing to work hard?  I can often tell failure up front when someone says I want the freedom to turn down loads and go home every week.  People find that running your own business usually results in more work than working for someone else.  You’ll have to work much harder than you currently do. And you’re probably going to make a little less money – at least in the beginning. It takes planning, discipline and patience to build up a successful business.  Are you really ready for that?  Being self employed is about loving what you do, about working hard to build something you’re proud of, about pouring your heart and soul into something rather than giving it to someone else. Make no mistake about it: you’ll work hard, or you won’t succeed. But you’ll love every minute of it.
  • Are you a self starter?  No one except yourself is going to make you do the things you need to do to be successful.  If you’re the kind of person who needs someone looking over your shoulder, stay at your job. Being self-employed isn’t for you.
  • Do you love doing an excellent job just for its own sake? Do you look for opportunities to improve everything around you? Do you love solving problems?  If not, rethink this decision. Being self-employed means putting your clients and customers before yourself. You have to be client-focused. Are you in it for you or them?  If you blame everything that goes wrong on someone else instead of  analyzing problems to fix them, you won’t make it.

You must be able or learn to handle time and money.  Create a clear plan and envision yourself experiencing success every day of your life. You are more likely to compel yourself to do everything in your power to acquire your goals when you write them down and focus on them daily.  We wish you success!

Happy Trucking, Tom

Appreciating Drivers

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imagesFZA76YUTIt was an early morning diner at a truck stop on the plains of western Kansas in a small town with a name only the locals knew. And a little man came in with the cold still fresh on his coat and sat down in the corner booth. The waitress came over with a smile and said “What will it be, Bub?” The little man looked up at the big girl and said with a twinkle in his eye, “Two looking up at me” and started filling out his logs. He had a wrinkled face that told of a life of many lonely hours on the road. As he sat quietly sipping his coffee, the big girl sat down his eggs and asked “Where are you from, honey?” The little man told the waitress his story:

“I am a long haul trucker. I grew up on a farm in Iowa, hunting in the woods and fishing in the stream. My brothers and I ran through the fields, hid in the corn and swan in the ponds. During the week we bucked hay until dark and on Sundays after church we had picnics by the river. I have a 2000 Freightliner with 1,000,000 miles and have put every one of those on. I’m halfway through a four day run. I have never had a wreck and hope I never do. I haul goods to people all over the country and always on time. I have driven next to drunks, outlaws, teenagers, old people who can’t see 20 fee in front of their cars, four wheelers who cut in front of me, traffic jams that go on for hours, and all kinds of weather. My boss drivers a shiny new corvette, I see it parked at the front door of the terminal when I get back once a month but I have never met him. He is always in his office on the second floor. He parks near a sign which says, “No Drivers Allowed Past this Point.” A voice on the phone dispatches me. I am Unit Number 9805. The company had Driver Appreciation week last week but I have been on the road 30 years and have never made it to one. As long as I do my job, I don’t think they know I exist and that is for the best.”
He looked down and started on his eggs and the waitress filled his mug.
When he finished, his bloodshot eyes stared at the wall.
The waitress, a friendly gal, then tried to restart the conversation with the lonely trucker.
“Tell me about your family,” she asked.

The trucker looked up from his coffee and smiled at the waitress with sadness in his eyes. “I went into trucking when my dad died and the farming went bad. My brothers went off to school and we lost the farm. A big corporation bought it at auction. Susie was never born to be a trucker’s wife and she took up with the local banker 20 years ago. She just could not take the lonely weeks alone. She lives in a big house in the city and spends time at the country club. My son Bobby just finished law school and my daughter Jenny is married with two girls but I haven’t seen them in 2 years. My mother died four years ago when I was in LA but I made it back in time for the service, having to remind my dispatcher three times. You’ve never seen a truck get back from the coast that quickly. What about you?”

The waitress then sat down at the booth and said “I raised three kids by myself in this little town. They now live in the city. I read People magazine on breaks and imagine that I was beautiful. I spend my days serving eggs and bacon. The job doesn’t pay much, but I like talking to the drivers and that makes me happy. I’ve talked to a lot of truck drivers over the years. I wish most people knew the sacrifices you make to do your job and move this country’s goods. Thank you.”
“I have to hurry,” said the trucker. “I have to deliver on time and we’ve got some catching up to do.”

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The trucker smiled, looked at the five dollar tab and put down a ten dollar bill.
He walked out against the cold and fired up his rig. The words “Thank you” hung with
him for the next 500 miles. It was words he had never heard before. But the smile
stayed on his face as he drove to his next delivery.

Happy trucking and thank you for all you do! Tom

Good Decisions…Bad Decisions & Fuel

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pumping fuelGood Decisions…Bad Decisions & Fuel

An owner operator’s settlement statement does not show profit or loss.  It shows cash flow week to week.  Successful independent contractors not only manage their cash flow but also have an accounting service (such as ATBS) prepare monthly profit and loss statements to manage their profit/loss.  They keep their eye on the big picture and review monthly financial statements to identify any areas which need to be improved.  We all want to improve top line, your revenue. But to really generate profit, you need to keep an eye on the bottom line.  The factor you have the most control over is expenses.  If you analyze this carefully, you will learn that you will make more money by controlling expenses than you will by worrying about miles.  It’s all about working smarter, not harder.

The biggest expense you incur and the one you have the most control over is fuel.    What you do with managing your fuel expense has a bigger impact on your profit and loss than miles. Our trucks are spec’d for good mpg.  The greatest factor impacting mpg is the driver, his decisions and habits.   I know many drivers who are experts at fuel management.  They also get good miles.  Their settlements are always outstanding, even in slow weeks.  They have a focused discipline running their business.

Why? Let’s do the math…calc

Assume you are a hard worker and generate 120,000 miles per year, or an average of 10,000 miles per month.   If you drive fast to get those miles and get 6 miles per gallon, you purchase in that time 20,000 gallons of fuel.  At $4.00 per gallon, you spend $80,000 on fuel per year.  No expense, even the cost of the driver, is greater.  Let’s assume that you decide to slow down and drive 65 miles per hour and get 7 miles per gallon.  On 120,000 miles, you purchased 17,143 gallons of fuel.  By saving one mile per gallon, you saved 2,857 gallons of fuel in a year.  At $4 per gallon, that is a savings of $11,428, or about a thousand dollars a month!  We have some drivers who drive the double nickel…55 miles per hour.  They consistently get over 8 miles per gallon.  If you drove 120,000 in a year at 8 miles per gallon, you would purchase 15,000 gallons in that year, a savings of 5000 gallons per year over the guy driving 70 miles per hour.  At $4 per gallon, these drivers save $20,000 per year!

Let’s discuss our fuel network.  Some use it and some don’t.  ACT passes 100% of our volume discount to owner operators.  So far this year, we have averaged .25 cents per gallon discount off of the Comdata street price.  A driver burning 20,000 gallons per year would save $4626 per year by simply using the Fuel Routing software to obtain the best prices in our network.  That would buy a lot of showers.  The owner operator who decided to slow down to improve mpg from 6 to 8 and used the fuel network would save $24,626 per year, or over $2000 per month.  You can quickly see why a company employee driver who is a top performer is worth every penny of 45 cents per mile while one making 36 per mile is costing the company money.

Here are some Trucker Myths – if you find yourself believing them, you are not running your business for profit:

  1. My settlements show what I make.” No, it only shows the gross pay and authorized deductions each week.
  2. “If I drive slowly, I won’t get my miles.” Our information shows that some of the slowest drivers get the best miles.
  3. “My mpg is low because I get the heavy loads, the ones going over the mountains and the ones heading into the wind.” Guess what? Everyone gets the same freight, including the high mpg drivers.
  4. “I can’t drive less than 65 mph.” Wrong…you can, you choose not to….and you pay a price for that decision.
  5. “I get better mpg with Quick Trip Fuel.” Dude, they all buy from the same rack.

Last year I lost a bet on Facebook.  I promised all drivers making over 8 mpg a Barbeque lunch.  I had lunch with several of them recently.  A couple of them have made over $70,000 by August.  They’re on a $100,000 per year profit pace.   It was a combination of high mpg, attention to business and recruiting bonuses. They use ATBS and call them regularly.  Only a handful of owner operators make this kind of money, but it shows that it can be done.  It’s completely up to you.  There are many other tricks to saving fuel.  We are here to help you and we are free so utilize us!  Our recruiting department will be happy to teach you how to make money as a driver recruiter also.  If you make more money…we all win!

Happy and Safe Trucking!  Tom

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